To use a well-worn cliché, January proved to be a classic ‘game of two halves’ for share investors. Breakthrough on the trade front between the US and China meant equity markets set off like a train. But the unfortunate coronavirus outbreak in China more recently has brought them crashing back down to earth.
The FTSE 100 has dropped 1% in the month to date. Not a shocking fall, sure, but recent weakness suggests a difficult February could be in the offing. There’s a confluence of factors that may weigh on global share markets next month, including:
- Signs that the virus outbreak in China is worsening. British Airways has today suspended all flights to the country until March as new cases spring up outside the country.
- The odds on Donald Trump being removed from office rise. Splits are emerging in the Republican wall that could see witnesses called as part of impeachment hearings, a potentially-hazardous development for the US president.
- Brexit-related tensions rising again. The vacuum between the UK officially leaving the European Union on January 31, and trade negotiations beginning on March 3, leaves plenty of scope for speculation and chatter on proceedings that could move markets one way and another.
A tasty safe-haven buy
In this environment it could be a good idea for share investors to buy up some classic safe haven assets. Commodities like gold and just putting your money in a low-yielding cash account are a couple of safe plays for February. But investors can also protect their portfolios with some select picks from share markets.
Food producers are one traditional flight-to-safety play for stock investors. So why not buy shares in Finsbury Food Group (LSE: FIF) for instance? Food and water are two of those commodities we can’t go without whatever economic conditions are like. This is why City analysts expect earnings here to rise by a chunky 8% in the fiscal year ending June.
This AIM-quoted business bakes cakes and bread for customers in Britain as well as abroad. And trading has been pretty good here of late. Sales at its core UK Bakery division jumping 5.8% in the six months to December.
Dirt cheap AND big dividends!
Another reason to buy into Finsbury Foods for next month? It’s due to unveil half-year financials on 24 February. Signs it continues to defy market pressure by growing revenues could give its recent share price boom fresh legs too.
Right now, Finsbury Foods trades on a forward earnings multiple of 10.1 times, low enough to support more rounds of frenetic investor buying. It also carries a handsome 3.8% dividend yield, one which smashes the UK mid-cap average of 3.1%.
All things considered, I reckon this is a terrific share to buy for these uncertain times.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.