FTSE 100 stocks are trading at discount prices. Indeed, many can be bought at multi-year lows. Sure, the near-term outlook for earnings is pretty bleak for nearly all companies. However, I’m confident buyers of a diverse range of Footsie stocks today will reap rich rewards in the coming years.
And with investors able to protect future returns against tax with a Stocks and Shares ISA, I believe now could be a great time to snap up shares in a number of blue-chip businesses.
Five FTSE 100 stocks
I’d happily buy Burberry, Johnson Matthey, Rightmove, Rolls-Royce, and Smiths Group today. Why these five?
Well, they have strong underlying businesses, in my view. Yet their shares have hit multi-year lows in this market crash. I reckon their discount prices represent a rare investment opportunity for long-term investors.
Let me begin by showing you just how big the discounts are on these five FTSE 100 stocks.
|
|
Recent share price (p) |
Discount to 52-week high (%) |
Discount to all-time high (%) |
|
Burberry |
1,424 |
-39 |
-39 |
|
Johnson Matthey |
1,884p |
-45 |
-51 |
|
Rightmove |
487p |
-31 |
-31 |
|
Rolls-Royce |
314p |
-67 |
-76 |
|
Smiths Group |
1,174p |
-34 |
-35 |
As you can see, these really are substantial discounts. While the near-term outlook is challenging for the businesses, I believe all five stocks are capable of regaining — and exceeding — their previous highs in due course.
Enduring appeal
Burberry’s sales have fallen off a cliff. However, it said last month it has “significant financial headroom,” and is “protecting key growth initiatives in preparation for a recovery in luxury demand.”
It added: “We remain confident in the strength of our brand and our strategy.” I share management’s confidence in both the enduring global appeal of the Burberry brand, and the strategy for growth.
Stronger than ever
The slowdown in the UK property market is hurting a number of FTSE 100 stocks, including Rightmove. However, the UK’s dominant property portal said last month it’s “confident” it has “the financial capacity to withstand this challenging period.”
Indeed, the company’s currently supporting customers with 75% discounts on their invoices. As a result, I’d say it’s likely to come out of this challenging period stronger than ever.
One of the world’s two big players
Rolls-Royce said it “exited 2019 in a robust liquidity and financial position as our transformation efforts gained momentum.” Earlier this month, it revealed it’s taken further steps “to ensure cash headroom in the event of a prolonged reduction in trading activity.”
Rolls is one of the world’s two big players in wide-body aircraft engines. Despite the near-term challenges, this puts it in a strong position for the long term.
Two lesser known FTSE 100 stocks
Global science and chemicals group Johnson Matthey is a leader in sustainable technologies. It said recently it has “a strong balance sheet and good access to liquidity.”
It added: “Looking beyond the current environment, given our leading market positions, strong technology offering, and operational and investment discipline, we remain confident in our medium term strategy.”
Multinational diversified engineering business Smiths Group is similarly attractive, in my view. It said recently: “Together with high cash conversion, a conservative balance sheet means that we are very well placed to withstand external shocks.”
Beyond the current environment, it reminded us it’s “well-positioned in long term, attractive growth markets,” with “highly-differentiated, market-leading products and services.”
So, there you have it: five FTSE 100 stocks I’d snap up for my Stocks and Shares ISA.
