Even though the FTSE 100 index has recovered quite a bit from the lowest point seen in this stock market crash, it’s still 22% lower than the highs seen earlier in the year. It’s also entirely possible that it may fall further. So far, the full economic impact hasn’t even begun to come through in the data.
But for the long-term investor, there’s no reason to fear. The FTSE 100 index is littered with resilient stocks. Some of them have been around from before the Great Depression of 1929 and are still going strong. There are others still, that have rewarded investors with eye-popping capital appreciation since the financial crisis started in 2008. And here’s the best part. These stocks were hit hard after it because they are cyclical. A slow-down is bad news for such shares, but a full-blown crisis is doubly so.
Thriving since the last stock market crash
One example is the FTSE 100 construction and industrial equipment provider, Ashtead (LSE:AHT). Even at its lowest in the 2020 stock market crash, its share price was still almost 39 times above the lowest point in the financial crisis-led recession. While share prices can rise on speculation even for companies that aren’t otherwise robust, these increases aren’t sustainable. So, clearly, AHT’s doing something right. Its revenues have been growing over the years, and it’s a profit-making company, ticking the two metrics I think are most important to consider before investing.
Providing essential services
Moreover, Ashtead continues to remain relatively robust despite the Covid-19 crisis, defying its cyclical nature. In a trading update released a few days ago, it said that it will continue to be profit-making for the year ending 30 April 2020. While the actual amount of profit is less than that seen last year, the current crisis hasn’t exactly put the company in financial jeopardy either. Its rentals business is an essential service and Ashtead has been “providing vital equipment and services to first responders, hospitals, alternative care facilities, testing sites, food services, telecom and utility companies…”. This has clearly helped keep its head above water.
As the lockdowns get lifted and the global economy starts coming back on track, AHT’s business will pick up further. Even if the recession is here to stay for the remainder of 2020, it’s only a matter of time before growth will come back.
Other FTSE 100 stocks to consider
AHT, however, is only one example of FTSE 100 stocks that have thrived since the last big stock market crash. I’m also looking carefully at real estate stocks, which have given impressive returns. For real estate, the picture is a bit more complex now. Brexit will likely have a big impact on the UK’s housing market. But given their past performance, I think they are worth studying more.