The Motley Fool

The 2020 stock market crash: 3 steps I’d take to buy the best shares 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.

Business man on stock market crash financial trade indicator background.
Image source: Getty Images

The 2020 stock market crash could provide opportunities to buy the best shares at cheap prices to benefit from a long-term stock market recovery.

Through identifying sectors with strong long-term growth prospects, it is possible to unearth companies with sound prospects. Furthermore, concentrating on company fundamentals may allow an investor to find businesses with solid market positions that can lead to higher profitability in the coming years.

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!

Buying such companies at discounts to their peers may mean higher returns in the long run after the 2020 stock market crash.

Identifying the most attractive sectors to find the best shares

The best shares to buy today could be those companies that operate in industries with strong long-term growth outlooks. Certainly, many sectors are likely to experience fast-paced change in the coming years, as the full impact of the coronavirus pandemic on consumer trends becomes clearer. However, some industries may have clearer paths to growth than others.

For example, trends in the healthcare and retailing sectors may provide growth opportunities for businesses operating within them. In healthcare, factors such as a growing world population and an ageing population may mean that demand for products and services increases over the coming years. Similarly, online retailers may be able to produce higher rates of sales and profit growth than their bricks-and-mortar peers.

Of course, market trends may be difficult to identify when seeking to find the best shares to buy today. However, investing money in a diverse range of sectors that have positive long-term growth outlooks may lead to relatively high returns in the coming years.

Focusing on high-quality stocks

Some of the best shares to buy today may be those companies with sound financial positions, as well as wide economic moats. They may be better able to survive a period of uncertain economic performance. They may even strengthen their positions relative to peers by investing in cheap assets or in developing new products and services to react to changing consumer demand.

Company fundamentals can provide guidance on the financial strength of a business. For example, low debt levels within a company’s balance sheet suggest sound finances. Meanwhile, an economic moat can be identified by considering factors such as the uniqueness of a company’s products, as well as its degree of customer loyalty.

Buying cheap shares for a stock market recovery

The best shares within a specific sector may be those that trade at cheap prices relative to their peers. For example, a company that has a better financial position and a wider economic moat than its peers, but that trades at a discount to its rivals, may provide greater scope for capital appreciation over the long run.

Therefore, considering a wide range of companies within a specific sector could be a useful step to find the best shares to buy today. It may provide an insight into which stocks offer the best value for money on a long-term basis.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

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.