What a summer it’s been for shares. Carnage in the markets has left investors fleeing for the exits. But anyone with a genuinely contrarian viewpoint will realise that this is the time to buy, and not to bail out.
You see, most money is made in bear markets, not bull markets. You just don’t realise it at the time. With share prices as low as they have been since the Eurozone crisis, this is the time to pick up a bargain. When confidence returns to equities, you could be sitting on a tidy profit. So here are the three shares I would buy right now.
Just look at these figures: a 2015 P/E ratio of 3.21. A 2016 P/E ratio of 2.72. An earnings per share progression between 2012 and 2016 of 4.22p, 6.20p, 7.35p, 7.87p and 9.30p. Hardly any debt. A share price that has been plumbing the depths, despite a surfeit of good news.
Globo (LSE: GBO) is not some basket case. On the contrary, this is one of the fastest growing companies in the UK stock market.
Bear markets can be brutal. I have learnt from bitter experience that it is better to stay uninvested until it draws to a close (which is round about now, I believe). But they can throw up the most astonishing bargains. Globo is perhaps the pick of them.
Globo’s business is one that is buzzing. It sells mobile apps for enterprises. Salesmen and managers are increasingly using smartphones and tablets to work and collaborate. The amount of media coverage of Apple‘s iPhone 6S illustrates what a growth area this is. For me, this is a cast-iron buy.
Lloyds Banking Group
It’s been a long road to recovery for the banks since the Credit Crunch. But, now that the Great Recession is well and truly over, interest in the banks is beginning to warm up.
I don’t think Lloyds (LSE: LLOY) will ever return to its pre-crisis profit levels. Interest rates will, I suspect, remain permanently low. But Britain is booming once again, with record numbers of entrepreneurs starting their businesses. Consumers are spending, and the housing market has recovered strongly. This means Lloyds’ core businesses of retail and business banking and mortgage lending will get a boost.
Lloyds is starting to become more profitable, and is resuming dividend payments. This is not as clear cut a buy as Globo for me, and it will take time for confidence to seep back into the UK banks, but this is one for the long term.
Bank of Georgia
So I have picked a small cap and a blue chip, so I’ll round off with an emerging-market play. Bank of Georgia (LSE: BGEO) has avoided the troubles encountered by UK banks, and is a leading player in the fastest growing of the former Soviet states.
Earnings have been rising strongly, and the fundamentals make this financial an attractive prospect. The 2015 P/E ratio is 8.91, falling to just 6.74 in 2016. The dividend yield is 3.86%, rising to 4.71%.
For a growing financial based in an emerging market with little in the way of debt, that is a real bargain. I rate this a strong buy.
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Prabhat Sakya owns shares in Globo and Bank of Georgia. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.