Equity markets around the world are falling this week as investors take profits following months of steady gains. This selling has sparked something of a mini stock market crash. However, I think this could be a fantastic opportunity to snap up some equities at bargain prices.
With that in mind, here are three shares I’d buy right now as markets plunge.
Stock market crash buys
I plan to focus on buying economic recovery plays, as I think these companies have the most potential as we advance.
With that in mind, I would add Virgin Money (LSE: VMUK) to my portfolio today. I think the challenger bank should see rapid growth over the next few years as the economic recovery gains traction. Its latest results show the group is already heading in the right direction.
At the beginning of May, Virgin Money said fiscal first-half pre-tax profits came in at £245m from £120m a year ago.
Based on City growth projections, the stock is currently trading at a forward price-to-earnings (P/E) ratio of 11.4. While I’m conscious these are just projections at this stage, I think that looks cheap. And that’s why I’d buy the bank amid the stock market crash.
Still, this might not be suitable for all investors. The pandemic is not over yet, and another wave could cause yet more economic pain. That could have a devastating impact on Virgin’s recovery.
Like Virgin, the Gym Group (LSE: GYM) has taken a big hit to profits over the past year. However, it’s now also looking forward to a period of rapid growth.
Last year the group reported a pre-tax loss of £47.2m as revenues plunged from £153m in 2019 to £80m. Unsurprisingly, the firm also eliminated its dividend to investors.
Nevertheless, putting a bad year behind it, management is optimistic about the future. The company planned to open three new gyms in April and one in May. It’s also beginning constructing another four gyms as it pushes to drive membership back to, and possibly above, pre-pandemic levels.
However, there is one considerable risk hanging over the company, and that’s debt. It had to tap its lenders for extra cash to keep the lights on last year. While there is room for further borrowing, another lockdown could stretch the firm to its limits.
Despite this risk, I’d buy the company in the stock market crash as an economic recovery play.
The final equity I’d buy amid the stock market crash is Hollywood Bowl (LSE: BOWL).
The owner of bowling alleys around the UK reported a near-total decline in profitability for its financial year ending 30 September 2020. Pre-tax profit fell from £28m to £1.2m.
But like Gym, the company is also looking to put this performance behind it. The business recently raised £30m from shareholders to “invest in new centre opening opportunities” and refresh its existing facilities.
As the UK economy reopens, I think the company could see a significant uptick in business, and that’s why I’d buy the stock as a recovery play amid the stock market crash.
The primary risk the company now faces is the potential for another lockdown, which would decimate sales once again and could throw its future into question. Overexpansion may also result in losses.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended The Gym Group. The Motley Fool UK has recommended Hollywood Bowl. 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.