A lot has been made of the macroeconomic turmoil throughout the world including soaring inflation and rising interest rates. Many stock markets, including the FTSE 100, have been struggling. Some even believe a stock market crash is on the cards.
For example, investors including British legend Jeremy Grantham and well-known The Big Short investor Michael Burry both believe there’s a high likelihood of a crash. But nobody can predict the future and these are merely forecasts — albeit from brilliant investors.
As a Foolish investor, I focus on the stocks I like, not potential crashes. One FTSE 100 stock I’d buy whether the markets tank or not is Intertek Group (LSE: ITRK). Here’s why.
Quality assurance
Intertek is a market leader in the quality assurance sector. It provides a huge range of testing and certification services to businesses across the world. This includes quality control for beauty products, battery testing and agricultural testing and inspection to mention a few.
As I write, Intertek shares are trading for 4,209p. This time last year, they were trading for 3,920p which means a 7% increase over a 12-month period. For context, the FTSE 100 is down close to 2% over the same timescale.
The ‘bull’ and ‘bear’ cases
I believe Intertek provides essential services. After all, many of the products we use or the processes industries employ require testing and certification. This also involves Intertek garnering lots of repeat business. In addition to this, being a market leader with a worldwide presence is a plus point. All of these factors should support consistent earnings, which could boost its share price and investor returns.
Next, it has a good record of performance. Since the pandemic, it has grown revenue and profit each year. However, I do understand that past performance is not a guarantee of the future.
Finally, Intertek shares would boost my passive income with a dividend yield of 2.6%, which admittedly is slightly lower than the FTSE 100 average of 3%-4%. And of course, dividends are never guaranteed.
From a more pessimistic — or bearish — perspective, any stock market crash or recession could impact the demand for Intertek’s services. This was evident previously when the pandemic struck and there was a market downturn.
Another risk to note is its propensity to complete acquisitions to enhance its offering. Although I’m buoyed by this, there’s always a risk that some acquisitions don’t work out. The issue here is that selling a newly acquired business that didn’t amalgamate with the existing company is costly and can impact investor sentiment too.
A stock I like
Although I don’t have any spare cash to invest right now, I’d be willing to buy some Intertek shares when I do have some.
I view Intertek as a steady business with a market leading position, solid fundamentals, and a fair valuation on a price-to-earnings ratio of 21. If a market crash were to occur, the shares could fall and look even more attractive. Yet for now, while there are cheaper shares on the FTSE 100, sometimes it’s worth buying a quality company at a fair price as Warren Buffett says!
