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Stock market crash bargains! I’d buy these 2 dirt-cheap FTSE 100 stocks in an ISA

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The stock market crash has left many top FTSE 100 stocks trading at dirt-cheap valuations. If you’re looking to buy bargain shares, you are spoiled for choice right now.

Buying stocks that have been sold off in a stock market crash is risky, especially today. The economy faces a massive hit from Covid-19, and there could be more pain in the pipeline. However, history shows that buying shares at the moment of maximum uncertainty is a winning strategy.

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Here are two risky stocks that could pay off. Buy them inside your Stocks and Shares ISA for tax-free returns, and look to hold for the long term.

Whitbread share price slump

The hospitality and leisure sector has been hit harder than most, with people locked down or banned from travelling, or nervously cutting back on their spending. Hotel and restaurant operator Whitbread (LSE: WTB) has inevitably had a tough time of it. Its share price fell by more than half in the stock market crash.

It has also failed to benefit from the recovery. While many FTSE 100 shares have posted healthy gains lately, the Whitbread share price still trades 4% lower than six months ago. 

At the height of the first wave, Whitbread axed its dividend and temporarily shut all Premier Inn hotels in the UK and Germany. Last month, it announced 6,000 job losses, almost one in five of its workforce.

Whitbread, which also owns Brewers Fayre and Beefeater restaurants, trades at just 11.4 earnings today. This has alerted analysts at Berenberg, who reckon the current share price undervalues its real estate by half, leaving the group undervalued.

This is the type of opportunity investors should be sniffing out after a market crash. The Whitbread share price could fly out of the traps if, say, we get a vaccine or infection rates diminish. It’s a tempting buy, but risky given current unknowns.

Stock market crash opportunity

Property development and investment company British Land Co (LSE: BLND) also saw its share price fall by more than half in the stock market crash, with little recovery since. That’s despite announcing it was resuming its dividend payments earlier this month, as footfall and retailer sales picked up strongly.

British Land says its balance sheet remains strong, with £1bn of undrawn facilities and cash, with no requirement to refinance until 2024. It has collected 74% of June rents, 98% for offices and 57% for retail.

The pandemic has hit commercial property and bricks and mortar retailers as hard as the leisure and hospitality sector. If the pandemic worsens and unemployment rises, rents could be at risk. British Land has been investing heavily in central London office space, which hangs in the balance with the rise of home working.

These challenges are reflected in its valuation of 10.5 times earnings. You get a forecast yield of 3.7%. Like Whitbread, the British Land share price is cheap after the stock market crash, but comes with risks that some may found unacceptable.

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