After the stock market crash, plenty of FTSE 100 shares now trade at bargain prices. Investors are beginning to notice this too. If you buy top companies when their share prices are down, you can accelerate your plans to get rich and retire early.
You have just such an opportunity today. These two FTSE 100 shares have fallen far during the coronavirus crash, but are flying right now.
FTSE 100 recovery play
After a nervous Friday, investors have rediscovered their appetite for risk. The Standard Chartered (LSE: STAN) share price is up 6% this morning, as bargain seekers decide the potential rewards outweigh the risks.
Like all the banks, Standard Chartered has been hit hard by the stock market crash. Its focus on Asia and China made that inevitable. Unlike many FTSE 100 stocks, it failed to recover during April and May’s rebound. But it’s flying today.
Standard Chartered has also been caught up in rising tensions between China and the West, and concern over the Hong Kong clampdown. Its share price is still 45% lower than before the stock market crash, even after today’s rebound.
Standard Chartered is up today after US President Donald Trump surprised markets by failing to introduce new, more punitive trade measures in response to China’s new security law in Hong Kong. Shares rose across Asia amid relief that the trade war hasn’t further intensified.
Inevitably, the US-China stand-off remains a threat. Along with Covid-19, that explains why the bank trades at just six times earnings. Anybody who buys into the Standard Chartered share price must brace themselves for further political volatility, or even another stock market crash.
Also, there’s no dividend for now. However, the risk seems to be reflected in today’s price. It still looks a strong long-term buy-and-hold at today’s entry price.
Stock market crash opportunity
Standard Chartered is only the second fastest rising share price on the FTSE 100 today. Associated British Foods (LSE: ABF) is up more than 8%. The Primark owner has inevitably been hit hard by the lockdown but, as the government relaxes rules, it should benefit once people get outside and want to smarten up their wardrobes.
Investors have welcomed today’s news that management aims to open all Primark stores in England by 15 June, with openings in Northern Ireland, Wales and Scotland coming later this month.
It’s currently trading from 112 stores across Europe and the US, around a third of its total selling space. Today, it reported that overseas customers are queueing to get in and “once in store, spending on larger basket sizes.”
Cash flow should improve markedly in the second half of this financial year, although management has yet to reinstate guidance. The share price is now bouncing back from the stock market crash.
The group is also renegotiating lease arrangements to cut overheads at Primark, which contributes around two thirds of the FTSE 100 group’s operating profit. The big opportunity here is that Associated British Foods shares still trade around a quarter lower than before Covid-19.
But one threat is that shoppers now reject fast fashion in favour of more sustainable options. Right now, I think the opportunity outweighs the threat.
Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods and Standard Chartered. 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.