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3 stocks I’m waiting to pounce on in this falling market

The FTSE 100 might be picking up in 2019, but there’s still a bearish mood around, and we’re still some way below last year’s high. Plenty of things could create further mayhem.

Now, I’m not generally one for trying to time the market, but I am holding out on a few stocks right now for possible opportunities later. Here’s why.

No cash

I’ll get my current favourite out of the way first, and it’s Royal Dutch Shell (LSE: RDSB).  What I like about Shell is its dividends, which are currently forecast to yield a shade under 6% — and if I can lock in that kind of return for years to come, it could make my retirement that bit nicer.

Those dividends are looking increasingly adequately covered too, and if Shell didn’t cut its annual payout during the oil crisis then it’s surely not going to do so now. Think we’re going to wean ourselves off fossil fuels in the next few decades? I really don’t see it happening.

So why haven’t I bought Shell shares yet? It’s for the best reason of all. I don’t have the cash yet, I’m just waiting for it to be released from a pension fund transfer — but that should be any day now.

New funding

I already own some Sirius Minerals (LSE: SXX) shares, which I bought for 18.5p a few years ago. And despite some impressive early gains, the price is back to only a little over 20p now.

Some of that is down to minor delays and cost overruns — both of which, as a long-term observer of engineering projects, I fully expected.

But there’s also some uncertainty over the next, and vital, phase of funding. I think there’s too much at stake now for big investors to pull out and that the funding will happen. But those providing the cash surely have the clout to swing the deal to their advantage, and the valuation left for the rest of us is a little up in the air right now.

So I’ll wait and see the colour of the deal. If it still looks good, sure, I’ll end up paying a higher price for some more. But I think it’s worth it for the accompanying lower risk.

Brexit

Finally, if we get a poor Brexit outcome, I think banking stocks could be hammered again.

I hope it doesn’t happen, as my Lloyds Banking Group shares are already underperforming. But I’ll keep some cash back in case of short-term banking bargains again, and this time I have my eye on Royal Bank of Scotland (LSE: RBS).

The RBS recovery has been the slowest of all, but we did finally see a modest dividend in 2018, and forecasts see that building up to a yield of 6.3% by 2020 with strong cover, as earnings move firmly into solid recovery territory.

On top of that, like the whole sector, RBS shares are trading at very modest valuations. We’re looking at forward P/E multiples of around eight to nine, and that has to be cheap when viewed through a long-term lens.

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Alan Oscroft owns shares of Lloyds Banking Group and Sirius Minerals. The Motley Fool UK has recommended Lloyds Banking Group. 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.