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I’d buy this bargain FTSE 100 stock to build a million pound ISA portfolio today

The Burberry share price is climbing today, despite a set of results that would have investors running for cover in normal times. Thanks to the pandemic, investors knew today’s preliminaries would make tough reading. Happily, these beat expectations.

Burberry (LSE: BRBY) is currently trading 40% lower than in January, as the luxury fashion market has been hit as hard as any other retail sector. If you’re looking to build a million-pound ISA portfolio, you should be on the alert for buying opportunities like this. The FTSE 100 group now looks cheap, judging by its own pricey standards.

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The Burberry share price took an early hit from Covid-19 because it generates two fifths of its sales from China. Last year’s Hong Kong democracy protests knocked sales, but the Covid-19 pandemic is far more damaging.

This FTSE 100 stock is cheap by its standards

At Motley Fool, we like buying top stocks on bad news, as you can get pick them up at bargain valuations. Before coronavirus, the Burberry share price typically traded at around 24 times earnings. That has now fallen to around 16 times. Traditional valuation methods mean less than they did, but this still suggests an opportunity to me.

CEO Marco Gobbetti said today that sales were beating expectations prior to Covid-19, and the group’s strong balance sheet and liquidity will see it through the crisis. It will also leave “space for investment when markets recover.”

The group has a strong connection with its customers, thanks to a successful digital and social media strategy. This will also help support the Burberry share price.

In the first nine months of the year, comparable sales rose 4%. They collapsed 27% in Q4, which should surprise nobody. By the end of March, 60% of its retail stores were closed. Full-year revenues fell 3% to £2.6bn, which was marginally better than expected.

The Burberry share price is a long-term buy

The good news is that you still get a dividend when you buy into the Burberry share price. The bad news is it’s been slashed by almost three quarters to 11.3p. Future payments will be reviewed at the end of the 2021 financial year.

Like many companies, Burberry is abandoning forward guidance, but Q1 is also going to hurt. Nor will easing the lockdown spell the end of its troubles. International travel will be one of the last things to recover and many Asian tourists buy Burberry product on visits to Europe.

Before the pandemic, Burberry was zoning in on the higher end of the luxury market. This allows it to boost margins, and tap into the spending power of the super wealthy, who can still afford its high-end goods in a recession.

The Burberry share price may take time to recover, but liquidity is not a problem. I would buy this for the long-term, inside a Stocks and Shares ISA.

These top FTSE stocks could also fit nicely inside your million-pound portfolio.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry. 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.