The 2020 stock market crash has caused many UK shares to experience challenging operating conditions.
Among them are property-focused stocks such as FTSE 100 businesses Barratt (LSE: BDEV) and Rightmove (LSE: RMV). The uncertain outlook for the UK housing market means their share prices have been hugely volatile this year.
However, this could present a buying opportunity for long-term investors. The new bull market and an economic recovery could push their share prices higher, as well as catalyse ISA portfolios in the coming years.
A declining share price in the 2020 stock market crash
Barratt’s share price has been one of the FTSE 100’s major casualties in the 2020 stock market crash. It’s currently down by 30% since the start of the year. Lockdown measures and a weak economic outlook have meant that investors have become increasingly concerned about demand for new homes.
However, the property market has always been highly cyclical. In other words, it generally experiences booms and busts on a fairly regular basis. Investors who can look beyond short-term risks in a downturn can pick up stocks such as Barratt while they trade on low valuations.
Indeed, the company’s shares now have a price-to-earnings (P/E) ratio of just 10. This suggests they offer a wide margin of safety after the stock market crash. Meanwhile, its recent updates have shown it has a solid balance sheet and that demand for its homes has been relatively robust. As such, it could offer recovery potential relative to other UK shares as the new bull market gains momentum in the coming years.
A leading market position to act as a growth platform
Rightmove is another UK share that has experienced disappointing performance as a result of the 2020 stock market crash. Its shares have been volatile throughout the year, and have only recently recovered to trade in positive territory year-to-date.
However, the company’s recent updates have shown that it has continued to release innovative features on its platform that are likely to help retain its competitive advantage. It has also sought to ease the financial burden of lockdown measures through offering discounted prices to the agents who use its property portal to advertise properties.
Looking ahead, Rightmove could produce a sound recovery after the stock market crash. It is forecast to post a 65% rise in net profit next year. Its price-to-earnings growth (PEG) ratio of 0.5 suggests that it offers a wide margin of safety. This could guard against the prospect of reduced earnings growth expectations as the economic outlook changes.
Therefore, now could be an opportunity to buy what appears to be a high-quality business while it trades at a low price. It could prove to be a major beneficiary of the new bull market over the coming years.
Peter Stephens owns shares of Barratt Developments. The Motley Fool UK has recommended Rightmove. 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.