Buying cheap FTSE 100 shares after a market crash could be a sound means of improving your long-term retirement prospects. Certainly, in the short run there is scope for further declines in the index’s price level. But as previous market crashes have shown, they have always been followed by a successful recovery.
With that in mind, here are two FTSE 100 shares that could offer investment potential right now. They do appear to be undervalued. And they could produce improving performances that increase your chances of retiring early.
FTSE 100 housebuilder Persimmon
The near-term financial prospects for FTSE 100 housebuilders such as Persimmon (LSE: PSN) continue to be very uncertain. The construction of new properties may recommence after a shutdown, of course. But appetite among prospective buyers may be low at a time when job security is unlikely to be high across a wide range of sectors.
Therefore, it would be unsurprising for Persimmon to continue to report low sales over the coming months. Fortunately, the business reported a strong net cash position in its most recent update. It currently has cash of over £600m. This should mean that it is in a relatively strong position to return to profitable growth in the long run.
With interest rates having fallen in response to the coronavirus, the affordability of homes may improve over the medium term. Furthermore, a lack of supply versus demand may lead to robust trading conditions once the economy returns to normal.
As such, FTSE 100 housebuilders such as Persimmon may enjoy improving operating conditions that help them to justify higher share prices following what has been a highly challenging period for the industry. Therefore, now could be the right time to buy a slice of the company after its 16% share price slump since the start of 2020.
The recent first-quarter update from HSBC (LSE: HSBA) provided guidance on the scale of decline in economic activity caused by coronavirus. The global banking business reported a 48% decline in profit for the period, with its sales falling by 5% versus the same period of the previous year.
This trend could continue in the near term, since many businesses and consumers are set to remain in lockdown across much of the global economy. As such, asset write-downs could be on the horizon across the banking sector, while lower interest rates may make it more challenging for banks to generate improving profitability over the medium term.
However, investors may have priced-in many of the challenges facing HSBC. Its share price has declined by 31% since the start of 2020 – even after the FTSE 100’s recent rebound. This suggests that it offers a wide margin of safety. And, with the company set to enact various cost reductions and a simplification programme as the world economy returns to normality, it could become a stronger business relative to its peers in the coming years.
Peter Stephens owns shares of HSBC Holdings and Persimmon. The Motley Fool UK has recommended HSBC Holdings. 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.