The stock market crash has caused the FTSE 100 to take a huge hit. The index has shed around 22% of its value since mid-February.
While this has damaged share prices across the board, it means there are plenty of stocks trading on dirt-cheap valuations that look like bargains to me.
Be under no illusion, stocks may still have further to fall before the market bottoms out. But I’m confident that in five to 10 years’ time, investors will look back at today’s share prices and recognise many of them as bargains.
One thing to be sure of is that the stock market will, as always, eventually recover.
A selection of FTSE 100 bargains
Before the stock market crash, two of my favourite FTSE 100 stocks were consumer staples giant Unilever and alcoholic beverages champion Diageo. I like them even more at their lower prices today. These two companies have established market-leading positions. What’s more, both have an impressive track record when it comes to financial performance over recent years.
Housebuilding shares plunged in the wake of the market crash as a result of uncertainty caused by the outbreak of Covid-19. However, if lockdown restrictions ease up in the near future, stocks such as Taylor Wimpey and Persimmon could bounce back swiftly, delivering handsome returns for investors. More good news for housebuilders came last week when the government announced it may extend the help-to-buy scheme.
If you happen to feel particularly bullish about the recovery of airline stocks, companies such as easyJet and International Consolidated Airlines Group would be my go-to. These two airline operators should have healthy enough balance sheets and sufficient cash reserves to see them through the crisis.
Finally, I particularly like the look of Aviva and Legal & General, two outstanding UK insurers. Both firms posted impressive results last year and have cemented their positions in the insurance market. Thanks to a fall in share prices, both look like bargains to me.
Ultimately, if you think the entire index represents good value, why not buy a FTSE 100 tracker fund? That way, you’ll have the entire index covered in one worthy investment.
Hold your investments for the long term
Picking up a selection of cheap FTSE 100 stocks is only the first step. The important part is to hold your investments for the long term. That way, you allow time for the market to recover, as well as letting your returns compound over time.
Millionaires are rarely made overnight in the stock market, that’s why it’s important to be patient. That means leaving your investments alone during the highs, and the lows, of the market. Trying to time the market has never proved to be an effective strategy!
Ultimately, investing consistently with a long-term view often results in financial freedom. With that in mind, don’t waste the stock market crash while it presents the opportunity to invest in an array of cheap FTSE 100 stocks!