Looking for the best shares to buy? Here are my FTSE 100 top stocks

Some of the best shares to buy in the coronavirus crisis are not the most obvious, but I think the FTSE 100 is a good place to begin your search.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Finding the best shares to buy during the coronavirus market crash is not easy. Some old favourites have lost their lustre and the mass dividend cull has caused havoc across the FTSE 100. We’ve seen glimmers of hope and signs of stocks rallying, only to be knocked back. Unfortunately, this trend is likely to continue until an end is in sight.  

However, there are businesses and sectors continuing to thrive in the chaos. Sectors gaining traction at the moment include pharmaceuticals, fast-moving consumer goods and defence. Meanwhile, I think the oil, banking and travel sectors should be avoided like the plague.

Personally, I look for companies with an acceptable level of debt. Many companies must take on additional debt to see them through the crisis. This means those already saddled with debt are at higher risk of failure. However, the strongest will survive and those that do are likely to become better businesses for it.

What are the best shares to buy today?

One FTSE 100 company I like is Mondi (LSE:MNDI). It’s a packaging and paper solutions business with a market capitalisation of £6bn.

Its price-to-earnings ratio is 8.8, which puts it into the potential value zone. Its debt ratio is 32%, which seems reasonable. Unfortunately, Mondi is one company that cancelled payment of its 2019 full-year dividend. It said it intends to make this up to investors at a later date. This might be in the form of an enhanced interim dividend, but that’s very much dependent on the length of time the crisis persists.

Mondi’s operating profits have fallen 18% in response to the crisis. It has seen reduced demand for office paper, but panic-buying increased demand for some of its consumer-targeted products.

Although Mondi will continue to be affected by the downturn in the immediate future, I think it will survive long term. Packaging is an increasing necessity in our modern world and Mondi is a solid business serving a variety of sectors.

Another stock on my watch list is PZ Cussons. Its beauty business has been severely impacted by the virus, but this has been offset by a surge in demand for its Carex hand wash, sanitiser gels and Imperial Leather soap. It’s a strong company with a portfolio of well-loved brands and a strong balance sheet. So far it’s still offering a 4.8% dividend yield. 

Risky territory

All shares are operating in risky territory while uncertainty remains. How long the lockdown lasts and how quickly people return to socialising and spending will determine the fate of many British businesses.

I believe you need to think carefully about which shares you buy at present, picking solid shares like those I’ve mentioned. And of course, if the government extends the lockdown through the summer, share prices could become much lower than they are now.

This is a good time to compile a list of your best shares to buy. You’ll then be in the perfect position to buy cheap shares, with growth potential ahead of the market emerging from its bearish state and signs of a bull run returning.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »