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5 FTSE 100 shares I’d buy now to capitalise on the stock market recovery

Peter Stephens
·3-min read

The track record of the FTSE 100 suggests a stock market recovery is likely to take place over the coming years.

Certainly, the lead index is now trading significantly higher than it was a number of months ago, due to the recent market rally. However, many of its members have outlooks that suggest they offer capital growth potential over the long run.

With that in mind, here are five FTSE 100 stocks that appear to offer scope for impressive returns in the coming years. Buying them now could prove to be a profitable move.

Online growth opportunities in a stock market recovery

FTSE 100 shares with online exposure could benefit the most from a stock market recovery. Consumers are increasingly switching their attention away from physical stores, and are instead buying a wider range of products online.

As such, retailers such as Next and Sainsbury’s could prove to be sound buys for the long term. They have invested heavily in their online presence in the past few years. They’ve also reported strong sales growth in recent months.

Although weak consumer confidence could hold back their short-term performances, strategies seeking to expand online may prove to be very profitable in the long run.

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Consumer goods growth prospects versus the FTSE 100

Other UK shares such as consumer goods businesses Unilever and Reckitt Benckiser could perform well in a stock market recovery. They have enviable positions in emerging markets such as China, where GDP growth has been ahead of many major economies across Europe and North America.

Unilever and Reckitt Benckiser also have a broad range of strong brands. This means they’ve dominant market positions that could lead to greater margins and higher profitability in the long run.

Although there are cheaper shares available elsewhere in the FTSE 100, their growth potential may mean they’re worthy of premium valuations in the coming years.

A turnaround opportunity among UK shares

Imperial Brands may deliver improving share price performance in a stock market recovery. The tobacco company has struggled in recent years due to poor performance in new product categories, such as e-cigarettes, where rivals have been able to gain ground.

However, it has a new management team, a solid balance sheet and offers recovery potential as a result of its price-to-earnings (P/E) ratio of just 6.

Clearly, Imperial Brands and other FTSE 100 shares could face challenges over the coming months. Lockdown could persist in the UK and elsewhere, which may disrupt operations. However, the past performance of the stock market shows it’s always reached new record highs following its declines.

Investors who’ve bought a diverse range of companies while other investors are fearful, and held them for the long term, have generally profited from the stock market’s recovery potential.

The post 5 FTSE 100 shares I’d buy now to capitalise on the stock market recovery appeared first on The Motley Fool UK.

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Peter Stephens owns shares in Reckitt Benckiser, Unilever and Imperial Brands. The Motley Fool UK owns shares of Next. The Motley Fool UK has recommended Imperial Brands and 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 2021