It looks like global markets could be in panic mode again. Both the FTSE 100 and S&P 500 fell almost 5% this week, at the time of writing. Volatility increased after further Covid-19-related lockdowns were announced in parts of Europe. Also, there is uncertainty surrounding the outcome of the US election and the timing of further economic stimulus.
Are we in the midst of a stock market crash? I’d say that stock markets don’t tend to like uncertainty, so it’s quite reasonable to be cautious. If we do get further stock market weakness, I’d see it as a good opportunity to top up on some quality FTSE 100 shares for my Stocks and Shares ISA.
Fear can grip investors when we see stocks down 5% in one day. Stock markets can be volatile at times. I’d say that it’s important to keep a cool head and think rationally. If I liked a FTSE 100 stock when it was trading at £5, has anything fundamentally changed if it starts trading at £4? If the answer is no, then perhaps it is on sale. It may provide a good long-term buying opportunity.
Top of the FTSE 100 charts
One such FTSE 100 company that I would buy in a stock market crash is Ashtead (LSE: AHT). It’s a well-managed international equipment rental company. Ashtead sits at the top of the FTSE 100 leader board for stock performance over the past 10 years. Incredibly, it has returned over 2,100%.
With such phenomenal performance, how much more can it have to offer? Much more, in my opinion. It operates the second-largest equipment rental brand in the US. Its Sunbelt Rentals brand comprises 86% of Ashtead group’s revenue.
Both US election candidates have indicated a focus on infrastructure. Ashtead looks well-placed to benefit from an increase in government spending in this sector over the coming years.
Ashtead benefits from a 12% return on capital and 22% operating margin. It even provides a dividend income. With a long and healthy track record, I’d consider this quality FTSE 100 company as part of my ‘get rich and retire early’ portfolio, especially on any further weakness in price.
Another quality FTSE 100 share that I’d buy on further stock market weakness is Hargreaves Lansdown (LSE: HL.). Earlier this month, it announced that it had seen growth in clients, assets, and revenue over the past quarter. The number of net new clients grew by 31,000. Assets under administration grew by 3% and revenue increased by 12%.
I’d say that this established investment platform demonstrates a resilient business model amid market uncertainty. Even with weakened market sentiment surrounding Covid-19, Brexit, and uncertainty surrounding the US election, this FTSE 100 firm has managed to grow.
Since National Savings and Investments (NS&I) cut its interest rates in mid-September, Hargreaves Lansdown saw new investment flows back into the business. In the current low-interest-rate environment, I believe it should continue to benefit from investors looking for greater yields.
Hargreaves Lansdown is a high-quality business, demonstrated with a return on capital of 65%. This is almost the greatest from all shares in the FTSE 100. Besides, it provides a generous dividend of 3%, which is most welcome in these uncertain times.
Harshil Patel has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.