The FTSE 100’s market crash may or may not be over. Due to the unprecedented nature of the coronavirus lockdown, it is difficult to accurately predict how industries will perform over the coming months. Similarly, it is tough to gauge how investors will respond to what could be a precarious period for many companies.
However, many FTSE 100 stocks appear to offer a margin of safety at the present time. This suggests that investors are factoring in a period of uncertainty, which could mean they offer good value for money on a long-term basis.
Here are two such companies that could deliver impressive total returns in the coming years. They could be worth buying with £2k, or any other amount, today.
Unilever’s (LSE: ULVR) recent trading update showed that it has been negatively impacted by coronavirus. Its operations in emerging markets reported a decline in sales so that its overall underlying sales growth was zero.
In the near term, lockdown could cause a challenging set of trading conditions for some of its products, such as ice cream. This may lead to a fall in sales across many of its key markets.
However, in the long run, the company’s strong financial position and its range of popular brands could provide it with a competitive advantage over many of its peers. As such, buying a slice of the business while it trades 10% lower than it did one year ago could be a shrewd move.
With the long-term growth outlook for Unilever’s key emerging markets continuing to be positive, the business appears to have exposure to regions that could catalyse its top and bottom lines, as well as its share price.
FTSE 100 utility stock United Utilities
Defensive stocks such as utility company United Utilities (LSE: UU) could deliver relatively strong total returns due to the challenging prospects for the UK economy. Its recent financial results were relatively strong, and highlighted its defensive business model compared to many of its FTSE 100 index peers.
United Utilities currently yields around 4.5%. This could make it a relatively attractive income proposition for a wide range of investors. Low interest rates mean that other income-producing assets such as cash and bonds offer relatively unattractive returns that in many cases are lower than inflation.
As such, investor demand for relatively reliable income shares, such as United Utilities, could increase over the coming years – especially if the business is able to deliver dividend growth. This could have a positive impact on the company’s share price, and may lead to impressive total returns for the company’s investors.
Therefore, now could be the right time to buy a slice of the business. Its stable business model could prove popular should the UK economy, and the FTSE 100, experience a decline in the coming months.
The post Have £2,000 to invest? I’d buy these 2 bargain FTSE 100 shares after the stock market crash appeared first on The Motley Fool UK.
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Peter Stephens owns shares of Unilever. The Motley Fool UK owns shares of and has recommended Unilever. 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.
Motley Fool UK 2020