There was an optimistic tone in the markets today and many shares bounced higher following the crash. It seems that investors are reading flattening coronavirus figures as a sign that the peak of the crisis could be near.
As ever, the stock market is looking forward. It’s not that the worst of the economic effects of the pandemic are behind us. It’s more that keen-sighted investors can see a twinkle of light in the far distance.
The stock market crash will end
This crisis will finish, and economic normality will return in the end. I wrote only today that famous investor Warren Buffett has seen many crises in his long investing lifetime. He remarked in an interview recently that economies and markets have not only bounced back every time, they’ve always gone on to ascend new heights.
Over a very long timescale, the economic and technological progress of humanity has been astounding. And Buffett believes that a bet on future progress is as near to a ‘sure thing’ as we can get. Indeed, betting on out-of-favour, good-quality stocks in a crisis is a cornerstone of the strategy that earned him his billions.
Meanwhile, the good news is that despite recent rises, many shares still look temptingly cheap. So, it’s not too late to Do Your Own Research (DYOR) with the aim of adding to your portfolio. It may feel dangerous to buy shares in a crisis, but when the recovery has run its course you could be glad that you did.
For example, I like the look of the FTSE 250’s Tate & Lyle, which is a global provider of solutions and ingredients for food, beverage, and industrial markets. The food industry is still producing at pace and the crisis has affected the company’s operations less than those of many other firms in other sectors.
I’m also keen on mid-cap firm HICL Infrastructure, which invests in companies and projects with underlying assets such as schools, hospitals, roads, rail, and facilities for fire and police services. Such assets won’t be felled by the virus and neither will most of the firm’s revenues from them.
I’d also run my calculator over the figures for Spectris, the FTSE 250 high-tech instruments and test equipment maker. Sales will take a dent because of the crisis but the directors don’t expect operations to grind to a halt altogether. Meanwhile, the balance sheet looks strong with only a modest level of net debt, which should help the company through the crisis.
These three aren’t the only mid-cap companies I’d investigate right now. Several others have also caught my eye. But I do believe that it’s a good time to work hard on building a watch list of shares that you may like to own. The effort you put into your investing now could pay off later when the crisis fades.
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Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Spectris. 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.