A stock market crash can present fantastic buying opportunities for long-term investors. No crisis lasts forever and, in the past, equity markets have always bounced back.
Stock market crash: this stock has fallen 37%
The first FTSE 100 stock I want to highlight is wealth manager St. James’s Place (LSE: STJ). Its share price has fallen from near-1,200p to just 760p in the last two months. That represents a decline of about 37%.
The reason I think STJ looks interesting at the moment is that I believe the recent stock market crash could potentially boost demand for trusted face-to-face financial advice going forward. With so much economic uncertainty, I think there’s a chance plenty of people (particularly retirees) will turn to financial experts for help.
I also like the fact that St. James’s Place’s clients are generally very happy with the services it offers. Last year, 89% of clients said they were either satisfied or very satisfied with their overall relationship with the group. In addition, 93% said they would recommend the group to others. Clearly, the wealth manager offers a good service.
Of course, in the short term, the FTSE 100 company’s profits are going to take a hit. This is because much of its fees are linked to assets under management, which will have fallen in the recent stock market crash. However, the medium-to-long-term story remains attractive, in my view. I think the stock has the potential to bounce back as stock markets rebound in the years ahead.
JP Morgan currently has a price target of 937p for STJ. That’s 22% higher than the current share price.
This FTSE 100 stock looks oversold
Another FTSE 100 stock I believe has the potential to rebound is DS Smith (LSE: SMDS). It’s a leading packaging company specialising in manufacturing cardboard boxes. Its share price has fallen nearly 25% in the recent stock market crash.
Looking at DS Smith’s recent Covid-19 trading update, issued on 8 April, I think the near-25% share price fall here is unjustified. For a start, the company advised that trading had remained “resilient” with “relatively limited impact” from Covid-19. Secondly, it said supplies into the grocery sector had been “very busy” and that e-commerce has also been strong in most categories.
On top of this, it said its balance sheet and liquidity profile are strong, with around £1.4bn of facilities currently undrawn. Additionally, the group advised that its net-debt-to-EBITDA ratio was anticipated to be around 2.0 at 30 April, down from 2.3 at the end of December. So, overall, the group appears to be in pretty good shape.
The long-term story here remains attractive, in my view. Across the world, people are increasingly doing more shopping online (Covid-19 has boosted this), which translates to more demand for packaging. DS Smith looks well-placed to capitalise.
I’m convinced that those buying now will be rewarded in a few years time.
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Edward Sheldon owns shares in St. James's Place and DS Smith. The Motley Fool UK has recommended DS Smith. 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.