If you have £1,000 to invest but are struggling to find the right stocks, here are two top FTSE 100 stocks that I think might take your fancy.
Right now the Informa (LSE: INF) share price looks like a bargain, sitting 45% below where it was a year ago. Why? The coronavirus crisis shut down Informa’s events business and events deliver about 65% of revenues, explaining why the shares are trading at just 456p.
However, subscription-linked businesses account for 35% of Informa’s revenues and these have continued to trade well. They have provided an anchor for Informa, buying time for its events business to get back on track.
Clearly, to get its share price moving upwards, Informa needs to start holding physical events again and it is working hard here. The company is heavily focused on the highest standards of hygiene and safety and that should help in getting permissions from authorities to run events when the time is right.
Part of the business is already back in action. This month should see a number of major events held in China. Other markets like the US are further behind. However, events there have been rescheduled, and some will be held digitally. Encouragingly, the amount of rebates requested remains low.
Informa’s balance sheet looks healthy following a £1bn equity raise, and so far, the company has not had to ask its debt holders for favours. So there is time for the events business to get going again. Obviously, the quicker the pandemic is dealt with, the faster Informa’s share price will rise, and a coronavirus vaccine would certainly jolt it into life.
Its prospects seem good in the long term and 90% of the 20 analysts covering Informa rate it as a buy. Since the share price is so low at present, they reckon investors could make 70%+ over the next 12 months by investing in this top FTSE 100 share.
Backing the FTSE 100
GVC Holdings (LSE: GVC) did not suffer as much as Informa did in the market crash. Its shares now trade 19.7% above where they were this time last year, although that is still below their pre-crash highs. Nevertheless, 89% of the 19 analysts covering GVC rate it as a buy, and think its shares could make gains of 50%+ over the next year.
GVC bought Ladbrokes Coral in 2018 to form one of the largest sports betting and gaming companies in the world. Gambling revenues dropped by up to 60% when lockdowns started. But they bounced back quickly as sports fixtures started to return in Europe and betting shops reopened in the UK. As a result, GVC’s share price has started to rebound, and revenues should pick up further once spectators start getting back into grounds.
Any negatives? The gambling industry has come under fire from governments and regulators, but many of the points raised in a recent report on gambling’s dark side are enshrined as principles in GVC’s safer gambling strategy. I think GVC is ahead of the regulatory curve and should be able to benefit from the continuing industry growth, particularly online.
Analysts think it will generate lower revenue and profits in 2020, but 2021 should see healthy growth returning, and pre-crisis-level dividend payments. GVC looks to me like a top FTSE 100 stock to invest in only a month after being readmitted to the index.
James J. McCombie has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.