After a strong bounce from the lows of March, fears of a second stock market crash are naturally rife. However, nobody knows what’ll happen in the coming months. We could see another crash. Equally, markets could continue to recover.
Here at the Motley Fool, we advocate investing through the market’s ups and downs. We think it is important to focus on the long-term prospects of the businesses you’re buying shares in. With this in mind, here are five FTSE stocks I’d be happy to buy today, whatever the coming weeks and months bring.
Protection against a second stock market crash
I think it’s a good idea to have some protection against a second stock market crash. Historically, Personal Assets Trust and Capital Gearing Trust have done a great job of providing this. They’ve also delivered excellent long-term returns. Indeed, they rank at the top of my ‘stocks-for-all-seasons’ list.
They both invest in a variety of lower-risk assets alongside equities. However, despite this similarity, I’d be happy to buy shares in both for enhanced diversification.
Personal Assets favours investing in individual companies for its equity exposure. It owns attractive, high-quality businesses, like Microsoft, Nestlé, and Unilever.
Capital Gearing leans more towards collective investments. These include index funds (the FTSE 100 and FTSE Japan are currently prominent), and investment companies trading at a discount to their underlying assets, giving a margin of safety.
Personal Assets and Capital Gearing are proven performers in offering relative protection against stock market crashes. However, while keeping some cash in reserve to take advantage of opportunities in the event of a second market crash, I see a number of FTSE businesses I believe are highly attractive investment propositions for long-term investors at today’s prices.
Beyond a second stock market crash
World number-one caterer Compass, international transport group National Express, and Premier Inn-owner Whitbread have a number of things in common. For one, they operate in industries severely hit by the social and economic impacts of Covid-19. As a result, their share prices have been hammered.
All three have raised substantial new equity since the stock market crash. I believe they have the financial strength to get through the Covid-19 crisis, even with a protracted recovery. Moreover, their fundraisings have given them the firepower to consolidate their market-leading positions at the expense of weaker competitors.
Here’s what the companies had to say about their enhanced balance sheets:
Compass: “Will allow us to weather the crisis whilst continuing to invest in the business to enhance our competitive advantages, support our long term growth prospects and further consolidate our position as the industry leader in food services”.
National Express: “A source of differentiation and competitive advantage … It increases our ability to invest in further growth opportunities once this period has passed”.
Whitbread: “Will enable the business to be in the best possible position to continue investing and taking market share in our fragmented sector when the current situation normalises”.
Now even stronger
In my view, Compass, National Express, and Whitbread had excellent long-term growth prospects before the stock market crash. As a result of their fundraisings, and the impact of the crisis on financially weaker competitors, I believe their long-term growth prospects are now even stronger.
This is why I’d be happy to buy their shares at today’s big discounts to their pre-Covid-19 levels.
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G A Chester has no position in any of the shares mentioned. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Microsoft and Unilever. The Motley Fool UK has recommended Compass Group and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. 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.