The volatility seen in the market in the past few months has opened up one of the best opportunities to buy FTSE 100 shares that we have seen in a while. With some stock prices trading at recent lows, I believe it is now possible to buy shares in great companies at a wonderful price.
Although I believe the FTSE 100 will recover in the long term, it is wise for investors to exercise caution. The global economic landscape is likely to get ugly and it could mean disaster for some businesses. As Warren Buffett advises investors: “Don’t lose money!”
That said, I think these shares could be great long-term bets for FTSE 100 investors.
Royal Dutch Shell
In the past, Royal Dutch Shell (LSE: RDSA) was much loved by income investors. However, in light of the Covid-19 pandemic and a tumbling oil price, the company slashed its interim dividend from $0.47 to $0.16 per share. Like other FTSE 100 companies, it also cancelled its share buyback program.
Oil prices have strengthened over the past month. Brent crude is now trading at just under $40 a barrel. At the start of May, its price was hovering around $30 a barrel. Demand for oil will probably increase, as governments around the world ease lockdowns and travel restrictions. If demand does surge, it is likely the price of oil will rise. If this occurs, there will be serious pressure for Shell to reinstate its dividend and resume its share buyback program.
A rising oil price is just a short-term fix for Shell. The business will eventually need to diversify away from fossil fuels and shift its revenue focus to renewables. Shell has a target of being a net-zero emissions energy business by 2050 or sooner.
For now though, after falling by 40% year-to-date, I believe the Royal Dutch Shell share price is trading at a bargain level. Its price-to-earnings ratio is currently trading at just over 8. The opportunity to buy cheap shares in a quality FTSE 100 company does not happen often. It might be worth buying right now.
The best FTSE 100 share to buy?
Prudential (LSE: PRU) also makes my list of best FTSE 100 shares to buy now.
Asia and the US are Prudential’s biggest markets after the split of its UK business last year. Due to the coronavirus, the life insurer announced in May that annual premium equivalent sales in Asia were down 24% in the first quarter.
It is not all bad news for Prudential, however. Outside of Hong Kong and China, sales in the region were up by 1%. In the US, annual premium equivalent sales were up by 25%, and in Africa, annual premium equivalent sales increased by 43%.
Asia remains a difficult territory for businesses, with the threat of an escalation of the US-China trade war always in the background. However, as fellow-Fool Royston Wild points out, the key to buying shares is holding them for at least 10 years. By utilising this strategy, economic wobbles should be minimised.
Prudential’s share price has fallen by almost 17% year-to-date. This drop makes its price-to-earnings ratio just 9. And unlike other FTSE 100 companies, Prudential has maintained its announced dividend payments. The shares have a prospective dividend yield of roughly 3%.
I think Prudential is in a great position for any market recovery. I would buy and hold right now.
Markets around the world are reeling from the coronavirus pandemic…
And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.
Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…
You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.
That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.
T Sligo has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. 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.