While the coronavirus has devastated some industries, it has created enormous opportunities for others. Many companies in the technology and healthcare sectors, for example, have seen much higher demand for their services in the wake of the pandemic.
In this article, I’m going to highlight two UK companies that are helping the world deal with the Covid-19 pandemic. I think these ‘coronavirus stocks’ have significant growth potential.
This company is leading the fight against Covid-19 One UK company that is certainly helping the world fight Covid-19 is Reckitt Benckiser (LSE: RB). It’s a leading health and hygiene company that owns a number of well-known, trusted disinfectant brands such as Dettol and Lysol.
Reckitt’s sales are literally flying right now. For the first half of the year, sales in its Hygiene division were up 16.1% on a like-for-like basis. Meanwhile, total group revenue for the period was up 11.9%.
Going forward, I expect sales growth to remain robust as I believe there will be an increased focus on hygiene globally. As the company said recently: “Covid-19 is likely to be with us for the foreseeable future and, as a society, we are embedding new hygiene practices to protect our way of life.”
What I find particularly interesting is that professional opportunities are opening up with service providers such as hotels and airlines. These companies are looking to provide consumers with the highest standards of hygiene. Recently, Reckitt has created a new professional service and signed agreements with the likes of Hilton, Avis, and Delta Airlines (NYSE:DAL) to help keep their customers safe and protected.
This coronavirus stock isn’t the cheapest stock around. Currently, RB shares trade on a forward-looking P/E ratio of about 24. I wouldn’t let that valuation put you off though. This is a high-quality company and the trend appears to be up. Barclays (LON:BARC) has it at a price target of 9,000p. That’s well above the current share price.
An under-the-radar coronavirus stock Another UK coronavirus stock that I like the look of right now is Computacenter (LSE: LON:CCC). It’s a leading FTSE 250 technology company that advises organisations on IT strategy, implements technology solutions, and manages its customers’ IT infrastructures.
Computercenter appears to have a lot of momentum right now. Just last week, the company advised that due to the work-from-home trend, it had seen a “surge” in demand for IT equipment. The company also advised that its adjusted profit before tax in the first half of 2020 has turned out to be “substantially ahead” of the same period last year. It believes that 2020 will be a year of “material” progress, following a “record-breaking” 2019.
I tipped this under-the-radar technology stock as a ‘buy’ during the stock market crash in March when it was trading at around 1,060p. Today, the coronavirus stock trades near 2,000p. I still see a lot of value here though. CCC’s forward-looking P/E ratio is about 21. I think that is very reasonable given the company’s track record and growth prospects in a post-Covid-19 world.
The post Two UK coronavirus stocks I’d buy in August appeared first on The Motley Fool UK.
Edward Sheldon owns shares in Reckitt Benckiser. The Motley Fool UK has no position in any of the shares mentioned. 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