The FTSE 100 has had a bad week, falling over 6%, mainly due to a large fall yesterday when selling pressure became intense, especially in the U.S. This was due to fears over a second wave of the virus after a number of U.S states reported an uptick in cases following the recent relaxation of lockdown. As shops started to reopen this week in the UK, there is a chance of a second outbreak of the coronavirus that could cause another severe market crash. Here are the three companies I think will thrive despite another crash.
Reckitt Benckiser Reckitt Benckiser (LSE: RB) is a producer of health, hygiene and home products. Its cleaning and hygiene brands such as Dettol and Lysol are poised to have continuous demand. Reckitt Benckiser’s first quarter net revenue of £3.5bn was 13.3% higher than the same period last year.
The high demand for its health and hygiene products in the wake of the pandemic will last, I believe, as consumer behaviours are changing to maintain a high level of hygiene. Its product demand should hold despite the potential second outbreak of the coronavirus, and could be a good addition to your portfolio ahead of another market crash.
Just Eat (LON:JE) Takeaway The fear of a second wave of coronavirus (whether in the UK or elsewhere) will prevent us from going to restaurants as much as before. Even when restaurants re-open, footfall will be lower due to social distancing or health concerns. I think this will benefit Just Eat Takeaway.com (LSE: JET) as people will order takeaway instead, as we continue spend the majority of our time at home.
Just Eat is an international business with market penetration around the world. Over 40% of revenue is from outside the UK now, spreading across 13 countries across Europe, Asia, Oceania, and the Americas. With the recent announcement of its acquisition of US-based GrubHub, the resulting synergies and cost savings lay the path to profitability in my opinion. The combined company would gain pricing power and increase market share as being the biggest platform, with an abundance of restaurant choices.
Tritax Big Box Tritax Big Box (LSE: BBOX) is a real estate investment trust investing in “Big Box” distribution centres. Its customers include large scale retailers such as Amazon (NASDAQ:AMZN), M&S, Tesco (LON:TSCO), Morrisons and DHL.
As ecommerce and online grocery shopping will likely be the norm going forward, Tritax Big Box is poised to have steady revenue going forward. The company’s customers are institutional-grade tenants on long-term leases (typically at least 12 years in length) with upward-only rent reviews.
Strong tenant demand and limited supply of very large logistics warehouses would provide significant opportunities for the company for years to come. Therefore, Tritax Big Box is a great defensive stock, thanks to its crucial role in the supply chain of major blue-chip companies and the strong ecommerce tailwind.
Market crash 2.0 A market crash sounds very negative to most, but savvy investors would take this as an opportunity of a lifetime to pick up some quality stocks at a discount. As Warren Buffett always says, you should be fearful when others are greedy and be greedy when others are fearful, so now is the opportunity to buy when others are selling off.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Ellen Leung has no position in any of the shares mentioned. The Motley Fool UK has recommended Just Eat Takeaway.com N.V., Tesco, and Tritax Big Box REIT. 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