The market is falling and panic seems to be setting in. At the time of writing, the FTSE 100 has lost 9% in the past month.
I have been saying for a while that the stock market has been overvalued. It was clear that people were being perhaps over-optimistic, perhaps greedy, and share prices were being distorted.
Now that the stock market has significantly dropped, I believe many buying opportunities have presented themselves for investors keen to acquire good quality stocks when they are on sale.
I will be watching the following shares throughout March, to see if the stock price drops further before buying.
Unilever (LSE: ULVR) is one of the gems of the FTSE 100. In its portfolio are household brands such as Marmite, Ben & Jerry’s and Dove. I believe that in any economic climate, these low-cost items will make it into customers’ shopping baskets.
Although Unilever’s share price has dropped by 16% in the past six months, it still carries an expensive valuation and has a price-to-earnings ratio of almost 20.
Sometimes this is the price you have to pay for a quality company. But with the market we are currently in, I am tempted to wait for the price to drop further before buying.
The HSBC (LSE: HSBA) share price has been on a downward spiral for a lot longer than Unilever’s.
The protests in Hong Kong, Brexit, the US-China trade war, global economic worries and now concerns over the coronavirus have understandably weighed heavily on the stock.
In the past three years, the HSBC price has dropped by a whopping 18%.
In its results, which were released in February, 2019 revenue at the bank rose by 5.9%, but reported profits fell 32.9% due to $7.3bn of write-downs that related to the economic climate and anticipation of a major restructure.
Despite the disappointing results, the dividend remains unchanged. HSBC stock has an incredibly lumpy prospective dividend yield of 7.5%.
The fact that management is reviewing a restructure should be seen as a positive measure by investors.
If the HSBC share price continues to slide, I would seriously consider buying.
Like Unilever, I believe Diageo’s (LSE: DGE) products will be purchased in whatever economic situation.
In its portfolio, Diageo owns brands such as Guinness, Gordon’s and Baileys.
In its January results, half-year net sales grew by 4.2%. Organic operating profit grew by 4.6%, which represented cost-saving measures and an improved pricing point. To sweeten investors, its interim dividend was increased by 5%. Its prospective dividend yield is now almost 2.5%.
In the past six months, Diageo’s share price has fallen by 19%. Despite this, over five years, its stock price has increased by 45%.
At 21, its price-to-earnings ratio is a bit too rich for me. However, if Diageo’s stock price drops further, it could be a great opportunity to acquire a quality stock at a bargain price.
It’s official: global stock markets have been on a tear for more than a decade, making this the longest bull market in history.
But this seemingly unstoppable run of success poses an uncomfortable question for investors: when will the current bull market finally run out of steam?
Opinions are split about whether we’re about to see a pullback — or even a bear market — in 2020. But one thing is crystal clear: right now there’s plenty of uncertainty and bad news out there!
It’s not just the threat posed by the coronavirus outbreak that could cause disruption — Trump’s ongoing trade-war with China and the UK’s Brexit trade negotiations with the EU rumble on... and then there’s the potential threat of both the German and Japanese economies entering recession...
It all adds up to a nasty cocktail with the potential to wreak havoc and send your portfolio into a tailspin.
Of course, nobody likes to see the value of their portfolio fall, but fortunately, you don’t have to go it alone. Download a FREE copy of our Bear Market Survival Guide today and discover the five steps we believe any investor can take right now to prepare for a downturn… including how you could potentially turn today’s market uncertainty to your advantage!
T Sligo has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Diageo and HSBC Holdings. 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.