2 FTSE 100 shares I’d buy as the economy sinks

Woman using laptop and working from home

These are scary times for the global economy. And as a FTSE 100 share investor I must think extra carefully about where to invest my hard-earned cash.

The good news is there are many Footsie shares out there I’d expect to perform robustly, even as economic conditions worsen. Here are two I’d add to my portfolio today.

Associated British Foods

Associated British Foods (LSE: ABF) has two qualities that could help it outperform broader markets in the near term.

Food is something we can’t do without. Our spending on edible goods remains broadly stable during good times and bad. So ABF can expect sales of its brands like Kingsmill bread and Ovaltine drinks — as well as sugars and other ingredients — to remain robust.

Finally, I expect clothes at ABF’s Primark division to sell strongly even as broader consumer spending sinks. Clothing is another staple of everyday life and the company’s budget fashion and lifestyle offer is likely to benefit from people switching down from more expensive retailers and brands to save money.

All this explains why City analysts think the company’s earnings will rise 57% in this financial year (to September) and a further 6% next year. I’d buy the Footsie stock even though costs are rising across the group.

Oh, one final thing. ABFs dirt-cheap share price is another reason I like this FTSE 100 share a lot. At current prices of £16.15 per share, it trades on a forward price-to-earnings growth (PEG) ratio of just 0.2. A reading below 1 suggests a stock is undervalued.

GSK

GSK (LSE: GSK) — or the stock formerly known as GlaxoSmithKline — is another safe-haven FTSE 100 share I’m considering buying.

Just like food, our need for medical products doesn’t change when times get tough. This is why analysts think earnings here will rise 7% in 2022 and 2023. GSK sells some of the biggest prescription drugs out there like HIV treatment Triumeq and asthma battler Seretide/Advair.

Buying pharmaceutical shares like this comes with some risk. Failures at the lab bench can be common and regulators are happy to reject drugs that aren’t up to standard. This can result in huge additional costs for the manufacturer and a mountain of lost revenues if a product launch is delayed (or binned entirely).

Still, GSK has an excellent track record on this front that fills me, as an investor, with confidence. You don’t become one of the planet’s top 10 biggest drugs developers by sales without a reliable history of getting your drugs to market.

I’d buy GSK shares as a way to build wealth during these uncertain economic times. And I’d aim to hold them for years to cash in on rising healthcare spending in emerging markets.

The post 2 FTSE 100 shares I’d buy as the economy sinks appeared first on The Motley Fool UK.

6 shares that we think could be the biggest winners of the stock market crash

The hotshot analysts at The Motley Fool UK’s flagship share-tipping service Share Advisor have just unveiled what they think could be the six best buys for investors right now.

And while timing isn’t everything, the average return of their previous stock picks shows that it could pay to get in early on their best ideas – particularly in this current climate!

What’s more, all six ‘Best Buys Now’ are available to access right now, in just a few clicks.

All you need is an email address to get started

More reading

  • Forget the Bitcoin crash. FTSE 100 shares are today’s real buying opportunity
  • After its £2.4bn demerger, can the GSK share price blossom?
  • 2 growing dividend stocks I’m buying now for passive income
  • I’d buy these 3 UK income shares for my Stocks and Shares ISA in June
  • Top British stocks to buy in June

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods and GlaxoSmithKline. 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.