This year’s market dip makes now a brilliant time to fill an empty Stocks and Shares ISA

I’m keen to load up my Stocks and Shares ISA with dirt cheap FTSE 100 stocks and right now there are plenty of bargains to choose from.

| More on:

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.

Young happy white woman loading groceries into the back of her car

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The annual Stocks and Shares ISA deadline is fast approaching, and this year there’s something rather splendid about the timing.

The FTSE 100 has had a bumpy start to the year, which means my favourite shares have fallen in price at the exact moment that I’m gearing up for a final push to load up my ISA.

Sadly, I won’t be able to invest anywhere near my full annual £20,000 allowance. I don’t have enough spare cash. Yet I want to use up as much as I can, and today looks like an unmissable opportunity.

I’m looking to buy cheap shares

Global stock markets ended 2023 on a high after investors convinced themselves that central bankers would start slashing interest rates in March. That assumption always looked optimistic, and so it proved.

Consumer price inflation is proving stickier than many hoped. It climbed 10 basis points to 4% in December, and as we learned this morning (14 February), it stayed there in January.

Hopes of an interest rate cut next month have been dashed. We may have to wait until May or June at the earliest. Share values are likely to recover as the long-awaited first rate cut looms. I’m keen to buy before that happens.

FTSE 100 shares look cheap right now. The index trades are just 9.8 times earnings, where a figure of 15 seen as fair value. That’s way cheaper than the US, where the S&P 500 trades at a thumping 33.34 times earnings.

When share prices fall, yields rise. Today I can see a heap of dirt cheap FTSE 100 stocks with ultra-high yields that I’d love to buy.

Time to go shopping on the FTSE

One of them is mining giant Glencore (LSE: GLEN). It’s fallen a whopping 16.83% year-to-date, and is down 24.43% over 12 months.

Glencore has been hit by the bad news coming out of China, once the world’s most voracious consumer of metals and metals, but now feeling queasy following the $300bn collapse of property giant Evergrande Group.

Glencore’s copper, cobalt and coal production all fell last year, adding to the squeeze, while copper, zinc and nickel output costs rose. That makes it risky, but the board still reckons annual trading profits will come in at around $3.5bn, though, above its long-term guidance of $2.2bn to $3.2bn.

Better still, the stock trades at just 8.89 times earnings and yields 8.17%. That’s forecast to fall to 4.54% next year but I think the long-term outlook is positive. The only thing stopping me from adding Glencore to my Stocks and Shares ISA at today’s lowly valuation is that I already hold it.

This is just one example of why I think now is a good time to buy FTSE shares. They’re cheap, dividends are high, and when inflation is licked and interest rates finally fall, with luck they may finally start motoring. If I’m right, I’ll be glad I filled up my ISA today. It’s better than waiting until the recovery arrives, as then I’ll have to pay more for exactly the same companies.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has positions in Glencore Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Young black woman using a mobile phone in a transport facility
Investing Articles

After soaring 35% this year, is there still value in Barclays shares? Here’s what the charts say!

Barclays has been on a tear in 2024. But where does that leave investors considering buying some shares now? This…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

Nvidia stock has surged 3,450%. This UK investment trust owns loads!

Nvidia's recent amazing price surge has helped boost the value of this investment trust too as the chipmaker is its…

Read more »

Bronze bull and bear figurines
Investing Articles

After the general election what might happen to the FTSE 100?

Our writer’s been looking at the manifestos of the three main political parties to try and understand how the general…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

When will Shein hit the UK stock market and should I invest?

With Shein looking likely to list on the London stock market in 2024, this writer weighs up the case for…

Read more »

Investing Articles

Start supercharging passive income with REITs!

Are REITs the ultimate investment for boosting income generated from a portfolio? Zaven Boyrazian explores some of the most lucrative…

Read more »

Investing Articles

Should I buy more Rolls-Royce shares near 500p?

This investor is wondering whether to buy more Rolls-Royce shares this summer or to just stick with those he already…

Read more »

Investing Articles

After its big fall, is the National Grid share price dirt cheap now?

The National Grid share price fell sharply in reponse to new rights issue plans. But is it an even better…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Starting in June, I’d invest £1,000 a month to aim for a £102,000 second income in retirement

This author highlights a less well-known FTSE 100 stock that could help his portfolio generate a very big second income…

Read more »