There’s no shortage of cheap shares after this year’s stock market crash. Today, I’m looking at three strong FTSE 100 businesses, currently trading at knockdown prices.
Markets may remain volatile in the short term. However, if you’re buying with a long-term horizon (10+ years), I reckon these three stocks could help you get rich and retire early.
Cheap shares leveraging a top global brand
Coca Cola HBC (LSE: CCH) is one of the largest bottlers and distributors of The Coca Cola Company‘s brands. It operates in 28 countries, including established, developing and emerging markets.
It reported another year of strong growth in its annual results, just before the onset of the coronavirus pandemic. However, it’ll take a hit to profits this year. This is due to lockdowns having had a severe impact on sales into hotels, restaurants and cafes.
But the business is expected to bounce back strongly next year. At the current share price of 2,106p (a 27% discount to its pre-crash level), the market’s valuing CCH at 17.2 times forecast 2021 earnings. This is a cheap rating for a defensive business with a strong record of earnings and dividend growth. As such, I rate the stock a ‘long-term buy’.
Another stock market crash bargain
The non-voting shares of asset manager Schroders (LSE: SDRC) are 19% below their pre-crash high. They’re also trading — as they typically do — at a discount to the company’s voting shares (ticker SDR). I think the non-voting shares are cheap.
The company is forecast to maintain its dividend at 114p per share this year. Buyers of the non-voting shares at 2,125p would get a dividend yield of 5.36% (or a £536 payout on a £10,000 investment). The figures for buyers of the voting shares at 3,010p would be a yield of 3.79% and a £379 payout.
Due to the superior yield, buying the non-voting shares and reinvesting your dividends would increase your economic interest in the business more quickly than if you bought the voting shares. This would include your entitlement to a growing share of each year’s dividend pot.
Due to the fall in the share price, the miracle of compounding returns by reinvesting dividends, and Schroders’ long history of prudent management through economic cycles, I see the non-voting shares as a great long-term buy for investors aiming to get rich and retire early.
Cheap shares #3
At 117p, Vodafone (LSE: VOD) shares are trading at a 29% discount to their 52-week high. This is another stock where reinvesting dividends from a fat starting yield — 6.95% — could snowball long-term returns.
The company told us last month it has maintained commercial momentum during lockdown. Service revenue was relatively resilient. A negative impact from travel restrictions and business project delays was mitigated by increased usage in voice and data, and broadband customer additions.
Heavy investment in recent years, including acquisitions and 5G spectrum, means Vodafone’s debt is currently somewhat elevated. However, the investment is set to pay off with strong earnings growth forecast for the coming years. A planned IPO of its towers business in early 2021 should also help the coffers.
All in all, I think this is another strong FTSE 100 business whose shares are cheap. As such, I’d be happy to buy the stock for the long-term.
