If you thought the stock market crash was over, think again. It’s true that the FTSE 100 index has recovered quite a bit from the sub-5,000 bottom it reached in late March. But it’s still a long way off from where it started 2020.
With the coronavirus crisis still underway, I think it’s safe to expect more stock market volatility in the next few months.
Solving pressing problems
That shouldn’t deter me from investing, however. On the contrary, high-quality FTSE 100 stocks are now available on bargain. I wouldn’t miss buying them now.
Pharmaceuticals company GlaxoSmithKline (LSE: GSK) is one example. Its share price has recovered quite a bit from the lowest it touched, but it’s still at an over 15% discount compared with the highest levels seen in 2020. It announced yesterday that it’s collaborating with Sanofi, the French pharmaceuticals company, to develop Covid-19 vaccines.
If this goes well, it could hold GSK in good stead over the long term. Its financial position is healthy and it’s also a dividend-paying stock. Its current dividend yield at 5.1% is a shade better than the 4.9% for the FTSE 100 as a whole. As a defensive stock, it’s an attractive buy during a slowdown anyway, but in a health crisis it’s even more so.
The FTSE 100 British-Dutch consumer goods giant Unilever (LSE: ULVR) is another stock I like. Like GSK, it has seen a sharp share price drop in the stock market crash, but has recovered a fair bit. Going by past trends, though, I reckon the share price can rise much from here.
Unilever’s price-to-earnings ratio (P/E), at 16.3 times, makes it a reasonable buy, compared to another consumer goods stock, Diageo, which has a P/E of 20.3 times. It’s also a dividend-paying stock, even though its yield is muted. At 3.4%, it’s below that of the FTSE 100. But the fact that it’s likely to be safer than many others could make up for this.
Untouched and lucrative FTSE 100 stock
Potentially debatable for ethical reasons, but a good income stock otherwise, Imperial Brands is another FTSE 100 share I’ve long liked. The tobacco biggie has an impressive dividend yield of 12.7%. While it’s been saying for sometime that it could cut dividends, it’s not yet done so. In fact, its Covid-19 update is reassuring. It said that there’s been “no material impact” on the business so far.
At a time when many businesses are suffering, this defensive stock looks like a safe haven. And it’s still trading at an almost 21% discount from the highs seen in January this year, having fallen as the stock market crash started.
All these stocks offer good long-term potential, not just because they have a past history of delivering to investors but because they give us something to look forward to. I’d think that investing in them today will hold us in good stead over time, stock market crash or not.
Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended Diageo and Imperial Brands. 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.