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Covid vaccine: two FTSE 100 shares I’d buy NOW

Edward Sheldon, CFA
·3-min read
Business development to success and FTSE 100 250 350 growth concept.
Business development to success and FTSE 100 250 350 growth concept.

After news broke on Monday that Pfizer has developed an effective Covid-19 vaccine, many FTSE 100 shares soared. Plenty of beaten-up stocks that were depressed due to the pandemic jumped 20% to 30%.

If the Pfizer vaccine – which has been described as a “game-changer” – is as effective as they say it is, the Footsie could keep rising. With that in mind, here’s a look at two FTSE 100 shares I’d buy now to capitalise on a potential market rebound.

A FTSE 100 stock with huge growth potential

One FTSE 100 share that I believe will benefit from the rollout of a Covid-19 vaccine is Smith & Nephew (LSE: SN). It’s a leading healthcare company that specialises in joint replacement systems (hip and knee implants), advanced wound management solutions, and surgical robotics.

Smith & Nephew’s share price is down significantly this year. The reason the stock has crashed is that the pandemic has had a substantial negative impact on sales. With hospitals around the world being overwhelmed by Covid-19 patients, many elective surgeries, such as joint replacements, have been postponed. Recently however, elective surgeries have picked up. If the Pfizer vaccine means a return to normality in the not-too-distant future, SN should enjoy further sales growth.

I believe Smith & Nephew’s long-term prospects are attractive, as the company is set to enjoy tailwinds from the world’s ageing population. By 2030, it’s expected that there will be roughly 1.4bn people globally aged 60 or older. That represents an increase of more than 50% on the number of over-60s worldwide back in 2015. This growth in the number of over-60s is almost certainly likely to drive demand for hip and knee implants higher.

SN is a high-quality company with an outstanding dividend track record. Since 1937, it has paid a dividend every year. Even when sales slumped during Covid-19, it did not cut its payout. I’d buy this top FTSE 100 healthcare stock now while its share price is still depressed.

Is data the new oil?

Another high-quality FTSE 100 share I’d buy now to take advantage of a possible vaccine bounce is RELX (LSE:REL). It’s a global provider of information and analytics for professional and business customers.

RELX shares are currently down around 15% from their 2020 highs. One reason for the share price weakness is that the company generates some of its revenues from exhibitions. This segment of the business has been disrupted quite badly by lockdowns across the world. If a vaccine is rolled out shortly however, this part of the business should recover.

I’ve said before that in today’s digital world, RELX looks well placed for long-term growth due to its data and analytics expertise. As businesses increasingly turn to data to make better decisions and be more productive, RELX should benefit. It’s worth noting that the company has been on a buying spree over the last 12 months, spending nearly £1bn on acquisitions. This should enhance its data and analytics power going forward.

Interestingly, in the first half of 2020, it was one of the most bought UK shares by fund managers. Clearly, the professionals have seen RELX’s share price weakness as a buying opportunity.

I agree that the share price dip has created an investment opportunity. I’d buy this FTSE 100 stock today.

The post Covid vaccine: two FTSE 100 shares I’d buy NOW appeared first on The Motley Fool UK.

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Edward Sheldon owns shares in Smith & Nephew. The Motley Fool UK has recommended RELX. 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