The FTSE 100 stock market crash means that many high-quality companies now trade at bargain prices. Yes, there is scope for their share prices to move lower in the coming months due to risks such as a possible second wave of coronavirus. But their long-term prospects could be relatively sound.
With that in mind, here are two blue-chip shares that could be worth buying today and holding over the long run. Their margins of safety suggest that they offer attractive risk/reward opportunities for long-term investors.
FTSE 100 bank HSBC
The HSBC (LSE: HSBA) share price has shown little sign of mounting a successful recovery over recent weeks, despite gains being made by the FTSE 100. The global bank’s shares are trading 35% lower than they were at the start of the year, with its recent first-quarter results highlighting the significant changes that have taken place in many of its key markets.
In response, the bank is seeking to become leaner and more efficient. This will involve a major cost-cutting programme that includes around 35,000 job cuts that could make the company more competitive across many of its divisions. This could help it to successfully overcome what may prove to be a period of lower demand as the world economy experiences reduced levels of GDP growth.
HSBC’s near-term prospects may be uncertain, but over the next decade, a likely recovery in the world economy could catalyse its financial performance. This may lead to an improving share price outlook that may make now the right time to buy a slice of the business while it appears to offer a wide margin of safety.
Furthermore, its global diversity could be a differentiating factor compared to its FTSE 100 sector peers that helps it to produce relatively high capital returns in the coming years.
Another FTSE 100 share that may offer good value for money after a challenging period is British Airways owner IAG (LSE: IAG). Clearly, uncertainty surrounding the airline sector is likely to weigh on its performance in the near term. Risks such as a second wave of coronavirus may mean that restrictions on air travel remain or return over the coming months.
However, the company’s recent quarterly update highlighted that it has a relatively strong financial position. For example, at the end of April it had liquidity of €10bn. It is also seeking to conserve cash wherever possible and is aiming to improve its efficiency so that it can strengthen its competitive position during what may prove to be a slow recovery to pre-coronavirus passenger numbers.
IAG is clearly a relatively high-risk FTSE 100 stock due to its challenging operating outlook. However, the airline sector is likely to recover over the long run, with the company appearing to have a sound financial position compared to many of its industry peers. Therefore, it may offer recovery potential for buy-and-hold investors.
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Peter Stephens has no position in any of the shares mentioned. 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.