Although the recent stock market falls are uncomfortable, I reckon it’s a good idea to resist the urge to sell up and run for the hills.
Warren Buffett, for example, is known for buying the shares of quality businesses when they are ‘on sale’. And to do that, he buys when others are scared away, such as right now. I’m keen on the following FTSE 100 shares. And my guess is that when the COVID-19 coronavirus fades from our collective consciousness, these two stocks will be making new highs.
The share price of pharmaceutical giant AstraZeneca (LSE: AZN) has fared better than many stocks in the recent market rout. Indeed, as I write, it’s only about 11% down from its recent highs.
And I think the stock market is right to be lenient on the company. In the middle of a health scare, holding the shares of pharmaceutical companies seems like a good idea, at least superficially. But in general, the firm tends to have a high degree of defensiveness to its operations. Cash flow has been stable over the past few years and backs up profits well.
I reckon the company’s business is far less vulnerable to the effects of general economic cycles than those of many others, such as oil companies, retailers, and banks. In the full-year results report delivered on 14 February, the company said it enjoyed a year of “strong” revenue growth. New medicines were launched from the R&D pipeline and the firm expects such positive trends to continue in 2020.
For a long time, I’ve seen the stock as a decent long-term hold and any weakness is a buying opportunity for me. With the recent share price of 7,055p, the forward-looking dividend yield for 2021 is just over 3%.
Fast-moving consumer goods
To me, Unilever (LSE: ULVR) is the king of fast-moving consumer goods on the London stock market. And I find the sector attractive because cash flow can be steady, driven by customers who return often to repeat-purchase due to loyalty to the firm’s brands.
The share price has been generally slipping for around six months. And now it’s around 17% lower than its peak last autumn. But I don’t think the move lower is much to worry about. The attractions of the company are widely known and the valuation tends to get ahead of itself from time to time. So weakness now could just be a correction that’s worth having. At the recent price of 4,166p, the forward-looking dividend yield for 2021 is knocking on the door of 4%, which I see as attractive.
At times such as these, I’m tempted to buy shares in Unilever to lock that rising income stream into my portfolio. And I’d aim to hold the shares for the long haul.
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Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended AstraZeneca. 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.