The 2020 stock market crash continues to cause uncertainty and volatility in global financial markets. Business activity has collapsed and talk of the UK heading for a recession is widespread.
While for investors, a stock market crash presents an opportunity to buy quality shares at bargain prices, it’s important to stay away from stocks that are potentially sinking ships.
That said, many companies with healthy balance sheets and strong cash flows will make it out of the crisis. Here are two FTSE 100 stocks I think look solid and that I’d buy this April.
Tobacco and the stock market crash
British multinational tobacco company Imperial Brands (LSE: IMB) is the world’s fourth largest tobacco company measured by market share.
At the beginning of the week, the company announced that Covid-19 has had no material effect on its trading so far. This came as the group unveiled a new £3.1bn revolving credit facility with its lenders.
That’s great news for strengthening liquidity and ensuring vital cash flow.
While other FTSE 100 companies struggle with a lack of demand for their goods and services, Imperial Brands is different.
Unwavering demands for the group’s products has ensured business continues as normally as possible. Imperial has even begun stockpiling core products to protect against any supply chain disruption.
If the company’s steadfast position wasn’t enough to convince you, I think good growth prospects and a juicy dividend yield should do the trick.
The group’s yield currently sits at an eye-watering 13% and a price-to-earnings ratio of 5.74 is appealing to me.
What’s more, with the company’s Next Generation Products (NGPs) offering a possible path to growth, Imperial Brands is a strong buy for me in this stock market crash.
Pest control specialist
Pest control and property care company Rentokil (LSE: RTO) is a market leader in its industry.
In the five years prior to the market crash, the company’s share price shot upwards. In 2019 alone, there was a 123% increase.
Those bumper returns have been slightly dented by the stock market crash, with the share price falling around 23% since February’s all-time high.
Last week, Rentokil announced cuts to the pay of top staff and scrapped dividend payments. This came after a dry-up in business caused by the coronavirus.
Thanks to the measures taken by directors, the company looks safe to me. What’s more, when business returns to usual I expect Rentokil to quickly regain full operational capacity. That’s mainly down to the nature of the business.
The price-to-earnings ratio is still relatively high at around 26. For me, that’s justified given the potential path for further growth.
What’s more, impressive full-year results underscore the strength of the company. In 2019, revenue increased by 8.6% and profit was up 10.5%.
Ultimately, if Rentokil can maintain its market-leading position and high levels of customer retention, I think the company could be a leader out of the 2020 stock market crash.
The post The stock market crash continues: I’d invest £5k in these 2 FTSE 100 shares appeared first on The Motley Fool UK.
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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands. 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