The Motley Fool

Market crash 2020: why this could be a once-in-a-lifetime investing opportunity

Image source: Getty Images.

While some stocks have fully recovered from the 2020 market crash, others continue to trade at exceptionally low prices. Although there’s scope for them to move even lower in the short run, over the long term a number of sectors appear to offer excellent recovery potential.

Therefore, buying a diverse range of undervalued stocks now could boost your portfolio returns over the coming years. They could prove to be among the most attractive buying opportunities of your lifetime.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Recovering from the market crash

The market crash caused a wide range of stocks to experience severe declines in their price levels in the first quarter of 2020. While some of them have recovered since then, many industries continue to be extremely unpopular among investors. Stocks trading within such sectors could, therefore, offer excellent value for money for long-term investors.

For example, low interest rates in many of the world’s major economies mean that banking stocks are generally viewed unfavourably by investors. Although they’re set to experience lower profitability in the short run, over the long term they could deliver sound recoveries.

Similarly, travel stocks, retail businesses and energy companies that have solid balance sheets may be able to adapt their business models to a changing economy. This may allow them to generate improving profitability that leads to rising share prices over the coming years.

Through focusing your capital on unpopular sectors after the market crash, you could enjoy market-beating returns over the long run. For many stocks in the aforementioned sectors, investor sentiment has very rarely been as weak as it is today. Therefore, now could be a rare buying opportunity.

Capitalising on undervalued stocks

Clearly, the market crash could be repeated in the near term. Risks such as the US election, Brexit and the coronavirus pandemic may cause investor sentiment to weaken further. Similarly, the weak prospects for sectors such as banking, travel and energy companies may lead to financial difficulties for their incumbents.

As such, it’s important to buy a diverse range of businesses. Having a portfolio that’s too concentrated on a small number of companies means you’re reliant on them to deliver your returns. Should one or more of them disappoint in this regard, your portfolio’s performance could be severely impacted. This risk can be diversified away, which could produce higher returns in the long run.

Furthermore, buying the strongest and most dominant businesses in unpopular sectors after the market crash is a logical approach. They may not be among the cheapest stocks compared to some of their peers.

But buying high-quality stocks at low prices may prove to be a better strategy than simply purchasing cheap stocks. Over time, strong businesses are likely to survive and prosper as their operating conditions improve, and investor sentiment does likewise. This could lead to higher returns for your portfolio.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.