It’s fair to say coronavirus is now having a huge impact on global stock markets. In less than three weeks, the FTSE 100 index has fallen from 7,400 points to around 6,000 points, which represents a decline of just under 20%.
At times like these, investing can certainly feel challenging. No one likes seeing the value of their investments plummet. However, if you’re a long-term investor, this kind of market weakness can also provide amazing buying opportunities. With that in mind, here’s a look at two high-quality FTSE 100 companies I believe look attractive right now.
One top FTSE 100 stock that’s popped up on my radar is property website operator Rightmove (LSE: RMV). It was trading above 700p a month ago, but now can be purchased for around 580p. As a result, its forward-looking P/E ratio has dropped to 26.9. I think that’s a very reasonable valuation for a company of RMV’s ilk.
The main reason I like Rightmove is that it’s the clear market leader in the UK online property space. Indeed, according to the company’s most recent annual report, 2019 was the ninth consecutive year Google reported that more people start their home search with ‘Rightmove’ rather than ‘Property’. This is a clear competitive advantage.
I also like the fact Rightmove is highly profitable (return on capital employed last year was 384%) and cash generative, it pays a small dividend (and has a great dividend growth track record), and it has a strong balance sheet.
All things considered, I see Rightmove as one of the most attractive growth plays in the FTSE 100. With the stock down nearly 20% over the last month, I think now is a great time to be building a position.
JD Sports Fashion
Another top FTSE 100 stock that’s dropped into my ‘buy-zone’ is JD Sports Fashion (LSE: JD). It was trading near 880p in February, yet now trades for around 660p. That means the forward-looking P/E ratio has fallen to about 17.5, which is an attractive valuation, in my view.
One reason I like JD Sports Fashion is the market for athletic footwear is continuing to grow at a very healthy rate. According to industry experts, global sales are expected to climb at around 7-8% per year in the next few years. JD, with its exposure to leading brands such as Nike and Adidas, looks well placed to capitalise. In addition, JD is also benefiting from the still-strong athleisure fashion trend.
Like Rightmove, JD has quality attributes. For a start, it’s a very profitable company. Last year, return on capital employed was 27%. In addition, the company is extremely cash generative and has a high level of free cash flow.
Overall, there’s a lot to like about JD, in my opinion. And with the shares having fallen significantly over the last few weeks, I think now is a great time to consider buying a slice of the business.
It’s official: global stock markets have been on a tear for more than a decade, making this the longest bull market in history.
But this seemingly unstoppable run of success poses an uncomfortable question for investors: when will the current bull market finally run out of steam?
Opinions are split about whether we’re about to see a pullback — or even a bear market — in 2020. But one thing is crystal clear: right now there’s plenty of uncertainty and bad news out there!
It’s not just the threat posed by the coronavirus outbreak that could cause disruption — Trump’s ongoing trade-war with China and the UK’s Brexit trade negotiations with the EU rumble on... and then there’s the potential threat of both the German and Japanese economies entering recession...
It all adds up to a nasty cocktail with the potential to wreak havoc and send your portfolio into a tailspin.
Of course, nobody likes to see the value of their portfolio fall, but fortunately, you don’t have to go it alone. Download a FREE copy of our Bear Market Survival Guide today and discover the five steps we believe any investor can take right now to prepare for a downturn… including how you could potentially turn today’s market uncertainty to your advantage!
Edward Sheldon owns shares in Rightmove, JD Sports Fashion and Alphabet. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares) and Nike. The Motley Fool UK has recommended Rightmove. 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.