£2k to invest after the stock market crash? I’d buy these 2 FTSE bargains before the recovery

The stock market crash has left a host of cheap share-buying opportunities in its wake. I’d take a look at these two FTSE bargains.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Persimmon share price is up more than 6% this morning, but it still looks like a top FTSE bargain to me.

The entire building sector has enjoyed a boost this morning from reports that chancellor Rishi Sunak may suspend stamp duty to revive the housing market. Investor sentiment has been further lifted by positive results from the UK’s largest housebuilder Barratt Developments.

The Barratt share price is similarly up 6% after it reported a “strong” forward order book with sales ahead of last year. It also reported a “welcome recovery in internet activity, site visitors and net reservations across both the industry and our business.”

The double dose of good news has boosted all the major housebuilders, with Crest Nicholson Holdings, Redrow, and Vistry also climbing. Yet I reckon these could still be FTSE bargains because the recovery has further to run.

I remain a fan of the housebuilders as a source of long-term income and capital growth. Yet the sector has been through a bumpy time since Brexit. Coronavirus bought the housing market to a halt. But one thing hasn’t change. Demand for property will remain high as the population rises, and supply cannot keep up.

I’d buy these FTSE bargains

A week ago, I tipped the Barratt and Crest Nicholson share prices, hailing them as top FTSE 100 bargains worth buying ahead of the recovery.

Persimmon (LSE: PLC) also tempts me. I tipped the FTSE 100 stock at the height of Covid-19 gloom in early April after it mothballed construction sites, stopped selling homes, and cancelled its interim dividend.

At the time, the Persimmon share price stood at 1,666p. Today, it trades at 2,403p. That’s a rise of 44%. I’m no stock-picking genius. I simply follow the Motley Fool philosophy of hunting down top stocks at times of crisis, with the aim of holding on for the rebound. This strategy is proving itself yet again.

I’d still buy Persimmon today. Despite the recent recovery, its stock remains a third below its pre-coronavirus crisis peak in January. It trades at 8.5 times earnings, if you can trust the P/E ratio in these strange times.

This stock is cheap after the market crash

Fellow-housebuilder Vistry Group (LSE: VTY) looks even cheaper at 6.71 times earnings. It might offer an even better buying opportunity, as the share price is still 50% below January’s peak.

Again, the group had to scrap its dividend to conserve cash, but at least it compensated investors by issuing £60m of shares in lieu. I wish more companies had done that.

The FTSE 250 group was going great guns before the crisis, with profits up 12% in 2019 and margins hitting 17%. In May, it reported a forward order book totalling £827m. It does have net debt of £476m, but this is balanced by committed banking facilities totalling £770m, with well-spread maturities out to 2027.

Housebuilding still looks like a tempting sector for long-term investors looking to benefit from the stock market crash.

Or you may prefer this suggestion…

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »