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The latest FTSE 100 volatility has given me many opportunities to buy cheap stocks, but one thing has caught me. Lack of preparedness.
I love hunting for stocks but it’s not so fun when I don’t have the money in my account to buy them. And so recently, as my Self-Invested Personal Pension has been fully invested.
I just made £2,000 off by selling stock I wish I hadn’t come close. I took it out this morning, which means I can’t reveal what it is. Under the Motley Fool’s strict trading rules, we are not allowed to write about stocks within two business days of buying or selling them.
I’m on the hunt for the FTSE 100
What I can discuss is which stocks I am willing to buy. I will spend a few days looking, so this is not a definitive list.
My first thought was to invest in two portfolio funds that I don’t regret buying, even though they are both in the red. The former is a coach and sports retailer JD Sports Fashiontheir shares have been hit by the drop in consumer spending in the US, problems that have plagued an important partner Nikefears about Trump’s taxes, and the Budget’s national insurance raids on employers.
JD Sports’ share price has fallen 31.75% over the past 12 months. I’m tempted to make my paper loss look good by lowering the ratio. Shares look very cheap at 8.33 times earnings.
I’m also tempted by another big portfolio dud, a flamboyant fashion disaster The Burberry Group. Shares have fallen by 39.41% in the last 12 months, after sales fell due to a drop in demand from China, and almost everywhere else. The Burberry brand also lost its way but new CEO Joshua Schulman has a credible plan to get it back on track and shares have risen 29.48% in the past month.
Trading at 12.48 times earnings, Burberry’s share price isn’t what it used to be. I’d happily short on both stocks but then my £2k would be gone and I want to take my time over this. There are so many FTSE 100 bargains out there right now.
HSBC Holdings looks incredibly valuable
There is HSBC Holdings share price (LSE: HSBA). I don’t own this stock but have been thinking about buying it for years. The Asian-focused bank is a money-making machine. It posted a reported pre-tax profit of $30.3bn for the full year 2023. That was up 78% last year, so it’s growing fast too.
The board paid off $7bn in share buybacks during the year, and is working on another $2bn in the first quarter of 2024. And then $3bn in both Q2 and Q3, after profits continued to beat expectations already.
HSBC’s share price is up 20.8% over 12 months, yet it still looks pretty good trading at 8.01 times earnings. And there is a high trailing yield of 6.68%.
Why is it cheap? Investors are worried about fears of a trade war between China and the West. The board is trying to allay their fears by splitting the operation into two. Let’s see if that helps. Another concern is that falling interest rates may depress net interest income.
I’ll stop right there. I think I have found a cheap share to buy. Although I have now written about it, I will have to wait a few days.
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