The most successful investors buy their shares with a long-term approach to making money. You shouldn’t be seduced by how well a share is performing today after the stock market crash. It’s more important to think about how a stock will be performing five-to-10 years from now (at least).
Centrica (LON:CNA) shares are flying at the minute, for example (up 30% in three months). But this is a company locked in a long-term downtrend and whose shares are likely to fall in value again shortly, given its high customer churn. Cyclical shares like retailer AO World, miner Rio Tinto (LON:RIO), and oil pump manufacturer Weir Group (LON:WEIR) are another few stock market flyers in danger of reversing again before long.
That’s not to say investors shouldn’t buy shares in anticipation of some near-term price gains, of course. Some clever timing can allow you to supercharge the returns you make over a long-term time horizon. The recent stock market crash leaves many UK shares with plenty of bounceback potential in the weeks ahead too.
A brilliant buy after the stock market crash As we enter the final days of July then, it’s worth considering some of the shares that could explode in August. One FTSE 100 stock which I’m thinking of buying after the stock market crash is Coca-Cola (NYSE:KO) HBC (LSE: CCH). The soft drinks giant’s timid share price recovery has levelled off during the past six weeks. I reckon the release of interim financials on 5 August could spur fresh rounds of rampant buying though.
The Coca-Cola bottler has suffered in 2020 as quarantine measures have damaged demand for its ‘out of home’ products. Sales are likely to have begun ripping higher more recently though, as lockdowns have been steadily reversed. I expect this to be illustrated in that upcoming statement.
Coke is one of the world’s most-loved consumer brands, and constant product innovation keeps supporting this allure and driving profits skywards. I’d buy it today in the hope of an August share price spike, and hold it forever.
Another FTSE 100 colossus FTSE 100 silver miner Fresnillo (LSE: LON:FRES) isn’t due to release any trading or operational updates in August. Instead, first-half financials are slated for the end of the month (28 July to be exact). I’d buy the commodities giant after the stock market crash because of the possibility of exploding silver values in the coming weeks.
Prices of the precious metal just rocketed to 10-month peaks above $19.10 per ounce. But the party is likely to have only just started. Significant concerns related to Covid-19, Brexit, and US-Chinese trade disputes should continue driving safe-haven silver demand. Meanwhile, hopes of a rebound in the global economy — a scenario that would boost silver demand for industrial purposes — could also keep driving prices of the dual-role metal in August.
I’d buy Fresnillo shares right now to ride silver prices in August. And I’d hold them for years as ultra-loose central bank money policy should keep precious metals prices well supported for the foreseeable future.
The post Stock market crash: 2 FTSE 100 stocks whose share prices I think could explode in August appeared first on The Motley Fool UK.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo and Weir. 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.
Motley Fool UK 2020