With the market falling, I’m looking to be strategic with my Stocks and Shares ISA

Share prices are falling, but investors still need to be careful. Stephen Wright is taking a strategic approach with his Stocks and Shares ISA.

| 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.

Text that reads Take a deep breath typed on retro typewriter

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.

I’m not the type to wait for a market correction or crash before buying stocks. But when prices fall, I’m also not one to shy away from an opportunity to load up my Stocks and Shares ISA.

The possibility of a recession in the US has traders worried. For long-term investors like me, though, this is a chance to be greedy when others are fearful. 

Not everything that’s down is a bargain

Stocks are falling right now, but investors need to tread carefully. Not everything is as cheap as it looks.

Should you invest £1,000 in Vodafone right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Vodafone made the list?

See the 6 stocks

Rolls-Royce is a good example. The stock is down 5.5%, but the last time the stock was this cheap was… last month.

Created with Highcharts 11.4.3Rolls-Royce Plc PriceZoom1M3M6MYTD1Y5Y10YALL5 Aug 20195 Aug 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

Something similar is true of Apple. A 7.5% drop looks like a big move, but it only puts the share price back to where it was a month ago.

Created with Highcharts 11.4.3Apple PriceZoom1M3M6MYTD1Y5Y10YALL5 Aug 20195 Aug 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

I’m convinced the downturn in share prices is a buying opportunity. But I don’t think everything is on sale right now.

The cheap get cheaper

In my view, the best opportunities in a situation like this are in shares that were already in or near bargain territory. In other words, stocks that were good value but are now great value.

That naturally causes me to look at the consumer discretionary sector. The most obvious example is Burberry, where the share price has fallen another 3.5% after struggling since the start of the year.

Created with Highcharts 11.4.3Burberry Group Plc PriceZoom1M3M6MYTD1Y5Y10YALL5 Aug 20195 Aug 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

Likewise the Dr. Martens share price has just fallen another 6%. And this is on top of a 25% decline since the beginning of January due to a weak outlook for US consumer spending.

Created with Highcharts 11.4.3Dr. Martens Plc PriceZoom1M3M6MYTD1Y5Y10YALL5 Aug 20195 Aug 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

At today’s prices, I’d be happy buying either of these for my Stocks and Shares ISA. But I think both businesses are facing challenges that mean the best opportunities are elsewhere. 

Amazon

The opportunity that jumps out at me at the moment is Amazon.com (NASDAQ:AMZN). The stock fell 8.78% after its earnings report and I think it looks set to keep heading lower. 

Created with Highcharts 11.4.3Amazon PriceZoom1M3M6MYTD1Y5Y10YALL5 Aug 20195 Aug 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

I didn’t think there was much wrong with the company’s earnings report. Revenues came in below expectations, but this was mostly due to consumers trading down to cheaper products. 

The prospect of a recession in the US means there’s a risk this might continue to weigh on sales in future. And there isn’t much Amazon can do to get the US economy moving. 

What it can do, however, is keep improving its services so that it’s well-positioned for when things recover. That’s exactly what the business is doing right now and I expect this to pay off over time.

Top of my buying list

When industries go through cyclical downturns, the best companies often emerge in a stronger position than their rivals. And I think that will happen here. 

Opportunities to buy shares in Amazon at attractive prices don’t come around that often. There’s a good reason for that – investors know it’s a quality business with a lot of earning power.

Right now, though, I think there’s an unusually good opportunity. With a global sell-off following a downturn after earnings, I’m looking to add to the investment in my Stocks and Shares ISA.

Should you invest £1,000 in Vodafone right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Vodafone made the list?

See the 6 stocks

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.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Stephen Wright has positions in Amazon and Apple. The Motley Fool UK has recommended Amazon, Apple, Burberry Group Plc, and Rolls-Royce Plc. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »

Investing Articles

What’s happening to the Rolls-Royce share price now?

The Rolls-Royce share price has taken a knock from US trade tariffs, but it's still gained more than 50% in…

Read more »

Investing Articles

10 UK shares that are 50% or more off their 52-week highs

These UK shares have been hit hard. And Edward Sheldon believes there could be some opportunities for those with a…

Read more »

Man smiling and working on laptop
Investing Articles

Could IAG’s share price surge over the next year? These analysts think so!

IAG's share price has sunk, reflecting growing concerns over the impact of trade wars on airline profits. Is this a…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£10,000 invested in Apple shares last week is now worth…

Apple shares are down 18% over the past week. It’s a truly phenomenal downward movement, but investors may want to…

Read more »

Investing Articles

Are shares like Tesco a safe haven for investors?

Christopher Ruane sees a lot to like about Tesco shares. But does he see them as a safe heaven in…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

The 2025 stock market sell-off could be a once-in-a-decade opportunity to build wealth in an ISA

If a long-term investor has cash sitting in an investment ISA, now could be a good time to put some…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Is now a good time to start buying shares?

Stock market turbulence can be alarming, but it can also offer opportunity. Our writer considers whether now could be the…

Read more »