While many investors are panicking about the stock market decline we’re experiencing right now, I’m seeing the drop as a buying opportunity. Sure, stocks could fall further, but I’m convinced that buying now, while the market is depressed, will pay off in five years’ time. With that in mind, here’s a look at three FTSE stocks I bought for my portfolio last week.
Smith & Nephew
The first stock I bought was Smith & Nephew (LSE: SN), which is a leading medical technology company that specialises in joint replacement systems, advanced wound management solutions, and surgical robotics. I first added the FTSE 100 stock to my portfolio a few weeks back and took the opportunity to buy more last week at lower share prices.
In the short term, I do expect SN to be impacted by the coronavirus. That’s because many elective surgeries are likely to be postponed in the near term. Yet in the long run, the growth story looks attractive. With the number of people aged 65 or over across the world set to increase from less than 1bn to over 2bn between now and 2050, demand for both joint replacement systems and wound care solutions is likely to increase.
Smith & Nephew shares have taken an enormous hit over the last month, falling from around 2,000p down to just 1,100p. That’s pushed the prospective dividend yield up to about 3%. At that price and yield, I’m a buyer.
JD Sports Fashion
The next stock I added was JD Sports Fashion (LSE: JD), the retailer of fashionable sportswear and trainers.
There’s no doubt that JD’s growth will be impacted by the coronavirus in the short term. Hardly any people out shopping translates to much lower sales for retailers. And if we see the expected recession, discretionary income will decrease, potentially meaning lower demand for non-essentials such as trainers.
However, the FTSE company does now have a strong online presence, which should help in the current environment. And I do not expect demand for JD’s products, such as Nike trainers, to fall off a cliff. During the Global Financial Crisis, the company still managed to generate like-for-like revenue growth.
JD’s share price has been smashed over the last month, falling from around 870p to under 300p. At the 300p level, I think the medium-to-long-term risk/reward proposition is highly attractive.
Finally, I also added to my position in FTSE AIM 100 online fashion retailer ASOS (LSE: ASC). Its share price has fallen from around 3,300p to near 1,000p over the last month – a level that was last seen in 2012. Back then, revenue was £553m. Last year, revenue was £2.7bn.
Of course, like JD Sports, ASOS could see its near-term growth hampered by the coronavirus. For example, fewer people taking holidays as the weather warms up is likely to translate to lower demand for summer/beachwear, let alone general unwillingness to spend on fashion.
Yet the long-term story remains attractive here. In my view, the company has developed one of the leading online fashion platforms in the world and as online sales continue to grow in the years ahead, ASOS should benefit. The potential for international growth also remains vast.
In the near term, I expect ASOS shares to be volatile. However, I’m confident that buying now will turn out to be a good move down the track.
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.)
Fortunately, The Motley Fool is here to help, and you don’t have to face this alone…
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Edward Sheldon owns shares in Smith & Nephew, JD Sports Fashion, and ASOS. The Motley Fool UK owns shares of and has recommended ASOS and Nike. 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.