The FTSE 100 stock market crash has caused a number of UK shares to trade at relatively low prices. Certainly, there is an ongoing risk that a second market crash may occur that could cause further declines in their valuations. However, the track record of the stock market suggests that improving trading conditions could be ahead over the long run.
As such, now may be an opportune moment to buy these two large-cap stocks. They have declined over recent months and may deliver recoveries over the long run.
FTSE 100-listed WPP (LSE: WPP) has posted a 41% share price decline since the start of the year, as the stock market crash has weighed on investor sentiment. As a cyclical business that is very dependent on the performance of the global economy, its prospects are likely to come under pressure as global GDP growth slows.
The company’s recent quarterly update showed that its revenue has declined by 4.9%. Further falls over the coming quarters would be unsurprising, since demand for its services could fall as businesses seek to reduce their non-essential expenditure.
However, with WPP having a strong balance sheet following a wide range of asset disposals, it could be in a relatively solid position to survive short-term challenges. It may also have a relatively flexible business model that can adapt to a fast pace of change across many sectors of the global economy.
With the company’s share price having fallen heavily in the stock market crash, it could offer a wide margin of safety. This may allow it to deliver a stock price recovery over the long run, although further volatility seems likely in the short term.
Glencore: buying opportunity after market crash
Another FTSE 100 share that has declined heavily in the stock market crash of 2020 is Glencore (LSE: GLEN). The mining company’s shares are currently down 29% since the start of the year, and could fall further as a weak global economic outlook has the potential to weigh on the wider resources industry.
Glencore’s recent production update showed that it has been able to maintain a high level of operation of its assets, with its production levels being relatively strong across many of its segments. It also highlighted its strong liquidity position, as well as the growth prospects of its marketing division.
In the short run, regulatory risks and weak investor sentiment towards the resources industry could negatively impact on Glencore’s share price prospects, of course. However, its diverse range of operations, a likely recovery for the world economy and its low share price may mean that the business offers an attractive risk/reward opportunity for long-term investors. It could deliver a strong recovery after its fall in the recent stock market crash.
The post Stock market crash bargains: I’d buy these 2 cheap UK shares today and hold them forever appeared first on The Motley Fool UK.
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Peter Stephens owns shares of WPP. The Motley Fool UK has no position in any of the shares mentioned. 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