Sure, another stock market crash could be just around the corner. But it hasn’t stopped me from buying UK shares in recent weeks. In fact, I’ve a watchlist of top FTSE 100 shares I’ll be looking to buy should share prices collapse through the floor again.
Stock market crashes provide the means for you and I to build five-star stocks portfolios at little cost. Of course, FTSE 100 investors need to be careful before splashing the cash in times like these. Market crashes often come when trading conditions for many companies have, or are about to, deteriorate significantly.
But stock pickers can take precautions to protect themselves in times like these. They can do a little digging to find FTSE 100 shares with strong balance sheets, for example. These are essential when the threat of a painful and prolonged economic downturn emerges.
They can pick FTSE 100 stocks with what billionaire investor Warren Buffett calls economic moats, or what the most of know simply as competitive advantages. That can come in the form of cutting-edge products, significant brand power, broad geographic footprints, or low cost bases for example.
Buying companies with defensive operations like utilities, telecoms providers, food producers and general insurance suppliers is another good idea. Profits here tend to remain stable whatever the broader economic landscape is like.
And finally, stock investors can pick up UK shares that trade on low valuations, like bargain-basement price-to-earnings (P/E) ratios of around 10 times and below. These sort of ratings tend to bake in the possibility of earnings projections taking a whack. And so they offer investors a wide margin of safety and can protect them from severe share price drops.
3 FTSE 100 heroes on my radar
With all this in mind, let me reveal three FTSE 100 shares I’d buy for my Stocks and Shares ISA today:
- BAE Systems is a great stress-free FTSE 100 share for many reasons. It offers a wide range of market-leading technologies to armed forces across the globe. It trades on a low forward P/E ratio of just 12 times. And finally, investors can take confidence from the fact that global defence budgets remain robust during economic upturns and downturns.
- Reckitt Benckiser, meanwhile, can rely on the exceptional brand power of its products to keep driving profits higher. But goods like Dettol disinfectant, Nurofen painkillers and Finish dishwasher tablets provide an extra protective blanket for FTSE 100 investors. They are essential product categories that therefore don’t fall out of favour when broader consumer spending power sinks.
- DS Smith is a UK share I already own in my ISA. And its low forward P/E ratio of 12 times is tempting me to buy even more. It is a major supplier of essential packaging to fast-moving consumer goods companies like Reckitt Benckiser. But this isn’t the only reason I reckon this FTSE 100 share should thrive. Its growing focus on e-commerce will allow it to capitalise spectacularly on the exciting online shopping phenomenon too.
Royston Wild owns shares of DS Smith. The Motley Fool UK has recommended DS Smith. 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.