The Motley Fool

Stock market crash: 2 ‘cheap’ shares I’d buy now

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Close up of newspaper headline for financial crisis news
Image source: Getty Images.

Despite the FTSE recovering ground since the lows of the stock market crash, there are still some good opportunities for adventurous investors to pick up bargains. Several industries have seen dramatic share price falls right across the board. Thankfully for those looking to invest, I think some of these falls have been irrationally excessive.

Given the highly uncertain economic backdrop, we should be receiving discounts for investing at this moment in time. This means that we need cheap share prices, or what Warren Buffett calls ”a margin of safety”. Paying less reduces the investment risk and offers protection to our initial investment.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Luckily for us, there are plenty of cheap shares available. Quite rightly, the travel and leisure industries have been particularly hard hit. Nobody is going on holiday and nobody is visiting restaurants, hotels and gyms.

Grounded

IAG (LSE: IAG) – the owner of British Airways – is one of the biggest names in the travel industry and has been among the hardest hit in the stock market crash. The shares are still over 60% down from where they were in mid-February. Obviously, IAG is particularly badly affected by the pandemic and lockdown, with the company effectively having months of revenues wiped out.

What’s more, we can’t yet see the light at the end of the tunnel for the travel sector. We don’t know if restrictions will be lifted within the next few months, or if they will remain in place for longer. But what we do know, is that on every metric, IAG shares are cheap, trading at just two times last year’s earnings.

Despite the stock market crash, IAG’s survival does not look like it’s in doubt. The company has €9bn in cash and undrawn credit facilities that it could access if needed. Management has also looked to slash operating costs by grounding 90% of its fleet, furloughing 30,000 cabin crew, and agreeing four weeks of unpaid leave for 4,000 of its pilots.

IAG has averaged profits of just under €2bn a year, for the last five years. In a pessimistic scenario, the company could make a multi-billion euro loss this year, and break even next year. After that, if it manages to recover profits to just half of what they were before, then I’ve no doubt that this could be a very profitable investment.

On the move

Another sector that has been badly affected is housebuilding. Clearly, there are not many people buying houses at the moment. Likewise, with a serious recession looming, the prospects for the rest of the year aren’t great either.

Redrow – the housebuilder – saw the stock market crash knock more than 50% off its share price. The shares now trade at just four times last year’s earnings. Boasting impressive net profit margins of around 15%, Redrow looks well placed to keep control of its costs and deal with any economic fallout.

The housebuilder has already furloughed 80% of its workforce and extended its credit facility to £350m. That’s as well as the £89m that it had in cash at the end of last year. Post-lockdown, people will still need to move house. Transaction prices will probably be lower, but that’s exactly the kind of risk that the low share price is compensating us for.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Thomas has no position in any of the shares mentioned. The Motley Fool UK has recommended Redrow. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.