2 high-quality FTSE 100 shares I’d buy as the coronavirus sell-off worsens

In these markets, I’m working hard to identify shares with strong underlying businesses.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I reckon COVID-19 coronavirus is driving the financial markets right now. And there’s plenty of logic in share prices falling. In short, I think the stock market is being rational because the virus looks set to inflict real economic damage to the businesses behind many shares.

Only today, for example, I reported on shipping services provider Clarkson. The chief executive said in today’s full-year results report that the outbreak will “impact” the firm’s first-half performance in 2020. 

But as so often happens, at times the sell-off is indiscriminate. So now could be a good time to start seeking out those stocks representing businesses that are less susceptible to economic damage inflicted by the virus. Here are two shares I’m watching closely.

Should you invest £1,000 in M&G right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if M&G made the list?

See the 6 stocks

Power transmission

Clarkson has a high degree of cyclicality in its operations but the business of National Grid (LSE: NG) is potentially much steadier. The firm runs the big pipes and power cables that move electricity and gas up, down, and across the UK. It also has a regulated power business in the US.

We haven’t had any commentary from the company since the virus outbreak emerged, but my guess is it will have little effect on trading. Unless we see the mass shut-down of industrial facilities and the like, power consumption will likely remain stable. Even those individuals self-isolating will likely still use energy, I reckon.

Yet the share price is showing weakness, and it could be a good time to research the stock. The recent 977p throws up a forward-looking earnings multiple around 16 for the trading year to March 2021 and the anticipated dividend yield is just above 5%.

Medical devices

On 20 February, Smith & Nephew’s (LSE: SN) chief executive said in the full-year report that revenue grew by 4.4% during 2019 and trading had been robust across the business.

The company operates in a market with steady demand. But it is feasible that orders for its joint implants and other medical hardware could ease off a bit in the short term if the NHS starts delaying non-essential operations because of the COVID-19 outbreak.

The shares are about 21% down since the day of the full-year results report (and falling), even though the outlook statement was positive. However, the directors did say the outlook “assumes the situation regarding the COVID-19 outbreak normalises early in Q2.”

But at the recent share price of 1,570p, the forward-looking earnings multiple at the moment is just over 17 for 2021 and the anticipated dividend yield is just over 2%. That’s still not cheap, but Smith & Nephew has been expensive for as long as I can remember, probably because of the quality of the underlying business.

I’ve had my eye on this stock for ages and sense an opportunity could be developing, so I’m watching it closely now.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK 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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

Rolls-Royce shares are up almost 500% in 2 years! Will the bubble burst?

Over the past two years, Rolls-Royce shares have gone parabolic, returning 470% since March 2023. But can the UK’s top…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
US Stock

3 actionable takeaways from Warren Buffett’s latest letter for stock market investors

Jon Smith reviews some of his favourite points from Warren Buffett's latest letter to investors, including the large cash pile…

Read more »

Investing Articles

I asked ChatGPT how I should invest £1,000 in UK stocks. Here’s what it said!

Charlie Carman turns to artificial intelligence for ideas on how to invest a four-figure sum in UK stocks, with some…

Read more »

Close up view of Electric Car charging and field background
Investing Articles

£10,000 invested in NIO stock 1 year ago is now worth…

NIO stock was a favourite among growth-oriented investors in 2020 and 2021. But it didn’t deliver. Dr James Fox spies…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

Down 37% from May, does Glencore’s near-£3 share price look cheap to me?

Glencore’s share price has tumbled from its one-year traded high, which suggests there may be good value in it. I…

Read more »

Dividend Shares

How much would an investor need in dividend shares to make £1,000 a month?

Jon Smith talks through both the strategy and the numbers behind the investment aim of using dividend shares to make…

Read more »

A row of satellite radars
Investing Articles

Defence spending is on the rise and this UK growth stock could be set to cash in

With the UK ready to increase its defence spending, Stephen Wright thinks the stock likely to benefit the most isn’t…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£11,000 in savings? Here’s how investors could use that to target an annual passive income of £12,892 over time!

Money put into high-dividend-paying shares with the returns used to buy more of them can generate potentially life-changing passive income.

Read more »