The FTSE 100 is stuffed full of bargains. I think many of these particular stocks could be some of the best investments of 2020. Companies, like the two listed below with substantial competitive advantages and large profit margins, look set to profit in a year dominated by the coronavirus.
The best investments for 2020
Online property portal Rightmove (LSE: RMV) is one of the most visited websites in the UK. At the beginning of the coronavirus crisis, the company reported a significant decline in activity on its sites as lockdown forced estate agents to shut up shop.
However, activity has rebounded in recent weeks. Earlier this week, the company announced that the number of home sales on its site in July hit a 10-year record, beating the previous monthly record by 20%.
Home prices jumped in almost every region, the site also noted. These figures suggest Rightmove is back in business, which is why I think it could be one of the best investments for 2020.
While there are some concerns that this mini property boom could peter out towards the end of the year, the group’s position in the market should help it weather the storm. Rightmove is used by around 90% of the estate agents in the UK.
Therefore, as long as the property market is moving, the company will be making money.
Rightmove is also one of the most profitable businesses listed in London. It has a 70% profit margin and converts virtually all of its profit into cash, most of which management has been returning to investors with dividends and share buybacks. This gives the business a considerable cushion against sales declines as well.
As such, as a way to play the UK economic recovery, I think Rightmove could be one of the best investments for 2020.
Avast (LSE: AVST) also has desirable investment qualities. Shares in the security software provider have surged in value over the past year. The stock is up 75% over the past 12 months.
Nevertheless, despite this performance, the stock looks cheap compared to its growth. City analysts are forecasting earnings growth of 46% this year. If the company hits this target, it will be one of the FTSE 100’s fastest-growing businesses.
However, shares in the tech company are dealing at a forward price-to-earnings (P/E) multiple of just 22. The rest of the sector is trading at a multiple of 27. These numbers suggest shares in Avast offer a wide margin of safety at current levels.
I also expect the company’s impressive growth to continue in the years ahead. The world is becoming increasingly reliant on technology.
Unfortunately, criminals are looking to exploit this. Avast is one of the few publicly-listed cybersecurity businesses. It’s the only pure-play in the sector in the FTSE 100. Therefore, I think this is not only one of the best investment for 2020, but for the long term as well.
Considering Avast’s current valuation, now could be a great time to snap up a share of this business while it offers a margin of safety.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Rightmove. 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.