Performance of these FTSE 100 actions
I will start by comparing the performance of my five stock choices to that of the FTSE 100. This is summarized in the table below.
|Fall since February 21 (%)||Fall since June 5 (%)|
As you can see, the shares of all Diageo bars have dropped more than the FTSE 100 since February 21. And all Smith & Nephew bars have largely matched the drop in the index since its peak in accident recovery on June 5.
Focus on these FTSE 100 actions
Let’s look at Diageo first. I’m not surprised at the shares of this world class brand owner – like Johnnie Walker whisky, Gordon’s Get it Guinness robust – performed well compared to the FTSE 100. After all, it’s a classic “defensive” company.
However, he did not fully escape the impact of the Covid-19 pandemic. However, I expect the profits to return to 2019 levels in due course. And then to resume growth, while an increasing number of people around the world appreciate the wide range of brands that are highly appreciated by the group.
Since utilities, healthcare, housewares and food are also classic defensive industries, it is somewhat surprising that National Grid, Smith & Nephew, Unilever and Associated British Foods have underperformed the market since February 21. However, I think it makes these FTSE 100 stocks all the more attractive.
National Grid received a shake this week from the gas and electricity regulator Ofgem. The proposed sweeping reforms would set NG’s authorized yield at 50% less than under the current regime. However, even if it goes ahead (this is a draft decision), I would still consider National Grid’s actions attractive because of the monopoly characteristics of the FTSE 100 company.
There have been suspensions of non-essential surgery in many countries due to the Covid-19 pandemic. This has hampered demand for certain Smith & Nephew medical devices, such as hip replacement systems. However, I expect a full recovery as countries end their freeze on elective surgery. I am attached to SN’s actions because of the long-term demographic trends favoring this FTSE 100 health star.
ABF’s food business is doing well. But of course, Primark suffered from the temporary closure of its stores during the lockout. I expect sales to return to pre-pandemic levels in due course. And I see a long international growth track for the chain.
In my opinion, Unilever’s stable of trusted food and household brands makes it an inherently attractive business. Warren Buffett supported an approach for this giant of the FTSE 100 a few years ago, and the stocks are currently trading roughly above the level they were then. As such, I am convinced that ULVR is an attractive investment proposition today.
Here. I would look beyond the overwhelming turbulence over the profits of 2020, and buy these five high-quality FTSE 100 stocks for the long term.
GA Chester has no position in any of the stocks mentioned. The Motley Fool UK owns shares and recommended Unilever. Motley Fool UK has recommended Associated British Foods and Diageo. The opinions expressed on the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that taking into account a diverse range of ideas makes us better investors.