The FTSE 100 is up nearly 7.5% since last Monday. It is currently at its highest point since June. Covid-19 vaccines created by Pfizer and Moderna have had some successful trial results, which caused the spike in share prices.
The vaccine news sent the market into a frenzy but what do we know about these vaccines? How close are we to immunisation and does the FTSE 100 surge change my investment thinking? Below are my thoughts and some shares on my buy list, as well as ones that I’m avoiding.
Last Monday, Pfizer and BioNTech seemed to win the Covid-19 vaccination race. Preliminary analysis showed their vaccine to be 90% effective. The markets reacted positively with share prices in ailing firms across the world shooting up. Yesterday, US biotech firm Moderna announced its own vaccine, which it claims is nearly 95% effective.
I must admit the news is encouraging. BUT I am not going to rush to book a flight abroad. There are some things to consider. Neither of the vaccines has been peer reviewed. Peer reviewed is another term for quality control. In addition to this, neither of the vaccines have been authorised by regulators such as the Food and Drug Administration (FDA) in the US. There will also be political and logistical challenges which come with distributing a vaccine to most of the world.
FTSE 100 picks
I really like Associated British Foods. The £13bn-cap owner of Primark has suffered a bit due to restrictions on retail outlets. Food production is where ABF’s resilience and defensive abilities lie. It has a diverse portfolio of products and brands which give it defensive qualities. In an economic downturn, food production will always remain resilient, in my opinion. ABF’s results during the downturn are proof of this.
Next, one of my top FTSE 100 picks is Smith & Nephew. It is a leading healthcare company specialising in joint replacement systems, advanced wound management solutions, and surgical robotics. Due to Covid-19, many elective surgeries were postponed. Long term, I believe it is an attractive proposition. It will benefit from the world’s ageing population. By 2030, it is estimated 1.4bn of the world’s population will be 60 or older.
FTSE AIM 100 alternative pick
Boohoo Group is a great tech stock pick in my opinion. It is a fast-growing online-only fashion retailer that has many of its own brands and thrives on social media marketing. Its main consumer demographic is young, trendy 16–30 year olds. It is already a growth sensation emerging from humble beginnings. The accelerated shift to online shopping will continue to serve it well. In addition to this, the new work-from-home trend will also boost sales in my opinion.
Ones I’m avoiding
The FTSE 100 surge has seen dwindling stocks emerging from the doldrums. Some of these include Rolls-Royce, Cineworld, and IAG. Despite the share price recovery, I am still not interested in any of these stocks. I will keep an eye on them, but this Covid-19 vaccine news has not changed my view on them.
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Jabran Khan has no position in any 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.
Motley Fool UK 2020