The Motley Fool

Do these crashing FTSE share prices mean we should buy?

Image source: Getty Images.

The stock market is looking fairly stable, perhaps surprisingly so. But some individual FTSE share prices are gyrating wildly.

On Tuesday, we saw several share prices soaring by 30% and more. At the same time, there were double-digit drops too.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Which should we go for, the ones that look like they’re recovering? Or the fallers, which might have bigger rebound potential?

Volatile share prices

Cineworld Group (LSE: CINE) has been one of the biggest victims of the coronavirus crash, losing almost 90% of its value at one point. It’s been erratic too, but it has bounced back to a slightly less painful loss of 64% during the crisis.

The share price actually perked up when the markets opened on Tuesday, gaining an early 12%. But it turned down soon after, and stands 11% down as I write, putting it among the losing FTSE share prices of the day.

Like many, Cineworld has suspended its dividend during the pandemic crisis. Some investors will see that as really bad news, but I reckon it’s exactly the right thing to do. Companies should be focusing firmly on their balance sheets and their long-term survival, not on pleasing the short-term City folks who want this year’s cash in their pockets.

So, avoid or buy? At today’s price, Cineworld shares are on a trailing P/E of only around four. If the lockdown ends soon and Cineworld gets back to business, there could be a nice recovery profit here.

But at year-end, Cineworld was sitting on $3.5bn in debt, for a debt-to-EBITDA ratio of 3.4. And that could bite. I see far less risky shares elsewhere in the FTSE.

Oil & gas contrarian?

The collapsing oil price has hurt the sector, and could lead some of the smaller and heavily indebted operators going bust.

But, hit by a pandemic slump along with the rest of the FTSE oilies, Enquest (LSE: ENQ) has been bucking the downward trend in the past couple of weeks. It was among Tuesday’s losing share prices with a 12% drop, but it’s gained close to 50% since a low at the end of March.

It should get a boost from the Opec agreement to cut global output and shore up prices. There hasn’t been much of an effect yet, mind, with a barrel still commanding only around $32. But the price could start to gain fairly soon, once the world’s surplus starts to reduce.

Enquest has, in its favour, an operating cost that averaged only $21 per barrel last year. And that should give it a little breathing room while prices are down.

FTSE gamble?

But Enquest’s big problem, like so many smaller oil companies, is debt. It stood at $1.4bn at year-end, though that represents a modest debt-to-EBITDA ratio of 1.4.

I think Enquest could turn out to be a profitable investment, if oil prices recover far enough before it starts to feel the financial pinch. If not, could we see the firm turning to the markets for a new equity issue?

Enquest is a gamble for the brave, though I don’t invest in the hope of simply getting lucky myself.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Alan Oscroft has no position in any of the shares 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.