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2 UK shares I’d buy as the FTSE 100 sinks

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The FTSE 100 is having a tough time. This year, the index is down over 25%. This month, it’s down about 5%. Covid-19 is the main driver of the underperformance. As a result of the pandemic, many FTSE 100 businesses are struggling.

I wouldn’t let this put you off investing however. Plenty of UK companies outside the FTSE 100 index are doing really well at the moment. Here’s a look at two such companies I’d be happy to invest in today.

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FTSE 250 tech champion 

One stock I like right now is Computacenter (LSE: CCC). It’s a FTSE 250-listed technology company that advises organisations on IT strategy and provides them with technology solutions.

Computacenter is benefitting from a few dominant trends at present. The first is digital transformation. Across the UK, businesses are racing to get up-to-speed digitally. They’re moving to the cloud, analysing their data more, and focusing on cybersecurity to protect themselves from data breaches. Computacenter – which helps businesses with all these services – is benefitting. Remote working is another trend that’s providing tailwinds.

Computacenter’s half-year results for the period ended 30 June were very good. Adjusted profit before tax was up 39.4%, while diluted earnings per share were up 36.4%. The dividend was increased 22%, which suggests management is confident about the future.

CCC shares have pulled back a little over the last week as volatility has returned to the market. I view this as a buying opportunity. The FTSE 250 stock’s forward-looking P/E ratio is about 19.7 which I see as very reasonable.

A leader in online shopping

Another UK stock I’d buy today is online fashion retailer ASOS (LSE:ASC). It’s part of the FTSE AIM 100 index.

The reason I’m bullish here is that Covid-19 has accelerated the shift to online shopping. ASOS, as a global leader in online fashion, is benefiting from this shift enormously. In addition, the work-from-home movement is pushing up demand for comfortable loungewear. ASOS is a specialist in this area of the clothing market.

ASOS posted an excellent set of full-year results earlier this month. For the year to 31 August, revenue was up 19%, while earnings per share were up a huge 327%. The group enjoyed strong sales growth worldwide with Europe and the US up 22% and 18% respectively. This international growth is great to see as the opportunity internationally is huge. The company said it’s positioned to capture the global opportunity despite uncertainty associated with Covid-19.

ASOS shares have had a good run this year. I picked some up in March at 1,100p. Since then, they’ve risen to around 4,500p. I expect them to continue rising in the medium to long term, however, as sales and profits continue to climb. The FTSE AIM 100 stock currently trades on a forward-looking P/E ratio of 31 using next year’s earnings forecast. I’m a buyer at that valuation.

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Edward Sheldon owns shares in ASOS. The Motley Fool UK has recommended ASOS. 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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