Two UK coronavirus stocks I’d buy in August

While Covid-19 has smashed some industries, it has created opportunities for others. Here are two coronavirus stocks I think look well placed for growth.

| 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.

While the coronavirus has devastated some industries, it has created enormous opportunities for others. Many companies in the technology and healthcare sectors, for example, have seen much higher demand for their services in the wake of the pandemic.

In this article, I’m going to highlight two UK companies that are helping the world deal with the Covid-19 pandemic. I think these ‘coronavirus stocks’ have significant growth potential.

This company is leading the fight against Covid-19 

One UK company that is certainly helping the world fight Covid-19 is Reckitt Benckiser (LSE: RB). It’s a leading health and hygiene company that owns a number of well-known, trusted disinfectant brands such as Dettol and Lysol.

Reckitt’s sales are literally flying right now. For the first half of the year, sales in its Hygiene division were up 16.1% on a like-for-like basis. Meanwhile, total group revenue for the period was up 11.9%.

Going forward, I expect sales growth to remain robust as I believe there will be an increased focus on hygiene globally. As the company said recently: “Covid-19 is likely to be with us for the foreseeable future and, as a society, we are embedding new hygiene practices to protect our way of life.”

What I find particularly interesting is that professional opportunities are opening up with service providers such as hotels and airlines. These companies are looking to provide consumers with the highest standards of hygiene. Recently, Reckitt has created a new professional service and signed agreements with the likes of Hilton, Avis, and Delta Airlines to help keep their customers safe and protected.

This coronavirus stock isn’t the cheapest stock around. Currently, RB shares trade on a forward-looking P/E ratio of about 24. I wouldn’t let that valuation put you off though. This is a high-quality company and the trend appears to be up. Barclays has it at a price target of 9,000p. That’s well above the current share price.

An under-the-radar coronavirus stock 

Another UK coronavirus stock that I like the look of right now is Computacenter (LSE: CCC). It’s a leading FTSE 250 technology company that advises organisations on IT strategy, implements technology solutions, and manages its customers’ IT infrastructures.

Computercenter appears to have a lot of momentum right now. Just last week, the company advised that due to the work-from-home trend, it had seen a “surge” in demand for IT equipment. The company also advised that its adjusted profit before tax in the first half of 2020 has turned out to be “substantially ahead” of the same period last year. It believes that 2020 will be a year of “material” progress, following a “record-breaking” 2019. 

I tipped this under-the-radar technology stock as a ‘buy’ during the stock market crash in March when it was trading at around 1,060p. Today, the coronavirus stock trades near 2,000p. I still see a lot of value here though. CCC’s forward-looking P/E ratio is about 21. I think that is very reasonable given the company’s track record and growth prospects in a post-Covid-19 world.

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.

Edward Sheldon owns shares in Reckitt Benckiser. 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.

More on Investing Articles

Investing Articles

Prediction: these FTSE 100 stocks could be among 2025’s big winners

Picking the coming year's FTSE 100 winners isn't an easy task, but we're all thinking about it at this time…

Read more »

Investing Articles

This UK dividend share is currently yielding 8.1%!

Our writer’s been looking at a FTSE 250 dividend share that -- due to its impressive 8%+ yield -- is…

Read more »

Investing Articles

If an investor put £10,000 in Aviva shares, how much income would they get?

Aviva shares have had a solid run, and the FTSE 100 insurer has paid investors bags of dividends too. How…

Read more »

Investing Articles

Here’s why I’m still holding out for a Rolls-Royce share price dip

The Rolls-Royce share price shows no sign of falling yet, but I'm still hoping it's one I can buy on…

Read more »

Investing Articles

Greggs shares became 23% cheaper this week! Is it time for me to take advantage?

On the day the baker released its latest trading update, the price of Greggs shares tanked 15.8%. But could this…

Read more »

Investing Articles

Down 33% in 2024 — can the UK’s 2 worst blue-chips smash the stock market this year?

Harvey Jones takes a look at the two worst-performing shares on the FTSE 100 over the last 12 months. Could…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Are National Grid shares all they’re cracked up to be?

Investors seem to love National Grid shares but Harvey Jones wonders if they’re making a clear-headed assessment of the risks…

Read more »

Investing For Beginners

Here’s what the crazy moves in the bond market could mean for UK shares

Jon Smith explains what rising UK Government bond yields signify for investors and talks about what could happen for UK…

Read more »