This week, the global stock market has experienced the worst sell-off since the 2008 financial crisis. Fears related to the coronavirus have punished markets with many global indices falling into correction territory – defined as a drop of 10% or greater.
Both the coronavirus outbreak and the market correction are scary stuff. However, this market activity is nothing for long-term investors to panic about. If anything, a drop in prices across the stock market presents an excellent buying opportunity, with many high-quality names available at lower-than-usual valuations.
With that in mind, here are two FTSE 350 stocks I’d certainly consider adding to any portfolio in the event of a market crash.
International Consolidated Airlines Group
International Consolidated Airlines Group (LSE: IAG) is an Anglo-Spanish multinational airline holding company founded in January 2011. Formed as a result of a merger between British Airways and Iberia, the company has its registered office in Madrid, Spain, and its operational headquarters in London, UK.
In the last few weeks, airline stocks have plummeted as a result of the outbreak of the coronavirus. Here, IAG is no exception. As of writing, the company’s share price has dropped by around 26%, with other airlines subject to a similar trend.
In the past, global health scares have resulted in a plunge in demand for international travel as regions become isolated and cut back on international flights. However, the travel industry has always bounced back owing to the temporary nature of such events. Here, the coronavirus is no exception.
Undoubtedly, the hit to short-term earnings could be ugly. But on the whole, IAG is in a strong position to shake off the impact of the coronavirus over the long term.
The company released their full year results on the 28 February 2020, reporting a healthy 5.1% increase in revenue. Operating profit was down 5.7%, but it is worth noting that this drop is mainly due to higher fuel costs.
Overall, IAG is resilient and has a strong balance sheet and substantial cash liquidity to help it withstand the impact of the outbreak.
HomeServe (LSE: HSV) is a home emergency repairs business with around 8.4m million customers worldwide.
The company reported strong profit growth across the group, with North America now HomeServe’s largest business. Profits increased in the UK, North America, France, and Spain, underscoring the success of the company’s growth strategy.
HomeServe’s share price has plummeted into correction territory along with the majority of UK stocks. However, it is worth nothing that the impact of the outbreak on companies such as HomeServe should be limited. After all, people still need home-warranty and emergency repairs.
A solid financial performance in 2019 was mirrored by a 47% increase in the share price. What’s more, new business development opportunities, such as a recent joint venture with Mitsubishi in Japan, signal new markets where HomeServe is seeking to establish its presence.
Despite currently trading at a relatively high price-to-earnings ratio of 32, I believe there is still plenty of room for the company to grow sustainably. What’s more, a drop in price of over 10% in the last 10 days indicates that there may be value to be had.
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Matthew Dumigan does not own any shares in the stocks mentioned. The Motley Fool UK has recommended Homeserve. 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.