Most FTSE 100 stocks have suffered significant declines in the recent stock market crash. While the market has recovered somewhat over the past week, there are still plenty of bargains in the index.
As such, now could be an excellent time to snap up a basket of these stocks. They could offer significant upside potential over the next few years as the market recovers.
FTSE 100 leader
Technology group Experian (LSE: EXPN) is one of the FTSE 100’s top blue-chips. The company is one of the world’s largest financial data providers. In this business, size matters. Experian has one of the most extensive data sets on financial products and services in the world. And that can’t be replicated overnight.
Therefore, the company has a definite competitive advantage over its peers. This should help it weather the coronavirus storm, and possibly come out stronger on the other side.
Having fallen by 17% from its 52-week high, Experian’s share price appears to offer a margin of safety. The stock has a dividend yield of 1.7%, covered 2.1 times by earnings per share. This suggests the FTSE 100 investment could provide good value for money as well as an attractive income return.
At a time when so many other companies are struggling, Experian’s market-leading position should ensure its growth continues. As such, now could be the right time to buy a slice of the business for the long term.
FTSE 100 utility group Pennon (LSE: PNN) also looks attractive after the recent stock market crash. As one of the largest water providers in the UK, Pennon’s financial performance is likely to be less impacted by the current lockdown than many of its FTSE 100 index peers. That implies the stock offers some defensive qualities.
Furthermore, Pennon has long-term growth potential in an industry that’s likely to undergo rising demand over the next few decades.
The company recently announced that while income for its current financial year will fall, it’s still in line with management’s expectations. What’s more, Pennon recently agreed to sell its waste management business, Viridor, for an enterprise value of £4.2bn. Excluding this cash, the business has £1.6bn of liquidity to tide it over in the meantime.
Management has said it plans to use this cash to reduce borrowing and “make a return to shareholders.” In other words, it seems likely the firm will declare a special dividend when the deal completes.
Despite this, and the company’s defensive qualities, shares in the FTSE 100 business are down 8% from their 52-week high. This decline suggests the shares offer a margin of safety.
On top of Pennon’s discounted price, the stock has a dividend yield of 4.1%. Considering all of the above, Pennon could be an attractive stock to own following the FTSE 100’s recent market crash.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Experian and Pennon Group. 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.