While many investors panic when stocks fall, I tend to see market weakness as a buying opportunity. This week, as markets have crashed, I’ve made a number of purchases for my ISA, taking advantage of the lower share prices on offer. Here are five FTSE 100 stocks I’ve bought.
My first purchase was Sage, a leading provider of cloud-based accounting and payroll solutions. Its share price has fallen significantly and I believe the stock now has an attractive valuation.
My thinking is Sage should be relatively insulated from the impact of the coronavirus. While the illness is likely to cause disruption for many businesses, they’re unlikely to cancel their accounting systems, in my view. It’s also worth noting CEO Steve Hare bought some shares recently. That suggests the insider is confident about the future.
Legal & General
My next purchase was Legal & General. Its share price has been hammered recently and I believe the stock now looks far too cheap.
Aside from the low valuation, one of the main reasons I bought more LGEN shares was the massive dividend yield. With analysts forecasting a payout of 18.7p per share this year, the prospective yield on offer when I bought was over 8%.
Recent full-year results here were good with earnings per share up 16%. Management said: “We are well-positioned for the future and we remain ambitious.” This leads me to believe the shares have the potential to rebound.
I also took advantage of the FTSE 100 sell-off to add to my position in Hargreaves Lansdown. It was down 10%+ on Monday and I picked up some shares at a price not seen since 2017.
Hargreaves is a stock that tends to divide opinion. Some investors believe that increasing competition from the likes of Vanguard adds risk. However, my view is that the company offers a world-class investment platform and that as the market leader in the UK investment space, it’s well placed to continue growing.
Another stock I added to was alcoholic drinks champion Diageo. Its P/E ratio had dropped below 20, which you don’t see often.
Diageo’s near-term sales and profits could certainly be impacted by the coronavirus. Recently, the company advised it was expecting a $260m hit to 2020 profits as a result of the outbreak.
However, the long-term growth story associated with rising income in the world’s emerging markets remains intact. As such, I see the current share price weakness as an opportunity.
Smith & Nephew
Finally, I added a new stock to my portfolio – Smith & Nephew, which specialises in hip and knee implants. This is a stock I’ve had my eye on for a while. With the share price falling more than 20% in recent weeks, I took the plunge and purchased it.
In the short term, Smith & Nephew could be impacted by the coronavirus. In China, elective medical procedures have been well down recently. However, with the global population ageing at a rapid rate (meaning higher demand for hip and knee replacements), I believe the long-term story here remains attractive. This is a stock I plan to hold for the long term.
Of course, I realise that shares could fall further. So, I only bought a small amount of each stock. However, I’m confident that, in the long run, I should be rewarded.
It’s ugly out there…
The threat posed by the coronavirus outbreak has spooked global markets, sending stock prices reeling.
And with the Covid-19 virus now beginning to spread beyond of China and Italy, it seems very likely that the bull market we’ve enjoyed over the past decade could finally be coming to an end.
Against such a backdrop of market worry, it’s little wonder that many investors are starting to panic. (After all, nobody likes to see the value of their portfolio fall significantly in such a short space of time.)
Fortunately, The Motley Fool is here to help, and you don’t have to face this alone…
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Edward Sheldon owns shares in Diageo, Hargreaves Lansdown, Smith & Nephew, Legal & General Group, and Sage Group. The Motley Fool UK has recommended Diageo, Hargreaves Lansdown, and Sage 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.