The recent stock market crash means that there are many cheap FTSE 100 shares on offer in the market today.
As such, now could be a great time to buy these blue-chips trading at low valuations. Over the long run, they have the potential to deliver high returns that could dramatically improve your financial prospects.
Cheap FTSE 100 shares At this point, the global economy faces an uncertain future. It’s not possible to tell which companies will survive in the next few months or years.
However, over the past few decades, the market has been through many peaks and troughs. On every occasion, the index has usually recovered its losses over the long run. In most cases, the FTSE 100 has gone on to create new highs as well.
Therefore, I’d take advantage of the recent stock market crash by buying a basket of cheap FTSE 100 shares.
Diversifying your portfolio across a range of companies means that you spread risk. That means you are less reliant on a small number of businesses to generate your profits. So you’re less likely to suffer a big financial hit if one investment starts to struggle. This is more important than ever in the current market environment.
Defensive investments Most of the FTSE 100’s constituents are currently dealing below the level they started the year. This may suggest that the stocks offer a margin of safety.
But as it’s difficult to tell which business will prosper and which will struggle over the next few months, focusing on defensive investments may be best.
Defensive stocks are less likely to suffer in a downturn. This means cheap FTSE 100 shares like Halma (LON:HLMA), Britvic (LON:BVIC), Coca-Cola (NYSE:KO) HBC and Tesco (LON:TSCO) could be attractive investments to own over the long run.
All of these companies exhibit defensive qualities and attractive income credentials. That suggests they could yield a steady income stream that rises in line with inflation over the long term.
What’s more, all of these businesses are now trading at a discount. Their dividend yields have risen above historical averages, which may suggest they offer a margin of safety.
Investor sentiment Clearly, the outlook for these companies is far from certain. Nevertheless, owning a diverse basket of these stocks could help you improve your financial situation over the long run. What’s more, when investor sentiment improves, these stocks may produce high capital returns for shareholders.
As covered above, the FTSE 100 has healthy long-term recovery potential, even after one of the worst downturns in history.
Therefore, whether you have £1k or £100k to invest today, now could be a great time to buy cheap FTSE 100 shares. These companies might not yield a positive return in the short term, but over the long run, these assets could boost your financial prospects.
The post Looking for cheap FTSE 100 shares? I’d buy these companies appeared first on The Motley Fool UK.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of and has recommended Britvic. The Motley Fool UK has recommended Halma and Tesco. 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.
Motley Fool UK 2020
First published on The Motley Fool
