The Motley Fool

Stock market crash: I’d buy these two cheap shares for their brighter futures!

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.

Businessman looking at a red arrow crashing through the floor
Image source: Getty Images.

The past five months haven’t been pretty for the FTSE 100, the UK’s main market index. After crashing spectacularly to below 5,000 points on 23 March, the Footsie then staged a strong comeback. By 5 June, the index had soared above 6,484, surging close to 30% in just over 10 weeks. Alas, it closed at 5,729 on Tuesday, down over 750 points (11.7%) since its June peak. Then again, the good news for patient value investors is that our favourite cheap shares just keep getting cheaper.

Cheap shares: BP stands for ‘Bumper Profits’

In 33 years of being a value investor, I’ve seen some incredibly cheap shares dumped into the bargain bin. Sometimes, this happens for good reasons. Other times, brave investors have to grit their teeth and buy cheap stocks that appear to be on the road to ruin.

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!

What more can I say about the struggles of BP (LSE: BP)? As these cheap shares have plunged in 2020, I have repeatedly run the rule over them. The good news for long-suffering BP shareholders is that, following its latest results, there is a ray of hope.

After gruesome losses in its second quarter, BP produced a much-improved performance in the third. The oil giant revealed underlying replacement-cost profit of $86m in Q3. Although this was a whopping 96% below the $2.3bn produced in Q3 2019, it was ahead of a predicted loss of $120m. Encouragingly, net debt dipped by $0.5bn to $40.4bn. The good news for income investors is that BP maintained its quarterly dividend at its new level of 5.25 cents.

BP’s cheap shares closed down on Tuesday, losing 4.26p (2.1%) to hit yet another generational low of 195.74p. With its dividend yield pushed up to 8.2%, I believe it’s time for bold investors like me to bite the bullet and buy big.

HSBC is bouncing back

Global mega-bank HSBC Holdings (LSE: HSBA) was the FTSE 100’s other fallen angel to report improved results on Tuesday. Its cheap shares popped slightly on this news, rising 10.75p (3.4%) to close at 330.1p. Yet they have almost halved in the past 12 months, falling 46.5% to drag down HSBC’s market value to just £65.1bn. Driven by improved results at its Asian operation, the bank’s quarterly profit came in at $1.4bn. This was more than $0.5bn ahead of the forecast $882m.

Despite Covid-19, the bank has a fortress balance sheet and billions in excess regulatory capital. But cancelling its dividend earlier this year (for the first time in 74 years) contributed to steep falls in HSBC shares. This pushed them deep into my ‘cheap shares’ bin. The good news is that HSBC has confirmed that it will restart dividends in 2020 as soon as possible.

In summary, the return of HSBC’s enormous yearly cash payout would be welcome worldwide from Harrogate to Hong Kong. That’s why, as with BP, I’d buy these cheap shares today, ideally inside an ISA, to enjoy a future stream of tax-free dividends and capital gains!

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…

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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.