The FTSE 100’s market crash could mean that a number of its members now offer wide margins of safety. As such, there may be buying opportunities for long-term investors who are seeking to purchase stocks while they offer good value for money.
With that in mind, here are two FTSE 100 shares that have each fallen by over 50% since the start of the year. Further declines in their prices cannot be ruled out, of course. But in the long run, they may deliver sound recoveries.
Investor sentiment towards Barclays (LSE: BARC) has weakened considerably since the start of 2020. The bank’s shares are down by 50%, as investors have priced in the uncertain economic outlook facing the wider industry. Weak business confidence and low interest rates could combine to limit the earnings growth rate of banks with UK operations over the medium term.
Barclays has also suspended dividends for 2020 alongside its sector peers. It was due to pay a rising dividend over the next couple of years. But its income appeal has been put on hold for the time being.
Looking ahead, the bank’s shares could remain unpopular among investors in the short run. However, Barclays’ improved balance sheet may mean that it is in a relatively strong position to overcome the current economic uncertainty. And that is especially so compared to its smaller peers.
The bank’s share price now trades at its lowest level since the darkest days of the financial crisis. So it appears to offer a wide margin of safety even though its recovery may not be smooth or swift,. I think Barclays could deliver an attractive return profile for long-term investors from its current share price.
Airlines such as IAG (LSE: IAG) have experienced an exceptionally difficult period in recent weeks. The industry has ground to a halt, and there is currently little sign that the sector will return to normal in the near term.
IAG is taking steps to mitigate a loss of income in the short run. For example, it has suspended dividend payments and recently announced that it is accessing the government’s jobs support scheme. It has also sought to reduce costs. That means it is currently not recruiting for new staff members and it is aiming to reduce the working hours of some of its staff.
Clearly, IAG’s outlook is highly uncertain at the present time. However, it has a substantial amount of cash and a solid balance sheet too. This should help it to survive an unprecedented challenge for the airline sector.
Trading at a seven-year low, its shares appear to offer good value for money given its market position. Although they could move lower in the short term depending on the prospects for the wider industry, they could represent a buying opportunity for long-term investors.
Peter Stephens owns shares of Barclays. The Motley Fool UK has recommended Barclays. 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.