The FTSE 100 ended the week at less than 6,600. As I wrote this article, approaching mid-day, it was only a little over 6,500, and had briefly dipped below that. So there was no big Friday afternoon recovery.
Are investors carefully rejecting the stocks they think could be most damaged by a coronavirus pandemic, or are the selling everything in blind panic? It looks a lot like the latter to me.
Wealth
I wonder if the historical insurance connection is behind the Standard Life Aberdeen (LSE: SLA) share price fall? It shouldn’t be, since Standard Life and Aberdeen Asset Management merged to form a new wealth management giant.
The shares have since been a bit volatile, as it looks like it’s taking a couple of years for the merger to smooth itself out. Results for 2019 are due on 10 March, and analysts are expecting a flat year for earnings. But there are EPS rises on the cards for 2020 and beyond, and I think we could be entering a profitable decade.
Dividend yield forecasts had been put at around 6.7%, but that was before this week’s stock market carnage. Standard Life Aberdeen shares have fallen 16% over the past week, and that’s boosted those dividends to a whopping 7.9%.
Some investors might wait and see how last year’s results turn out. But however the year went, I see the shares as a great income buy today.
Pressure
Housebuilder shares are reeling under combined blows from the coronavirus panic and fears hanging over property markets. That’s helped push Barratt Developments (LSE: BDEV) shares down 15% over the past week.
Is there going to be a house price slump? I don’t think so, not when estimates put the UK’s housing shortage at somewhere between a million and 1.2 million homes. And even if property prices should fall, land prices should follow (though I expect there’d be a lag), housebuilders should be able to maintain decent profit margins.
As for Barratt Developments specifically, the share price crunch has resulted in a forward P/E of only 9.8. Forecast dividend yields have been pushed up too, to 6.4% this year and to 6.8% on 2021 forecasts.
I was already bullish on housebuilders, and now I reckon I’m seeing even better buys.
Trust
Investment trusts have been taking a battering this week too, and I’ve got my eye on Scottish Mortgage Investment Trust (LSE: SMT).
Despite its name, it doesn’t really invest in Scotland or in mortgages. But as my Fool colleague Tom Rodgers pointed out a couple of days ago, it does include some of the world’s top tech companies, with Amazon and Tesla among its holdings. Tom rates it a buy, especially as the value of its investments has now grown to £9bn.
Since then, the shares have fallen further, taking them down 14% on the week. With a net asset value of 613p, that’s widened the discount to 11%.
Scottish Mortgage invests for growth, and I reckon if you combine it with one of the week’s depressed dividend-paying investment trusts, you could have a very nice pairing to add to your ISA.
