It’s been a dreary start to the second quarter of the year. Global stocks continue to rocket and then plunge in the coronavirus-led stock market crash. Ultimately, investors are struggling to weigh up the economic impact of Covid-19.
Meanwhile, the FTSE 100 is offering up some great bargains that I don’t think you should miss out on. Here are two top-draw stocks I’d buy now:
British American Tobacco
Giant cigarette manufacturing company British American Tobacco (LSE: BATS) has struck the headlines this week in a rather unlikely manner.
The firm is reported to be working on a tobacco plant-based coronavirus vaccine, supposedly a faster and safer plant for drug development.
In the event that the company does produce a vaccine, its share price would undoubtedly rocket upwards. But that’s not the reason why I’d buy shares in the tobacco manufacturing firm.
BAT has a market-leading position in over 50 countries globally. As of 2012, it is the second-largest cigarette manufacturer in the world.
The company’s share price is 12% lower on the start of the year. That’s a small decrease relative to the 25% drop in the index as a whole. But it still means the price-to-earnings ratio is sitting at an attractive 8.79. Thanks to that price drop, the dividend yield comes in at a handsome 7.16%.
What’s more, analysts at Citi say that shareholder payouts from the world’s largest tobacco companies are safe (for now). That’s due to the resilience of these firms, which have strong balance sheets and healthy cash flows. In any case, a global pandemic doesn’t slow sales of their products as much as it would for other products. A strong buy for me!
Consumer goods leviathan Unilever (LSE: ULVR) is the home of many household staples. From soaps and beauty products to beverages and ice cream, the company’s products are in demand regardless of the economic climate.
It’s reported that on a typical day, one-third of the world’s population will use a Unilever product. This staggering figure underscores the world market-leading position of the company.
As a result of the coronavirus stock market crash, Unilever’s share price is now 8% cheaper than it was at the start of the year. In fact, since September 2019, the share price has shed just over 25% of its value.
Yet in January 2020, the company reported a 2.9% rise in full-year underlying sales. Revenue was up 2% over the previous year, but profit before tax fell slightly.
As a huge company with vast cash reserves, Unilever is in a good position to get through the coronavirus stock market crash.
The firm has announced €600m of donations and support for suppliers to limit the impact of the virus. On top of this, bosses said they would offer €500m of cashflow relief for businesses in its supply chain.
All in all, with the company boasting a strong balance sheet and plenty of cash reserves, I think Unilever is in a solid position.
Due to the coronavirus stock market crash, I think the share price represents a solid bargain. I’d buy, as I reckon the company could come out of the other end stronger than ever.
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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.