The recent market turbulence has thrown up some fantastic blue-chip bargains. Many of these could be excellent long term investments for buy-and-hold investors.
Here are three FTSE 100 companies that appear cheap today and could be great investments over the long run.
As one of the largest asset management and insurance companies in the UK, Aviva (LSE: AV) is also one of the country’s largest businesses.
However, despite the group’s size and reputation, the market seems to hate the stock.
Its shares are currently dealing at a price-to-earnings (P/E) ratio of just 6.3, compared to the market average of 13. At the same time, the insurance group offers a dividend yield of 8.5%.
Aviva’s valuation suggests that the stock offers a wide margin of safety at current levels. As such, now could be the time for income investors to snap up a share of this undervalued business.
Recent trading updates from the group show that while the company has lacked direction for the past few years, it is now trying to return to growth. Management is targeting improved cash generation, which will allow it to reduce debt and increase shareholder returns.
Considering the company’s current valuation, even a slight improvement in its fortunes could lead to a big re-rating of the stock.
International Consolidated Airlines Group
Shares in British Airways owner International Consolidated Airlines Group (LSE: IAG) have seen heavy selling pressure over the past few weeks.
It is not difficult to understand why investors have been dumping the stock. IAG is one of the world’s largest airlines and is highly exposed to the coronavirus outbreak.
IAG estimates the outbreak will hit capacity by 1%to 2% in terms of available seat kilometres, although it has not put a figure on what the global travel disruption will cost.
Unfortunately, the situation could get a lot worse before it gets better. So, at this stage, it is impossible to tell what the final cost will be.
Nevertheless, for long-term investors, this could be a great opportunity. IAG has a strong balance sheet and owns some of the world’s most recognisable airline brands. This suggests that the business can weather the storm and possibly come out the other side unscathed.
At the time of writing, shares in the airline group trade at a P/E of 5.5 and support a dividend yield of 5.3%.
Reckitt Benckiser Group
Shares in consumer goods giant Reckitt Benckiser Group (LSE: RB) have also come under pressure due to virus worries. Still, once again, the market seems to have overreacted. The virus outbreak might cause some disruption to the group’s operations in the near term. Nonetheless, Reckitt’s long run potential remains attractive.
What is more, the owner of health and hygiene brands such as Cillit Bang and Dettol might actually see sales of its cleaning products rise over the next few weeks as authorities try to contain the virus.
Therefore, now could be an excellent time to take advantage of the current market weakness to buy a stake in Reckitt.
It is currently dealing at a P/E of 17.7 and supports a dividend yield of 2.9%. This is one of the lowest valuations attributed to the stock in the past five years. That suggests there could be a significant upside on offer for investors from current levels when uncertainty recedes.
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.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.