Forget the stock market crash – I’d invest £5k in these 2 fast-climbing FTSE 100 stocks
The Motley Fool
Published Jul 27, 2020 15:50
Updated Jul 27, 2020 16:10
Forget the stock market crash – I’d invest £5k in these 2 fast-climbing FTSE 100 stocks
This year’s stock market crash was the fastest in history by some measures, and the FTSE 100 is still trading 20% below its January high. Not every company is down, though. These two winners are actually trading higher than at the start of the year. Any company that can emerge from the pandemic with its share price intact has plenty going for it.
Now is a great time to go hunting for bargain FTSE 100 stocks after the stock market crash, but you might want to balance your risk by investing in one or two survivors as well. If I had £5k to invest, or any other sum, I’d consider splitting it between them.
Ashtead Group (LON:AHT) has the power The Ashtead Group (LSE: AHT) share price is up 40% in the last three months, and an incredible 165% over five years. Actually, it has done even better than that. Analysis by wealth platform AJ Bell suggests it is easily the best performing stock on the FTSE 100 over the past decade. In that time, it delivered a total return of 2,589.6%, with dividends reinvested for growth.
Ashtead is thriving thanks to US subsidiary Sunbelt, which generates 90% of its earnings from renting out industrial and power generation equipment. That means it has benefited from outperformance in the US.
It survived the stock market crash in reasonable shape. Now it could benefit from attempts by the US Federal Reserve and President Donald Trump to revive the economy, with monetary stimulus and an infrastructure splurge.
My one worry is that the infrastructure package has been widely anticipated, but not yet delivered. If it doesn’t come through, Ashtead could stutter. A victory for Democratic candidate Joe Biden could also lead to corporate tax hikes, squeezing Sunbelt’s earnings.
This is a solid business, though, one that has been able to get through the pandemic without making staff redundant or calling on government furlough schemes. It also maintained its dividend, despite profits halving in the fourth quarter. The yield is low at 1.5%, but covered three times by earnings. Today it trades at 14.75 times earnings.
Bunzl (LON:BNZL) survives the stock market crash Distribution and outsourcing group Bunzl (LSE: BNZL) has also bounced back strongly since March, rising 33% in the last three months.
As an international business-to-business group, the Bunzl share price fell during the stock market crash, but its resilience is impressive. Last month, it announced 6% revenue growth despite the pandemic, boosted by recent acquisitions.
While profits at its lower margin food service and retail sectors took a knock, the FTSE 100 group benefited from rising demand at its safety, cleaning & hygiene and healthcare sectors, where it enjoyed “significant sales volumes of Covid-19 related products”.
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Bunzl is repaying employee-related government support packages and bringing forward the settlement of tax deferrals where possible. “Substantial funding headroom available with strong cashflows and a robust balance sheet”, makes this a strong package.
You can buy it today or put it on your watch list and load up if we get another stock market crash.
The post Forget the stock market crash – I’d invest £5k in these 2 fast-climbing FTSE 100 stocks appeared first on The Motley Fool UK.
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Motley Fool UK 2020
First published on The Motley Fool
Written By: The Motley Fool
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