If there’s ever been a time to invest in FTSE 100 stocks, it’s now. I know this sounds counter-intuitive when a stock market crash is underway. Stock markets can be volatile at such times since the index is super sensitive to incoming news and analysis. As information about gloom and doom piles up, it’s easy to put off investing for a later date. This is especially true if I’m just about to start investing.
But what if I know exactly what I’m looking for in the newsflow? Would it still look as daunting? Perhaps not. Not each piece of incoming information will impact share prices, not in the long run, even if it appears important during the stock market crash.
Look out for the verifiable upside despite the stock market crash
And that, for me, is the key point to remember when I start by investing £500. The question that arises now is, how do I figure out key information from the sea of stock market crash stories? Despite all the grim stories around us, there are still reports to the contrary. I’m looking for these ones.
An example is the news piece I read yesterday about the FTSE 100 pharmaceuticals giant AstraZeneca, which is starting clinical trials of its Covid-19 treatment soon. It is best if the news is straight from the company itself.
Only time will tell whether or not AstraZeneca’s treatment is a success. But as things stand, it’s a positive for the company. Not only is AZN looking for a cure for a disease that’s brought the world to its knees, it could add to its credentials as well. AZN is already a highly valued pharmaceutical company, with a meteoric price-to-earning ratio of 74 times, despite the stock market crash. I think it might be expensive, but I’d like to consider it as a possible investment.
Another example is the FTSE 100 low-cost airline easyJet. There’s much information available on its troubled situation. But more recently, it appears that it may well come through the Covid-19 crisis and stock market crash. Based on this, I’d look for further news on the stock if I’m still undecided about whether to invest in it or not.
Not all positives mean something
I’d focus on positive news flow, but consider it with care. Not all positive developments in a stock market crash will necessarily amount to long-term gains. Consider the examples of online grocery delivery providers like Ocado or even brick-and-mortar grocers like Tesco and J Sainsbury.
Panic buying and the lockdown temporarily increased their sales in mid-March, but they decreased sharply in the next 10 days, according to Lloyds Bank research. If the recession is as stark as forecasts indicate, discretionary spending will fall. This can hit grocers as well.
In short, I’m looking for positives pertaining to FTSE 100 companies when I start investing my first £500. Among these, I like those that give insight into long-term potential. These, I think, can be a good starting point to ensure my capital grows despite the stock market crash.
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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca, Lloyds Banking Group, and 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.