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I’d buy these 2 bargain FTSE stocks to make a million from the stock market crash

Every investor loves buying bargain FTSE stocks, and the recent stock market crash has thrown up plenty of opportunities. Some top UK companies are now trading at dirt cheap valuations, ideal conditions for long-term investors.

Moments like these are a great time to top up your portfolio as you work towards your long-term goal of building a million-pound pot for your retirement. Ian Lance, equity income fund manager at RWC Partners, reckons today’s best opportunities can be found in unloved ‘value’ stocks that have been overlooked by the market but offer great long-term potential.

Lance, a fund manager for more than three decades, has unearthed several companies with profitable subsidiaries that are actually worth more than the entire group’s valuation.

It is hard to love broadcaster ITV (LSE: ITV), which trades 70% lower than five years ago. The ITV share price was in long-term decline even before the pandemic. Competition from streaming services, squeezed advertising revenues and slowing growth at its much-heralded ITV Studios division have hit profits.

Check out these bargain FTSE stocks

The ITV share price is down by half this year alone, as advertising revenues fell 42% in the pandemic, while the group was forced to pause programme making.

As Lance points out, ITV is in effect two businesses: broadcasting and content production. In 2019, content production delivered profits of £267m. This would suggest a company valuation of £3.5bn, measured at 13 times earnings. Yet the entire group has a market cap of just £3.18bn today. This means the broadcast business, which made £500m last year, is effectively available for free. That looks like a bargain FTSE stock to me.

Here’s another figure that might tempt you. Netflix spends around $15bn a year on content production, Lance notes. “For a fraction of this, they could have ITV’s entire back catalogue and all future content.”

This is likely to be a tricky year for ITV, but it still looks like a tempting bargain FTSE 100 stock to me.

Another dirt-cheap stock to consider

The outsourcing industry was hit hard by the collapse of Carillion and Interserve, while Kier Group and Capita Group (LSE: CPI) survived by the skin of their teeth.

The Capita share price took another beating in the Covid-19 crash. Its face-to-face training, resourcing, contact centres, consultancies and corporate travel agency operations have been locked down. However, investors spotted a bargain FTSE stock and piled in, driving the stock up 30% in the last month.

Capita’s high-margin software division made just over £100m of EBIT in 2019, which valued at a modest 15 times earnings would be worth £1.5bn, while the rest of the group delivered £200m of earnings. Yet today, the group has a market cap of just £681m.

Lance says ITV and Capita are undervalued by a market that is fixated on short-term earnings momentum. He reckons these are genuine bargain FTSE shares and so do I, if you are investing for the long term.

You will not make a million from investing in shares overnight. However, by identifying bargain FTSE stocks like these during a crash, you can accelerate your progress.

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