Many FTSE 100 shares have experienced very challenging operating conditions over the last year. The coronavirus pandemic has caused major disruption in a range of industries. And that may continue for many months, or even years, in some cases.
While there’s never any guarantee of a recovery, companies operating in those sectors could provide scope for capital gains over the long run. Their low valuations, the prospect of a global economic recovery, and the potential for a stock market rally may mean they’re among the best shares to buy now.
With that in mind, here are three FTSE 100 companies that could be among those businesses. They may offer capital appreciation over the long run from their current price levels.
FTSE 100 shares with long-term recovery potential
Shell has experienced difficult operating conditions that have held back its stock market performance versus other FTSE 100 shares. However, its plans to refocus its operations on renewable energy could lead to a more sustainable and growing bottom line.
Certainly, it will take a large amount of investment to move from fossil fuels to low-carbon assets. However, Shell appears to have the balance sheet and profit potential in oil and gas to deliver on its ambitions.
NatWest may also offer improving share price prospects. Its operating environment is expected to remain difficult due to low interest rates and a tough economic outlook. However, with the UK economy forecast to return to positive growth this year, its financial performance may experience a lift. Furthermore, NatWest’s forward price-to-earnings (P/E) ratio of 10 suggests it offers a wide margin of safety at the present time.
Whitbread could also offer recovery prospects versus other FTSE 100 shares. The hotel and restaurant operator has faced major disruption in the last year due to the closing of its premises. This has put pressure on its financial position. But its cost reductions and capital raising could mean it’s better placed to capitalise on a long-term recovery versus sector peers. Its international growth potential may also catalyse its stock price.
Building a portfolio of the best shares to buy now
Clearly, it takes more than three FTSE 100 shares to build a portfolio that can deliver relatively resilient growth over the long run. A concentrated portfolio can lead to high company-specific risk. This is when the threat of one or more companies negatively impacts on the performance of an entire portfolio. As such, diversifying across a multitude of companies can be a means of reducing, but not eliminating, risks when buying shares.
A stock market recovery can never be guaranteed. But the improving prospects for the economy suggest that companies facing disruption today could generate relatively high returns in the long run. As such, the likes of Whitbread, Shell and NatWest could be among the best shares to buy today.