The FTSE 100’s recent stock market crash could provide buying opportunities for long-term investors. Although it is likely to take some time for the index to fully recover and there is an ongoing risk of further short-term declines, many large-cap shares appear to offer good value for money.
As such, now could be the right time to buy a diverse range of FTSE 100 shares for your portfolio. Here are two prime examples of what appear to be high-quality businesses trading at attractive price levels.
FTSE 100 retailer Tesco
The recent full-year results from Tesco (LSE: TSCO) highlight the progress made by the business in strengthening its competitive position over recent years. For example, it has improved its customer satisfaction rates, with its brand net promoter score increasing by seven points year-on-year. It has also introduced innovative pricing promotions, such as price-matching budget rivals on certain products, while shifting its focus towards the UK through asset disposals in Asia.
Of course, recent months have included unprecedented operating conditions for the FTSE 100 company. It has incurred higher costs as a result of taking on additional staff to cope with extra demand. It is aiming to recover this through prudent operations management, a reduction in business rates in the short term, as well as a gradual return to normal operating conditions in the coming months.
Following its 7% share price fall since the start of 2020, Tesco seems to offer relatively good value for money. Its strong position in online grocery retail and improving market position could enable it to outperform many of its peers, with investor sentiment having the potential to improve over the long term.
The impact of coronavirus on Unilever’s (LSE: ULVR) recent financial performance has been significant. For example, in its first quarter the FTSE 100 global consumer goods business reported zero sales growth. This was largely due to a revenue fall in emerging economies of 1.8%. Previously, they had been the main driver of the company’s strong sales growth over recent years.
Looking ahead, demand for many of Unilever’s products could change due to the impact of the coronavirus. Already, the FTSE 100 company has reported that sales of its in-home food products and hygiene brands have risen. However, demand for its food service and ice cream products has fallen sharply. These trends could mean that it is more challenging to accurately predict the short-term financial prospects for the business.
However, over the long run, Unilever could deliver strong capital growth. Its shares are trading 10% down over the past year, yet the company continues to enjoy a strong market position across many emerging economies and consumer goods sub-sectors. As such, now could be the right time to buy and hold the FTSE 100 stock over the long run, with it likely to produce improving financial performance as the global economy gradually reopens.
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Peter Stephens owns shares of Tesco and Unilever. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Tesco. 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.