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Why I think this FTSE 100 stock is one of the best bargains out there

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One FTSE 100 stock I believe is still a bargain six months after the market crash is Smith and Nephew (LSE:SN). SN is a prominent player in the medical supplies and medical technology arena.

SN is an international producer of advanced wound management products. It also possesses products including surgical robotics and joint replacement systems. It operates in a very highly regulated industry but SN is highly respected by those in the industry including doctors and patients alike.

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FTSE 100 opportunity

The Covid-19 pandemic put paid to delayed surgeries and SN saw the material impact of this. At the time of the crash, I felt SN would recover well due to its reputation, history of success, experience, and size. 

Prior to the crash, SN shares could be purchased for 1,980p per share. Fast forward approximately a month and it had lost 40% of its share price value. At the height of the crash you could pick up shares for close to 1,150p per share. At that time I would have said this was a superb, unmissable bargain.

As I write this, shares can be picked up for 1,376p per share. This is nearly a 20% recovery. However, this is still nowhere near pre-crash levels. This is one of the primary reasons I believe SN is a great FTSE 100 opportunity at its current price.

Q3 update encouraging

It would be fair to say the second quarter was disastrous but this was to be expected as most of SN’s work comes from elective surgeries. A third-quarter trading update released today made for better reading. SN’s gradual recovery can be seen in these recent results.

SN’s US business returned to growth with revenue up by 0.9%. This was mainly due to restrictions on elective surgeries being lifted. Other established markets overall saw a decrease of 6% due to postponements and cancellations. In Europe, some countries returned to growth including Germany and France. Additionally, both Australia and Japan saw elective surgery volumes recover strongly by the end of the quarter.

During the update, SN confirmed a recent acquisition of the Extremity Orthopaedics business of Integra LifeSciences Holdings for $240m. Despite the economic downturn, SN remains confident enough in itself to undergo a major acquisition and enhance its offering. As an investor this gives me a huge confidence boost.

Buy and hold

I really like the look of Smith and Nephew. Due to its high standing and respected products, I feel it has a defensive moat. This can sometimes impact its share price and it can be seen as expensive. At its current price I consider it one of the best FTSE 100 bargains out there.

As a savvy investor I would not just look at a stock’s current price. Reviewing SN’s longer-term performance and future prospects is important. It has increased revenue and gross profit for the previous three years, year on year, which is impressive. The current pandemic is still ongoing but governments around the world are trying to find a way to return to normal. This will mean elective surgeries will become the norm once more. For me, SN is one to buy and hold for a long time.

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Jabran Khan 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.

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