The stock market crash continues to disrupt financial markets around the world. With share prices low across the board, it can become hard to tell the stocks that are quality from those that are ticking time bombs
With shares down, then up and then down again, the stock market has become incredibly volatile. Guessing what tomorrow, next week, or even next month will bring is futile, you might as well toss a coin.
But don’t lose heart, there are plenty of quality stocks in the FTSE 100 trading on cheap valuations at the moment. Hold them for the long term and you could expect healthy returns as markets recover. Here are two I particularly like the look of.
BAE Systems (LSE: BA) is a British multinational defence, security and aerospace company. It operates worldwide. Its businesses cover everything from electronic warfare systems to intelligence gathering to armoured vehicles.
In recently released preliminary results, the company reported a good overall performance for 2019. Sales were up around 9%, with net debt reduced. This allowed BAE to lift its dividend by 4.5%, with the dividend per share increasing by 1p over last year.
I see a positive outlook for the business. Last year, 43% of the company’s sales were to the US, which is a huge market when it comes to defence and security. What’s more, the company is in the process of carrying out two proposed acquisitions in the US.
I’m particularly bullish when it comes to this stock and see it as well-placed for continued growth. In an ever-changing defence and security market that can be expected to experience increased demand over the coming years, BAE has a very strong position.
The company mixes innovation with a business strategy that remains consistent and well-proven. Overall, it’s a quality stock that’s a strong buy for me, especially in light of a reduced price offered by the market crash.
International financial services company Prudential (LSE: PRU) offers a range of asset management services around the world. Such services and products include life insurance, pensions and annuities and investment schemes.
In its recent full-year results report, the company highlighted its success in the Asian market, where it says it’s now the leading Asian mutual fund manager. It also said new business profit increased by 2% with adjusted operating profit up by 14%.
A strong performance in volatile and uncertain times is a strong pull-factor for investors. I particularly like that the company has consistently implemented strong operational delivery, which has been a catalyst for growth so far.
Ultimately, I think Prudential is a quality company that’s well-positioned to continue to deliver long-term profitable growth. In light of current market conditions and a price-to-earnings ratio of 7.3, I think there’s significant value to be had.
What’s more, a resilient balance sheet and appropriate capital management mean that the market crash shouldn’t damage its finances too heavily.
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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. 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.