Stock market crash: I’d buy these 3 FTSE 100 stocks for the long term

After the market crash, stocks could remain volatile in the short term. But there are bargains around for long-term investors, argues G A Chester.

| 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.

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.

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.

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.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

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

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »