The coronavirus outbreak has become a pandemic, and the toll on human and economic life is rising. We’ve seen panic-buying in supermarkets, and panic-selling in stock markets.
The FTSE 100 doesn’t crash 30% in the space of a month without a great deal of fear and panic around. Yet I’m convinced this is the wrong time to be dumping shares. Indeed, I think long-term investors should be doing exactly the reverse. With this in mind, I wouldn’t recommend stockpiling groceries, but here are three FTSE stocks I’d stockpile during this market crash.
It may not be a household name, like BP, Lloyds or Vodafone, but Halma (LSE: HLMA) is a FTSE 100 group with highly attractive qualities for investors.
Its businesses are focused on delivering a safer, cleaner and healthier future for people worldwide. It operates in four sectors: Process Safety, Infrastructure Safety, Medical and Environmental & Analysis. These have long-term drivers for growth and high returns.
The company issued a trading update yesterday, ahead of its financial year-end of 31 March. It hasn’t been immune to the impact of Covid-19. It advised it now expects adjusted profit before tax of £265m-£270m, compared with a City consensus forecast of £275.5m.
According to my sums, this translates into earnings per share (EPS) of around 56p. At a share price of 1,930p, the price-to-earnings (P/E) ratio is 34.5. This, together with a 1% yield on what I reckon will be a dividend of around 16.8p, may suggest an overly rich valuation. However, I believe the stock is worth buying for its relative resilience, and history — and long-term prospects — of strong growth.
Hikma Pharmaceuticals (LSE: HIK) is another lesser known FTSE 100 stock. Certainly it’s often overlooked, due to the presence of super-heavyweight sector peers AstraZeneca and GlaxoSmithKline. However, I believe Hikma merits much greater interest from investors, and that the stock is very buyable today.
The company issued strong annual results on 27 February, with growth across all three of its Injectables, Generics and Branded business segments. It had little to say on the coronavirus at that time, it having no extensive operations or manufacturing in China.
However, management said it’s continually monitoring the situation. We may get an update before its next scheduled statement on 30 April. Either way, I see Hikma as another relatively resilient business, with excellent long-term growth prospects.
At a share price of 1,900p, it trades at a P/E of 15 on current City forecasts of 127p EPS for 2020. A forecast dividend of 36p gives a yield of 1.9%.
There are some solid, small-caps trading at nice discounts right now. Alliance Pharma (LSE: APH) is certainly one smaller FTSE stock I’d happily buy today.
In a full-year trading update, the company reported revenue for its Local brands slightly ahead of the prior year, but very strong growth across its International Star brands. These include Kelo-cote (a scar treatment product), and Nizoral (a medicated anti-dandruff shampoo).
The trading update was on 22 January, but we’ll get the full results — and doubtless a first statement from management on the coronavirus — next Tuesday. I expect the business will be impacted to some extent. However, at a share price of 65p, Alliance is trading at an attractive P/E of 13 on a consensus EPS forecast of 5p. There’s also a yield of 2.5% on a predicted 1.6p dividend.
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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 GlaxoSmithKline. The Motley Fool UK has recommended Alliance Pharma, AstraZeneca, Halma, Hikma Pharmaceuticals, and Lloyds Banking Group. 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.