2020 has been a challenging year for FTSE 100 investors. Stocks of all varieties were sold off during the Covid-19 panic that sent people running the start of the year. It’s quite likely that things could get worse before they get better, too.
On top of the worsening coronavirus crisis, the rising possibility of a hard Brexit, a messy aftermath of a fraught US presidential election, and fresh rounds of trade-related bickering between major global powers all threaten to push FTSE 100 share prices to the downside again.
Keep the faith!
I’m not fretting over the possibility of a new stock market crash, though. It’s important to remember that we investors don’t lose money when UK share prices fall. We only make a loss if we sell our shares at a cheaper price than what we originally buy it for. And as a long-term investor I’m confident that my Stocks and Shares ISA will recover in value during the inevitable economic recovery.
In fact, I’ve continued to buy UK shares for my ISA despite the troubled economic landscape. I’ve followed the advice of legendary investor Warren Buffett who implores us to be “fearful when others are greedy, and greedy when others are fearful”. That way I hope to make a large profit as the stocks I buy today rebound in value from their current lows, driven by improving economic conditions and recovering investor confidence.
2 FTSE 100 firecrackers on my radar
Let me talk you through a couple of the top-class FTSE 100 shares on my watchlist today. I think they’re too cheap to miss after tanking during the 2020 stock market crash:
- Aviva has dropped 33% in value in 2020. And right now it can be picked up on a forward price-to-earnings (P/E) ratio of just 6 times. It’s a reading I think’s worth serious attention from long-term investors. The business has market-leading brands that will help profits to rebound strongly once economic conditions pick up. Meanwhile, the likely sale of its European and Asian assets will help the FTSE 100 firm in its plan to prioritise its major UK, Irish, and Canadian markets. It also underpins broker expectations of more chunky dividends – Aviva carries a 9.7% yield for 2020.
- I’d use the near-20% share price drop at DS Smith this year as a dip buying opportunity too. Like Aviva it offers plenty of all-round value for UK share investors. Alongside a forward P/E ratio of 12 times the packaging manufacturer sports a chubby 4.2% dividend yield. There are a few reasons I own the business in my ISA and am thinking of buying more following the recent price drop. It’s a brilliant play on the fast-growing emerging markets of Eastern Europe. The FTSE 100 firm’s recent expansion into the US has boosted its long-term earnings outlook even further. And I like the brilliant sales possibilities that the exploding e-commerce sector offers.
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.
Royston Wild owns shares of DS Smith. The Motley Fool UK has recommended DS Smith. 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.
The post Investing like Warren Buffett: I think these 2 ‘must own’ FTSE 100 shares are too cheap to miss appeared first on The Motley Fool UK.