The FTSE 100 has fallen over 15% this year. Much of that loss has been in the last couple of weeks as fears over coronavirus grow.
Pulled down with the rest
I think SSE (LSE: SSE), which is down 7.5% over one month, is one company that should hold up better in a bear market. Many FTSE 100 share prices have fallen over 20% in the last month. So SSE shares haven’t done too badly, all things being considered.
The predictable nature of SSE’s regulated earnings and the prospects it has from investing in renewable energy at a time when demand is increasing and costs are coming down is attractive. I think when markets stabilise the dividend will be very attractive to investors and the shares will bounce back.
The shares had been flying up until recently and have still gained value over the last 12 months, as investors have caught onto the potential from renewables. The company has also offloaded its consumer arm to Ovo Energy. Given the good performance until the recent market crash I have high hopes for SSE.
Tesco (LSE: TSCO) shares are down 6% over one month. If it wasn’t for the wider market slump, I think the news that Tesco had agreed an £8.2bn deal for its 2,000 stores across Malaysia and Thailand would have seen the shares rise. It’s a good deal as the group continues to slim down and focus on improving margins. The deal means Tesco will no longer have interests outside of Europe.
Industries such as tourism and insurance and companies with a big presence in China will understandably be effected by the coronavirus and see their share prices plunge. It’s harder to see why that would be the case at Tesco. Indeed, people stockpiling may give a short-term boost to the retailer.
Tesco is now a better run business than it was five years ago and I think investors should hold onto the shares. All things considered, the shares are performing well and are now just a little cheaper.
A third solid company for troubled times
The share price of National Grid (LSE: NG) has fallen 5% over the last month. Up until mid-February the shares had spent six months on the charge, rising from around 800p in early September 2019 to top 1,050p in mid-Feb 2020. National Grid shares have only fallen because the rest of the market has, but not by as much.
Similarly to SSE, National Grid is a very defensive share to own, making it a reliable company to invest in during turbulent times. The shares yield 5% and have increased year on year. With cost-cutting targeting £50m cost savings in the UK and $30m in the US the dividend should be safe.
Growth comes from the US where the utility operator has managed to grow operating profit in the solid double digits. This company also has no exposure to Asia, still, the region most affected by coronavirus to date. Fundamentally the shares are worth owning, particularly in a bear market.
It’s ugly out there…
The threat posed by the coronavirus outbreak has spooked global markets, sending stock prices reeling.
And with the Covid-19 virus now beginning to spread beyond of China and Italy, it seems very likely that the bull market we’ve enjoyed over the past decade could finally be coming to an end.
Against such a backdrop of market worry, it’s little wonder that many investors are starting to panic. (After all, nobody likes to see the value of their portfolio fall significantly in such a short space of time.)
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Andy Ross owns shares in National Grid. The Motley Fool UK has recommended Tesco. 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.