There’s never been a bad time to start investing in the stock market, provided you have a long-term view. And investing during market crashes has always produced particularly high rewards.
Here are 10 FTSE 100 stocks I’d buy for a starter portfolio today. I’ve selected them on the basis of legendary investor Warren Buffett’s philosophy. He aims to buy and hold forever so I’ve focused on stocks in industries with long-term tailwinds for growth. And I’ve avoided industries with clear structural headwinds.
I’ve also followed Buffett’s view that it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price. As it happens, I think many of my selections are not only wonderful companies, but also trading at wonderful prices!
Consumer goods powerhouses
Unilever (share price 3,874p, P/E 16, yield 4.1%) and Diageo (2,286p, 17.4, 3.1%) both own valuable portfolios of much-loved and trusted global brands. The former owns foods like Marmite, and personal and homecare names like Pond’s and Domestos. The latter owns alcohol brands, including Gordon’s gin, Johnnie Walker whisky and Smirnoff vodka.
I see both businesses profiting from rising disposable incomes around the world, particularly in emerging markets. It’s worth noting, too, that Unilever’s shares are currently trading below 4,000p. This is the price at which a Buffett-backed group tried to buy the business a few years ago.
Health and safety
Smith & Nephew (1,195p, 13.7, 2.7%) is a leading medical devices group in areas such as hip and knee replacements, and advanced wound care. I see this business benefiting from ageing populations in the developed world, and increased healthcare spending in emerging markets.
Intertek (4,662p, 22.1, 2.3%) has a global network of laboratories providing testing, inspection and certification services. I think increasing regulation and demand for quality assurance give this business an attractive structural growth backdrop.
Defence and databases
BAE Systems (490p, 10.2, 4.9%) is a defence giant and trusted partner of the UK, US and other allied governments. Unfortunately, world peace seems an impossible dream. But it means there’s always going to be demand for BAE’s technologies and kit.
Relx (1,508p, 15.6, 3.2%) owns valuable databases and analytical tools. These are indispensable for its customers in legal, scientific, technical and medical fields. In a world of ever-expanding information, I believe Relx is well-positioned for long-term growth.
Life insurer Prudential (734p, 5.1, 4.9%) and asset manager Schroders (2,230p, 11.1, 5.2%) are my picks in the financial sector. Prudential is becoming increasingly focused on Asia. That’s a sensible move as it’s said Asia will account for 66% of the global middle-class population by 2030. Schroders is a superbly managed multinational business, and still family-controlled over two centuries after its founding.
Last but not least
National Grid (871p, 14.3, 5.7%) is the near-monopoly owner and operator of much of the UK’s primary energy infrastructure. It also owns an expanding portfolio of regulated assets in the US. Warren Buffett is a notable investor in utilities there too. Finally, I see luxury fashion house Burberry (1,177p, 13.7, 3.8%) as having enduring worldwide appeal for its quintessential British heritage style.
There you have it, my 10 FTSE 100 stocks for a blue-chip starter portfolio.
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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G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Burberry, Diageo, Intertek, Prudential, RELX, and Schroders (Non-Voting). 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.