The sharp decline in the FTSE 100’s price level may persuade some investors to focus their capital on other assets. Think Cash ISAs and buy-to-let properties. Such assets may be viewed as lower risk by some investors, or less volatile in the short term.
However, the FTSE 100’s recent decline could present buying opportunities for long-term investors. The index has a solid track record of recovery from its lowest levels during past bear markets. As such, now could be the right time to buy these two falling stocks and hold them for the long term.
The Imperial Brands (LSE: IMB) share price has fallen by around 17% since the start of the year. This is somewhat surprising. Why? Well, the business reported at the end of March that coronavirus has not materially hit its financial performance.
Therefore, the company appears to still have a significant amount of defensive characteristics. And that is despite a gradual shift of consumers away from tobacco products. This could mean that its share price displays less volatility than many of its FTSE 100 peers in the coming months.
Of course, Imperial Brands is currently experiencing a period of change. It has refreshed its management team in recent months. And it is seeking to transition its products towards less harmful next-generation offerings such as e-cigarettes.
Whether they fully replicate the revenues and profitability of tobacco products is a known unknown. However, with Imperial Brands’ share price now trading at a similar level as that recorded in the financial crisis, it seems to offer good value for money. As such, now could be the right time to buy a slice of the business for the long term. That is especially so while the FTSE 100 continues to face an uncertain future.
Standard Life Aberdeen
The share price of Standard Life Aberdeen (LSE: SLA) has declined by around 35% since the start of the year. That’s not a major surprise, since its financial performance is highly correlated to the performance of global stock markets. At a time when most risky assets across the world have been negatively impacted by coronavirus, investor sentiment towards the business has understandably weakened.
As with many financial services business, Standard Life Aberdeen’s share price is now trading at a level that was last seen in the global financial crisis. Although it could decline further in the near term, the financial strength and market position of the company suggest that it has the capacity to survive a period of economic weakness.
Furthermore, the stock market has always recovered from its downturns to post new record highs. Therefore, Standard Life Aberdeen’s operating environment is likely to improve over the coming years. This could catalyse its financial performance, and lift investor sentiment towards its shares after what has been a challenging period for the wider sector.
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Peter Stephens owns shares of Imperial Brands and Standard Life Aberdeen. The Motley Fool UK has recommended Imperial Brands. 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.