The Motley Fool

These 3 FTSE 100 stocks have crashed up to 44%. I’d buy them today

Image source: Getty Images

Many investors nod in agreement with Warren Buffett’s simple and sage advice, such as “be greedy when others are fearful.” Except when it comes to putting those words into practice!

The stumbling block I hear most is: “I like the company, and its share price has fallen a long way, but I think it could fall further.” This isn’t being greedy when others are fearful. It’s the very definition of being fearful!

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

If you’re confident a company is well-managed, financially strong, and has good long-term growth prospects, if you were thinking of buying it’s shares a week ago, a few weeks ago, or a few months ago, and if those shares are now trading at a material discount, it’s time to be greedy.

Fear in action

Companies in the tourism and travel industries have been hardest hit by fears about the impact of the coronavirus. I’m not surprised by this. We’ve had headline news about cruise ships and hotels in lockdown, and restrictions on travel.

However, I believe cruise giant Carnival (LSE: CCL), flights and holidays firm EasyJet (LSE: EZJ), and InterContinental Hotels Group (LSE: IHG) are well-managed and financially-strong businesses, with good long-term growth prospects.

I’ve rated two of these three FTSE 100 companies ‘buys’ — and, in the case of IHG, a ‘hold’ — in the recent past. With their share prices closing yesterday at large discounts to a week ago and their 52-week highs, I think this is a great opportunity for buyers.

InterContinental Hotels’ share price is down 12% this week, and 23% from its 52-week high. For EasyJet, it’s 26% and 28%. And for Carnival, it’s 20% and 44%. If you’re not going to snap up such stocks at such discounts, when are you going to buy? When everyone’s being greedy and prices are high?

Long-term view

Undoubtedly, CCL, EZJ and IHG face challenges in the near term. It would be no surprise to see their earnings forecasts for 2020 downgraded by City analysts, if the impact of the coronavirus proves more severe than currently envisaged.

I think it’s a fool’s errand to value the businesses on present forecasts. Or to try and second guess where the forecasts might move in the coming months.

I reckon it’s far better for long-term investors to look at the earnings these enterprises have generated over the last few years. And to ask whether — when the impact of the coronavirus recedes — the world’s biggest cruise operator, one of the owners of some of the world’s most well-loved hotel brands, and one of the most popular and forward-thinking budget airlines are capable of growing their earnings over the long term. Personally, I think they are.

At a share price of 2,397p, Carnival trades at 7.1 times recent average annual earnings. InterContinental Hotels, at 4,422p, trades at 19.3 times earnings. And EasyJet, at 1,110p, at 10.7 times. The multiples are spread over quite a range, but are well below the valuations the market has afforded each company in more benign times. As such, I see good value in all three stocks.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

The Motley Fool UK has recommended Carnival and InterContinental Hotels 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.