The FTSE 100 is down 22% so far in 2020, all due to the Covid-19 pandemic and its economic impact. That’s just the index average, and there are some top stocks that have crashed far further than that. For long-term investors, I reckon that provides great buying opportunities. Here are three FTSE 100 share prices that I think could even double your money.
Taylor Wimpey (LSE: TW) shares have been going nowhere over the past five years. Then the coronavirus struck, moving house became a suspended activity, and the price crashed.
Taylor Wimpey hit a bottom of just 101p in early April, for a fall of 49% since the year started. If you managed to time it right and bought in at that price, you would already be sitting on a gain of 40% – way better than most FTSE 100 share prices. You might be on your way to doubling your money. At Wednesday’s 142p price, we’re looking at a 2020 drop of 28%. So is there still potential to double in the next year or two?
The loosening of lockdown rules doesn’t seem to have had any impact yet. And forecasts suggest a big fall in earnings this year, so the depressed price is understandable. But once we get further out of the crisis and analysts see the potential for growth in the coming year, I think we could see big gains.
Worst FTSE 100 share prices
The banks have suffered some of the biggest falls among FTSE 100 share prices, with Royal Bank of Scotland (LSE: RBS) down 55%. It’s not surprising. What if the Covid-19 recession is deeper than predicted? If it goes on longer? What if mortgage demand dries up? If RBS’s bad debts turn out to be worse than feared? Sure, those things could all justify the pessimism currently built into the share price.
Buy, what if the recession isn’t worse than expected? If mortgage demand remains reasonable? If the bank’s bad debt provisions turn out to be adequate after all? I think we could see FTSE 100 share prices over the next year doing better than the bears think. And RBS beating the market.
I reckon the outlook for banks will brighten as the year progresses. And RBS shareholders could even be looking at a potential doubling. Perhaps not in a year, but very possibly over the next couple of years.
Advertising crunch
Shares in PR and advertising giant WPP (LSE: WPP) were in trouble long before the coronavirus reached these shores. Between February 2017 and the end of 2019, the WPP share price had lost almost 45% of its value. So far in 2020, the shares are down another 47%.
Overall, that’s a 70% crash since that 2017 high point. FTSE 100 share prices don’t plunge that far, that quickly, very often. It’s hard to say how much of the problem is down to WPP itself and how much to the general economic and advertising downturn.
But the current price puts WPP shares on a trailing price-to-earnings ratio of just 7 times. Forecasts are very much guesswork right now. But taking into account a big potential earnings fall this year followed by a predicted recovery in 2021, we’d be looking at a forward P/E of only around 7.3. If WPP gets back to the growth I expect, I think this is another FSTE 100 share price that could be set to double.
