FTSE 100 stocks are crashing again today. Not a single blue-chip is in the blue, as I’m writing. It’s at times like this long-term investors should be snapping up bargain stocks.
Certainly, there’s considerable fear in the market, and a challenging outlook in the near term. However, history shows that many stocks bought during such periods deliver high returns in the long run. As such, buying at discount prices today could even help you build a £1m portfolio by the time you retire.
FTSE 100 stocks I’d buy right now
Investors are spoilt for choice, with potential bargain stocks left, right, and centre. I’m particularly keen on strong businesses with trusted brands and a loyal customer base.
With this in mind, Premier Inn owner Whitbread (LSE: WTB) and consumer goods powerhouse Reckitt Benckiser (LSE: RB) are two FTSE 100 stocks I believe are brilliant buys today.
The spread of the coronavirus has hit travel & leisure stocks particularly hard. Whitbread’s shares are trading at 3,350p, as I’m writing. They’re almost 30% down from their pre-crash level on 21 February, and 35% below their 52-week high.
Undoubtedly, the company faces headwinds in the near term. Business and leisure travel are likely to be subdued for as long as the outbreak of the coronavirus lasts. However, I believe Whitbread is well positioned for both the near-term challenges and long-term growth.
Value on offer
The sale of its Costa coffee business last year means its balance sheet is strong. That’s good for weathering a spell of near-term economic turbulence. It also has the financial headroom to invest in the growth of its primary business, Premier Inn, when other operators may be struggling. That’s good for its long-term growth prospects.
Premier Inn is a much loved brand, consistently rated the UK’s best value hotel chain. It has further scope for growth at home, but is also intent on replicating its decades-long UK success in Germany. This represents a compelling long-term growth opportunity, in my view.
The shares are trading at 15 times forward earnings per share (EPS) of 201p. The forecast dividend of 100.5p is robustly covered twice by EPS, and gives a yield of 3%. It’s rare for Whitbread’s shares to carry a yield as high as 3%. I see this as a good indication of the value on offer.
Bargain stock #2
Reckitt Benckiser’s share price hasn’t been hammered as severely as Whitbread’s. It stands at around 5,700p, as I’m writing. This is 11% down from its pre-crash level on 21 February, and 15% below its 52-week high.
RB owns a strong portfolio of loved and trusted household brands in hygiene, health, and nutrition. For example, Dettol, Durex, and Enfa are the world number one brands in antiseptics, condoms, and infant milk formulas respectively. Sales of such trusted products tend to hold up relatively well through economic downturns – as do the share prices of the companies that own them.
RB’s currently trading at 19.2 times forward EPS of 297p. The forecast dividend of 170.8p is covered 1.7 times by EPS. I view this as reasonable cover for a relatively stable business. The yield on the dividend is 3%. Like Whitbread, it’s rare for RB to be available at a yield as high as this. As such, I see RB as another bargain FTSE 100 stock to buy today.
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G A Chester 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.