The coronavirus pandemic and subsequent sell-off in equities dealt a serious blow to many companies listed in the FTSE 100. Fast-forward a few months and some are struggling to recover while others are flying high. Given the current market conditions, it can appear a difficult task for would-be investors to pick out the best FTSE 100 shares to buy today. With that in mind, here are two of my top picks after the 2020 stock market crash.
Tech-focused online supermarket
Online grocery retailer Ocado (LSE: OCDO) was the best-performing FTSE 100 stock in the first quarter of 2020. The company’s share price is up 57% since the beginning of the year, far outperforming many other firms listed in the index. But is the company worthy of being classified as one of the best FTSE 100 shares out there?
Explaining Ocado’s share price success isn’t rocket science. The online retailer has profited immensely from surging demand and shifting supermarket trends over the period of the global pandemic. Additionally, as a consumer staple, its products are constantly in demand, come what may.
However, what differentiates Ocado from other supermarkets is its technology-driven focus. To illustrate, the company’s operating warehouses are decked out with state-of-the-art robotics that have thus far transformed the industry. What’s more, its tech division is a leading designer and supplier to other retailers worldwide.
Yesterday’s half-year results announcement was full to the brim with yet more positive news. Group revenue grew 23% to reach just over £1bn, with retail revenue up by 27%. The report detailed a strong balance sheet and gave evidence of more investment into the technology side of the business.
In my view, Ocado shares are a strong long-term play. I reckon investors could profit tidily through a combination of share price appreciation and dividend payments.
Defence and aerospace titan
Unlike Ocado, the BAE Systems (LSE: BA.) share price isn’t in positive territory for the year. After a 34% plunge in the depths of the sell-off, the company’s valuation is still down 18% since the beginning of 2020. Nevertheless, I’m confident that the company has a bright future outlook that could reward investors considerably over the coming years.
The defence and aerospace specialist is a key supplier to major governments around the world. In fact, the company boasts a leading market position in the US, UK, Saudi Arabia, and Australia. On top of this, BAE is working to establish itself in numerous other international markets.
With current geopolitical uncertainties not appearing to subside anytime soon, defence spending should remain a top priority for many of the governments that BAE have contracts with. Evidently, this stands the company in good stead moving forward.
Despite analysts’ expectations that earnings will falter in the first half of 2020, management states that “demand for our capabilities remains high with order intake in line with our original expectations for the year”.
With a forward-looking price-to-earnings ratio of just 10.4, the shares appear undervalued in my eyes. Consequently, I reckon BAE shares are a wise long-term investment that could deliver attractive returns in the years to come.
Matthew Dumigan 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.