Top FTSE 100 Stocks to Look at, As the UK Prepares for Easing Lockdown

The British government continues with the testing and monitoring programme, as it plans to ease lockdown restrictions shortly, imposed due to Covid-19 crisis on 23rd March. Nearly 20,00,000 tests have been carried out in the UK, and around 2,20,000 of them have tested positive. The novel coronavirus has claimed more than 32 thousand lives in the UK till date.

The outbreak of the novel coronavirus has severely impacted various sectors of the economy. Travel and Leisure is the worst-hit sector, as they remain completely shut. Even with the government offering support in terms of job retention scheme, Business Interruption Loan, Bounce Back Loan, the industries are going through several job losses.

The British government is, therefore looking forward to easing restrictions in the light of prevalent conditions. The government has encouraged people to go to work, only if they must and would be rolling out sector-specific guidelines to ensure safer work environments and requesting people to practice social distancing. Previously, the government was also in talks with tech firms to issue immunity passports so that people could return to work safely.

The government credited NHS for its contribution in the fight against the novel coronavirus. The government also emphasised on keeping the reproduction rate (R), which implies the rate at which the virus spreads, less than 1. The ideal range of R is between 0.5 to 0.9. This would ensure that the virus would not spread from one person to another.

The lockdown would be eased gradually, and the government aims to reopen primary schools with smaller batches. The government is likely to reopen Non-essential retail with enhanced safety protocols from next month onwards. Businesses operating in personal care items such as leisure facilities, public places, and places of worship are likely to reopen soon. However, these businesses would need to implement new safety measures before commencing operations. Pubs & Restaurants might still have to wait a little longer as physical distancing remains a challenge.

Retailers offering Consumer goods & services have been at the forefront to make Covid-19 induced lockdowns a success. Retailers in the UK are looking to reopen stores with enhanced safety measures. Britain based DIY household items High street retailer; B&Q limited, which deals in the essential’s category, has reportedly commenced trading across the country with enhanced safety protocols. These safety protocols include perspex screens installed at billing counters to minimise contact and people visiting stores in batches. People are encouraged to switch to non-cash methods of making payments and common surfaces are sanitised regularly.

As the government is likely to allow the non-essential retail and other similar business categories to reopen, we would be discussing some FTSE 100 or Footsie stocks operating in these categories. FTSE 100 is an index made up of blue-chip companies with international presence and strong fundamentals. The companies are ranked in order of their market capitalisation. Investing in FTSE 100 companies not only provide investors with global exposure but also allows a greater amount of risk diversification.

• Unilever Plc (LON:ULVR)-Dividend Yield: 3.51 per cent

Operating from two base countries- The United Kingdom and the Netherlands, Unilever Plc is a global FMCG group. The group’s revenue surged by 2 per cent to EUR 52 billion in the fiscal year 2019. The Free cash flow increased by EUR 0.7 billion to EUR 6.1 billion for the financial year 2019 due to an increase in underlying operating profit.

The stock has delivered nearly 45 per cent price return in the last five years. At the current trading level (as on May 12, 2020, while writing before the market close) shares of the company were quoting at GBX 4,173. The Market capitalisation of the company was hovering around £47,711.11 million.

• Diageo Plc (LON:DGE)- Dividend Yield: 2.52 per cent

London-based global alcoholic beverage company, Diageo Plc offers a broad assortment of many brands across spirits and beer in several countries across the world. The company’s reported net sales increased by 4.2 per cent to £7.2 billion in the first half of 2020. The organic profit from operating activities was up by 4.6 per cent in the first half of 2020. The group made the headlines recently as it pledged nearly 8 million bottles of sanitiser for frontline workers.

The stock has delivered nearly 9 per cent price return in last one month. Also, in the last five years, the stock has delivered a 58 per cent price return. At the current trading level (as on May 12, 2020, while writing before the market close) shares of the company were quoting at GBX 2,866. The Market capitalisation of the company was hovering around £129,856.96 million.

• Reckitt Benckiser Group Plc (LON: RB.)- Dividend Yield: 2.63 per cent

Reckitt Benckiser Group Plc is into manufacturing and marketing of household cleansing, toiletry, and health care products. The company has a strong brand image in the global markets with names such as Durex, Nurofen, Strepsils, Mucinex, Dettol, Lysol, Veet, Harpic, Mortein, Finish and Vanish.

The company recorded 0.8 per cent growth in reported revenue, which stood at £12.8 billion on a like-for-like basis in the fiscal year 2019. The annual dividend of the company was up by 2 per cent to 174.6 pence per share in 2019 compared to the previous year period.

The stock has delivered nearly 13.50 per cent price return in last one month. Also, in the last five years, the stock has delivered a 20 per cent price return. At the current trading level (as on May 12, 2020, while writing before the market close) shares of the company were quoting at GBX 6,984. The Market capitalisation of the company was hovering around £47,206.56 million.

• Tesco Plc (LON:TSCO)- Dividend Yield: 3.86 per cent

Tesco Plc is a United Kingdom based retail company that is engaged in the business of consumer product retailing through its supermarkets as well as retail banking and insurance services. The supermarkets across the UK have been doing a great service to the nation by making the Covid-19 induced lockdown successful.

The company’s operating profit was up by nearly 14 per cent to £2,959 million in the fiscal year 2020. The company’s annual dividend stood at 9.15 pence per share in 2020. The company ensured that the food supply chain remained undisrupted after it witnessed panic buying in the initial days of lockdown.

In the nine-month period, the stock has delivered 13 per cent price return, while the stock has delivered nearly 5 per cent price return in last one month. At the current trading level (as on May 12, 2020, while writing before the market close) shares of the company were quoting at GBX 242.50. The Market capitalisation of the company was hovering around £ 23,239.97 million.

• National Grid Plc (LON: NG.)- Dividend Yield: 5.19 per cent

London, United Kingdom-based, National Grid PLC is an electricity, and gas utility company. The company declared a dividend of 16.57 pence per share in the first half of the fiscal year 2020. The company’s underlying operating profit grew by 1 per cent to GBP 1.3 billion in the first half of the fiscal year 2020.

The stock has delivered nearly 2.35 per cent price return in the last one month. In the last one year, the stock has delivered a 10 per cent price return. At the current trading level (as on May 12, 2020, while writing before the market close) shares of the company were quoting at GBX 936. The Market capitalisation of the company was hovering around £ 32,332.48 million.

Comparative price chart of ULVR, DGE, RB., TSCO and NG.

(Source: Thomson Reuters)