The FTSE 100 is having a tough time. This year, the index is down over 25%. This month, it’s down about 5%. Covid-19 is the main driver of the underperformance. As a result of the pandemic, many FTSE 100 businesses are struggling.
I wouldn’t let this put you off investing however. Plenty of UK companies outside the FTSE 100 index are doing really well at the moment. Here’s a look at two such companies I’d be happy to invest in today.
FTSE 250 tech champion
One stock I like right now is Computacenter (LSE: CCC). It’s a FTSE 250-listed technology company that advises organisations on IT strategy and provides them with technology solutions.
Computacenter is benefitting from a few dominant trends at present. The first is digital transformation. Across the UK, businesses are racing to get up-to-speed digitally. They’re moving to the cloud, analysing their data more, and focusing on cybersecurity to protect themselves from data breaches. Computacenter – which helps businesses with all these services – is benefitting. Remote working is another trend that’s providing tailwinds.
Computacenter’s half-year results for the period ended 30 June were very good. Adjusted profit before tax was up 39.4%, while diluted earnings per share were up 36.4%. The dividend was increased 22%, which suggests management is confident about the future.
CCC shares have pulled back a little over the last week as volatility has returned to the market. I view this as a buying opportunity. The FTSE 250 stock’s forward-looking P/E ratio is about 19.7 which I see as very reasonable.
A leader in online shopping
Another UK stock I’d buy today is online fashion retailer ASOS (LSE:ASC). It’s part of the FTSE AIM 100 index.
The reason I’m bullish here is that Covid-19 has accelerated the shift to online shopping. ASOS, as a global leader in online fashion, is benefiting from this shift enormously. In addition, the work-from-home movement is pushing up demand for comfortable loungewear. ASOS is a specialist in this area of the clothing market.
ASOS posted an excellent set of full-year results earlier this month. For the year to 31 August, revenue was up 19%, while earnings per share were up a huge 327%. The group enjoyed strong sales growth worldwide with Europe and the US up 22% and 18% respectively. This international growth is great to see as the opportunity internationally is huge. The company said it’s positioned to capture the global opportunity despite uncertainty associated with Covid-19.
ASOS shares have had a good run this year. I picked some up in March at 1,100p. Since then, they’ve risen to around 4,500p. I expect them to continue rising in the medium to long term, however, as sales and profits continue to climb. The FTSE AIM 100 stock currently trades on a forward-looking P/E ratio of 31 using next year’s earnings forecast. I’m a buyer at that valuation.