While the FTSE 100 may be rallying thus far today, its future remains extremely uncertain. China’s growth rate is slowing, interest rate rises are on the horizon and the global economy is in a somewhat precarious state. As a result, investors are generally bearish and volatility looks set to be a feature of life for investors in the weeks and months ahead.
This, then, is the perfect time to buy shares. Clearly, there is the scope for them to fall in the short run and post paper losses. However, for longer-term investors there are some exceptional bargains on offer, with BHP Billiton (LSE: BLT) being among the most obvious examples.
That’s because BHP’s share price has fallen by an incredible 60% since its peak towards the end of 2010. Certainly, it may not recover to such a level anytime soon and its fall has not been without good reason. In fact, demand for commodities could come under further pressure and, with supply being relatively high, further price falls for iron ore, oil and other commodities may be on the cards.
This, though, appears to already be priced in to BHP’s valuation. For example, it trades on a price to book value (P/B) ratio of just 1.3, which indicates that there is considerable upside potential. And, with BHP being a highly diversified and financially sound business with a capable management team, it appears to be a great place to invest for the long run. That’s especially the case since it yields a rather enticing 7.7% at the present time.
Similarly, Santander (LSE: BNC) also has huge potential after its share price fall of 44% in the last 15 months. Clearly, this is a major slump and, while it is difficult to catch a falling knife, Santander’s valuation indicates that the company offers a wide margin of safety at the present time.
For example, it trades on a price to earnings (P/E) ratio of just 9.6 and, while the outlook for the Eurozone is rather uncertain, Santander’s global footprint means that issues in one region can be at least partially offset by strong performance in another. Of course, the Eurozone’s future is much brighter than it was a year or two ago, since it now has a significant programme of quantitative easing which could boost consumer demand. And, with Santander being forecast to increase its bottom line by 11% next year, it appears to have a positive catalyst to push its share price higher.
Meanwhile, consumer marketing company NAHL Group (LSE: NAH) has released an upbeat set of interim results. The company behind National Accident Helpline posted a rise in sales of 15%, with impressive performance from the recently acquired Fitzalan business. A key reason for its strong sales growth was a rise in enquiries of 9.4%, with higher margin non road traffic accident (RTA) and medical negligence cases being significant contributors. As a result, NAHL’s earnings per share increased from 8.2p in the first half of last year to 12.3p in the first half of the current year.
Looking ahead, NAHL is expected to increase its net profit by 18% this year, followed by 10% next year. This could cause the company’s share price to continue the run which has seen it soar by 57% since the turn of the year and, with it trading on a price to earnings growth (PEG) ratio of only 1.2, it still offers good value for money right now.
