Stock market crash: Should I take refuge in these blue-chip FTSE 100 stocks?


As tensions on the Ukrainian border increase daily, the threat of a stock market crash seems ever closer. Experience from past cycles tells me that in times of uncertainty, risk appetite wanes and investors turn to big, proven companies. Should I follow the herd and take refuge in first-class actions?

The much-talked-about return of value stocks is a popular trend, and I’ve decided to take a look at some of the biggest companies in the world – and in particular FTSE 100 stocks which could be a good haven for my wallet in the dark days to come.

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Markets around the world are reeling from the coronavirus pandemic… and with so many big companies trading at what appear to be “discount” prices, now may be the time for savvy investors to get in on the business potential.

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The first shock for me was discovering that so few of our valuable UK businesses are relevant in a global context. Of the world’s top 100 listed companies (by market value), only four make it into the ranks of the FTSE 100.

Even these four have slightly tenuous ties to the UK.

banking giant HSBC (LSE: HSBA) moved its headquarters to the UK in 1993, while Shell only left the Netherlands last month. Astra Zenecaof course has a strong presence in the UK, but Linde has its origins in Germany and the United States.

Changing the goalposts and looking at the same top 100 by earnings, only a slightly better picture emerges for the UK. Linde gives up, but HSBC, BP, world freedom (LSE: 0XHR) and AstraZeneca are all included in this ranking.

This is clear evidence that the UK has lost out in the tech boom of the past 25 years, but perhaps this could make our stocks a better haven for the tough times ahead?

According to Bloomberg, the FTSE 100 currently trades on a price-earnings ratio of around 16x and has a dividend yield of around 3.3%.

That looks like better value than the US markets – with the NASDAQ 100, for example, trading at more than 33 times earnings. That sounds costly, at a time when questions are being raised about the future growth in profitability of some tech stocks.

Of the UK ‘safe haven’ stocks available, I particularly like the look of HSBC and Liberty Global.

With interest rates trending higher, banks will surely benefit (as in previous cycles), and strong full-year 2021 results are expected to be released by HSBC later this month. It should be noted, however, that this strong rebound in performance will be partly due to the release of large credit provisions, which were put in place by the company at the start of the pandemic.

Liberty Global, in my opinion, has a solid business model and I like the way it invests heavily in its key markets.

Management clearly thinks it’s undervalued and has committed up to $1.4 billion to a stock buyback program in fiscal 2021. Liberty’s Commitment to Fixed Communications Convergence and mobile is something that I have personally embraced, and platform operator Virgin/O2 in the UK seems like a good bet for the future.

The telecommunications sector is, however, extremely competitive and other players, such as Sky and Vodafone in the UK, will need to be carefully monitored.

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Fergus Mackintosh does not hold a position in any of the companies mentioned. The Motley Fool UK recommended HSBC Holdings and Vodafone. The opinions expressed on the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we give in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a wide range of information makes us better investors.


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