The prospects for FTSE 100 stocks continue to look highly precarious. The spread of coronavirus is showing little sign of slowing in many countries. Restrictions on movement are yet to have a clear impact on case numbers.
However, in the long run, the FTSE 100 is highly likely to recover from its current bear market. It has a solid track record of experiencing bull markets after bear markets, which could make now the right time to buy a range of high-quality stocks.
With that in mind, here are two FTSE 100 stocks that could be worth buying today with £2k, or any other amount, for the long term.
Recent weeks have been hugely challenging for supermarkets such as Tesco (LSE: TSCO). High demand for a range of products has placed strain on its supply chain. Its shares have declined by around 14%, which is roughly half the FTSE 100’s decline over the same time period.
In the near term, factors such as weak consumer confidence and economic uncertainty may weigh on its valuation. However, the company’s recent quarterly update highlighted the progress it’s making against its strategic goals.
For example, Tesco outperformed the wider market in both volume and value terms. Its customer satisfaction ratings improved, while basket size in its online grocery segment continue to rise. This suggests the company is strengthening its competitive advantage over peers. That may give it a strong platform to capitalise on long-term growth within the wider retail segment.
Tesco’s pivot towards the UK through the sale of its international operations could improve its efficiency. Trading on a price-to-earnings (P/E) ratio of 11.9, it seems to offer good value for money at present and may deliver improving total returns in the coming years.
Also falling by around 14% since the start of the year are shares in Severn Trent (LSE: SVT). The utility company has offered some defensive characteristics for investors during what has been an exceptional period for the wider market. This trend may continue in the short run, which could increase the appeal of the stock among increasingly risk-averse investors.
The company’s recent trading update showed it’s on track to meet its financial targets for the current year. This suggests it could offer a relatively reliable income outlook during an uncertain period for dividend investors. And, with its dividends forecast to rise by at least as much as CPIH (CPI inflation plus housing costs) over the medium term, Severn Trent could offer a generous income return in the coming years.
The company’s dividend yield has risen to 4.7% following its share price fall. This suggests it offers good value for money. That means its defensive business model and resilient income prospects are likely to be viewed as attractive by an increasing number of FTSE 100 investors in the coming years.
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Peter Stephens owns shares of Tesco. The Motley Fool UK has recommended Tesco. 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.