Investors who choose to seek shelter miss an excellent opportunity to buy large companies at very low levels. Truly successful investors are those who use market crashes to buy at a low price and then watch their stocks increase in value steadily as economic conditions improve. It is a tactic that often separates those who make a million from their stock portfolios and those who, well, do not.
With that in mind, I would like to highlight some top value UK stocks on my watch list, starting with Babcock International Group. The earnings outlook for FTSE 100 remains bright as global defense spending strengthens. However, the defense giant is negotiating on a price / earnings ratio (P / E) in the long term of 7 times. It also shows a dividend yield of 7.5% for 2020.
Defense companions QinetiQ and BAE systems also deserve special attention after the stock market crash. They may not generate powerful dividend yields like Babcock. But, at current prices, their profit multiples are 15 times and 11 times very reasonable respectively.
No more major purchases after the stock market crash
More stock market crashes I see are FTSE 100 media giants ITV and WPP. These blue chips face serious short-term challenges as advertising revenues decline. I encourage them to rebound strongly once economic conditions improve. ITV is now a real global distribution giant in contact with the pulse of digital media. Meanwhile, a full recovery plan should allow WPP to steer recovery when it settles down.
These two blue-chips are traded on forward P / E ratios of around 10 times or less at current prices. And their dividend yields are at chubby levels between 4% and 4.7%.
Many UK listed gold miners also look like high value purchases today. Okay, companies like Centamin and Petropavlovsk have actually increased in value since the stock market crash, as a result of soaring investor demand for safe haven gold. But I think they still look too cheap to miss. Petropavlovsk is traded on a multiple P / E before less than 7 times. Centamin, meanwhile, is trading on a 14 times higher ratio, but sports a powerful dividend yield north of 5%.
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Royston Wild has no position on any of the actions mentioned. Motley Fool UK recommended ITV. The opinions expressed on the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that taking into account a diverse range of ideas makes us better investors.