The stock market crash may or may not be over. The volatility of stocks could continue in the short term. This is because of the uncertainty over how long the Covid-19 pandemic will last. However, I’m seeing an abundance of attractive investment opportunities for long-term investors at current prices.
With his in mind, here are three FTSE 100 stocks I’d buy today. I believe they’ll deliver big rewards in the coming years and decades. As such, I’d forget short-term volatility, and buy Rentokil Initial (LSE: RTO), Softcat (LSE: STC), and Whitbread (LSE: WTB) for the long term.
Key demographic trends
Rentokil posted strong numbers in its annual results on 27 February. It also said: “Looking forward into the new decade, key demographic trends such as urbanisation will enlarge our global pest control and hygiene markets.”
The Covid-19 outbreak and stock market crash escalated rapidly after the results. However, I was impressed by the company’s Q1 trading update last week. Particularly its strategy for managing the business through the pandemic. For example, it previously had 1,000 specialist hygiene technicians. In just over three weeks, it’s re-trained a further 7,000 employees to perform disinfection and deep clean services.
Parts of Rentokil’s business have been adversely impacted by Covid-19. However, I’m confident about its survivability. Hong Kong, where virus restrictions are being lifted, saw revenue growth of 34.5% in Q1. The long-term outlook is bright, in my view, and the shares, at 435.4p, are at a 17% discount to their high of less than two months ago.
Stock market crash outperformer
Technology firm Softcat posted strong half-year results on 17 March. The provider of IT infrastructure products and services also said: “To date we have not seen a material impact from the ongoing Covid-19 outbreak.”
Management commented positively on the outlook:“Given the strength of our business model, lack of any bank debt and a strong cash position, we will continue to invest in our business, and are confident in our ability to continue to build market share and drive profitable growth over the longer term.”
Management has since turned somewhat more cautious. It said it’s taking “a prudent stance on cash conservation.” Nevertheless, I think this is another firm with strong near-term survival credentials, and exciting long-term growth prospects. The shares, at 1,111p, are at a 12% discount to their high in February, outperforming the FTSE 100.
Stock market crash victim
The share price of Premier Inn owner Whitbread has fared rather more badly in this market crash than Softcat’s, Rentokil’s and the Footsie. At 2,700p, it’s at a massive 48% discount to its 52-week high.
On 24 March, the company said: “Trading… has been materially adversely impacted by Covid-19.” Having already temporarily closed its pubs and restaurants businesses, it also announced the temporary closure of all its Premier Inn hotels in the UK with immediate effect. It said its nascent chain in Germany would also close.
However, the company had good headroom on its funding facilities going into the lockdown. It also confirmed on Friday it’s eligible for the UK Government’s Covid Corporate Financing Facility.
I think the business will survive. I also think it can repeat the multi-decade success of Premier Inn UK in its new market of Germany. As such, I reckon the deeply discounted share price in this market crash is highly attractive for long-term investors.
G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Softcat. 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.