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£5k to spend? I’d buy this FTSE 100 stock in an ISA and hold it forever

Intertek Group (LSE: ITRK) is a FTSE 100 share well-placed to benefit in a post-coronavirus landscape. But the blue-chip assurance, inspection, product testing and certification company hasn’t had things its own way of late, as the pandemic wreaked havoc across the globe.

Intertek’s like-for-like revenues slipped 4.9% at constant currencies during the four months to April, it announced earlier this month.

Therefore, it hasn’t been as resilient as other FTSE 100 stocks, like gold-producer Polymetal International, or online supermarket Ocado Group, for instance. Make no mistake though, Intertek is another firm likely to play an important role in a world that faces big changes to prevent and contain dangerous diseases.

New horizons

The company has highlighted the “wide range of new opportunities” it’s well-placed to capitalise on. “These range from health, safety and wellbeing-oriented quality assurance in the workplace, public spaces and the hometo the growing demand in the healthcare sector for PPE, new medical devices and stronger infrastructure.”

Intertek had more to say too. It added: “We are seeing the increasing need for risk management across supply chains and more robust protection against online piracy and other cyber threats in a connected world.”

The global economy has just started on the road of what’s likely to be a painful recession. But these opportunities should help Intertek weather temporary weakness in the gigantic $250bn Total Quality Assurance (TQA) market.

Cash machine

The Footsie firm remains quite upbeat then. It’s why it still plans to pay a final dividend of 71.6p per share for 2019 in June.

Intertek is a master when it comes to creating cash, with cash generation more than doubling between 2014 and 2019. This should see it through any market turbulence in the short-to-medium term and could well result in more dividend increases.

The company also has terrific defensive qualities to help it absorb the worst a global recession could throw up. Products tests, inspections and certifications are things manufacturers can’t do without, and this provides Intertek with some protection. The company can also rely on its broad geographic footprint and expertise across many industries to help defend the bottom line too.

A FTSE 100 star

It looks as if Covid-19 will put paid to Intertek’s long record of unbroken annual earnings growth. Make no mistake though, the long-term outlook for the TQA market remains really quite exciting.

Intertek has previously talked up “the long-term structural growth drivers including product variety, brand and supply chain expansion, product innovation and regulation, the growing demand for quality and sustainability from developed and emerging economies, the acceleration of e-commerce as a sales channel, and the increased corporate focus on risk.”

No wonder City analysts expect Intertek to bounce straight back from an expected 22% decline in annual earnings in 2020 with a robust 19% rise in 2021.

However, this FTSE 100 firm’s shares don’t come cheap. Right now, it trades on a forward price-to-earnings (P/E) ratio of around 35 times. I reckon this top-quality stock is worth every penny though.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek. 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.