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.
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.
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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.