Which shares are on your buy list if the bear market persists?
Investors generally feel the most confident about the future when things are going well. We think we know about things with more certainty than we actually do.
Of course, the converse is also true. If people think things are bad, they're sure they're bad with more certainty than the reality supports.
This all leads to market extremes... and great buying and selling opportunities!
Personally, I think now is a good time to be nearing full investment, in the right shares of course. The problem is, I need to sell a few holdings at a short-term small profit, and/or introduce fresh cash, to take advantage of today's market sale, so I want to be very picky from here.
The five shares below are on my potential buy list. They have nothing in common in industry or in size, by design.
In other words, I'm looking to spread my risk. In a few cases, I already own the shares and am thinking of averaging down.
So without further ado and in descending order of market capitalisation, these are my five potential purchases:
RSA Insurance (LSE: RSA) share price has received an 'appropriate' hammering of late. Nevertheless, I think it's been overdone at 108p.
When my colleague Tony Reading looked more closely at RSA in May, the shares stood at 137p and the yield was 6.4%. The shares have gone ex-dividend by 3.34p since then. Today, the potential yield is an unlikely 8.7%, the P/E a lowly 7.2.
These figures don't stack up quite as well as fellow insurer Aviva (LSE: AV). But RSA's cash-stuffed balance sheet, international diversification and low-risk investment strategy are reason enough for confidence in the yield for me.
Robert Wiseman Dairies
Robert Wiseman Dairies (LSE: RWD) is probably the dullest share on the list. And I like boring, defensive shares.
As you might expect, the dairy giant's shares haven't suffered much in the summer sell off. But the well-covered yield of 5.9%, and net tangible assets (NTAV) per share of 221p make it a safety-first buy for me at 306p.
I just hope the market presents another generalised opportunity.
I've made a decent profit on Bloomsbury Publishing (LSE: BMY) in the past. But my worries about book sales in troubled times caused me to take a fortuitous profit north of 130p in May.
Today at 95p, the publisher of Harry Potter fame is valued at a little less than its net working capital and a fair way south of its net tangible assets. The company also had 50p per share in cash at the end of February. Add to this the fact that the shares' anticipated yield is 5.7%, and the P/E against enterprise value is 4.3, and they're a clear 'Ben Graham-esque' buy on fundamentals.
The publisher also sees its industry's transition to e-books as more of an opportunity than a threat.
PV Crystalox Solar
There's no getting away from it; PV Crystalox Solar (LSE: PVCS) has been an absolute disaster of a share for me so far. But history is bunk. Being wrong at 50p, doesn't mean you're wrong at today's 13.75p. This share is now much more about suddenly unfashionable value than growth.
Now valued around half its NTAV and half its net working capital, with net cash of 8.6p per share, the company is not having an easy time. Oversupply in the photovoltaic sector has led to pressure on prices, and a backlog of inventory in the industry.
But the brokers still anticipate full year earnings of 2.4p per share. And any sustainable profit will make PV look unfeasibly cheap.
Just before the market really suffered the collywobbles in July, I took a closer look at Morson (LSE: MRN), the only AIM firm from the five. At the time, the shares were 101p.
Thankfully, I concluded: "I'm going to watch, wait and hope that the next update talks of tough conditions and takes the share price a little further into bargain basement territory."
Now at 84p, the shares are on a prospective P/E of just 6.4, are expected to yield 7.4%, and there's 57p per share of NTAV.
The Salford-based engineering personnel provider and project manager will report its half-year results on Wednesday 28 September.
In the current climate, any hint of bad news could knock the shares further into contrarian buying territory. One to set the alarm for.
More from David Holding:
> David owns shares in Aviva, PV Crystalox Solar and RSA Insurance. The Motley Fool owns shares in Robert Wiseman Dairies.