Want to make money? Buy the dip! 3 shares I’d buy on the London Stock Exchange

Right now there are bargain stocks on the London Stock Exchange for grabs. If you buy the dip now, you can reap the rewards later.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

During March 2020, stock markets worldwide began to crash. The crash was because of the expected effect Covid-19 would have on world economies. Since then, stock markets globally have ricocheted, and this is true for even the London Stock Exchange.

However, not all companies on the London Stock Exchange have boomeranged back. I think I have found three companies with solid fundamentals that are cheap right now and have the potential to reach new highs.

Reach for the sky

All eyes on easyJet (LSE: EZY), the low-cost airliner that operates within Europe. I know what you are thinking, “who in their right mind would buy airline stocks during Covid-19?” and you would be right. At the moment, all non-essential travel is to be circumvented. But EZY’s operational model and its balance sheet is a recipe for success.

Should you invest £1,000 in Bodycote Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bodycote Plc made the list?

See the 6 stocks

The low-cost model adopted by EZY gives the company flexibility compared to the competition. This allows EZY to adapt to a low volume environment a lot faster. Total assets outweigh total liabilities by a factor of 1.3, and operating income easily covers the debt repayments. Currently on the London Stock Exchange, easyJet is trading just above the March lows. But I think the company could see some remarkable growth when flying becomes the norm again.

Get grounded

Right now there is a boom in the iron ore price. For Anglo American  (LSE: AAL) that means money, money, money!

AAL is one of my favourite companies on the London Stock Exchange. With a high, predictable dividend yield of 4.6%, a balance sheet made of steel (see what I did there?) and is currently fairly priced, what’s not to love? Over the past three years, AAL has consistently reduced its debt to equity ratio to just above 30%. Having as little debt as possible during the Covid-19 pandemic will help the company ride out this wave of uncertainty. I think AAL would make a great addition to any portfolio.

The black sheep

I enjoy scanning through the London Stock Exchange looking for a company that is not receiving the love it may deserve, and I found one! Arrow Global Group (LSE: ARW).

ARW is a diversified financial sector firm that specialises in the debt acquisition space. It will identify, acquire and manage the debt on behalf of financial institutions like banks. At first, this may not sound like a good thing, being that a lot of debts are going to “go bad” in the coming months. But I think the pandemic will open up a whole range of high yield debt for ARW to source profits.

ARW’s share price is 72% down from its March value and for a good reason. But it has a few hidden tricks. ARW has high Return On Equity (ROE) of 28%, a resilient balance sheet with long-term debt (which is only repayable in 2024), and a sustainable dividend yield of 11%. I believe ARW could rebound in a big way once it starts to exceed the market’s expectations and get some much-needed love.


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Miles Williams owns shares in Anglo American. 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.

More on Investing Articles

Man thinking about artificial intelligence investing algorithms
Investing Articles

2 FTSE 250 shares I’ll consider piling into if the stock market crashes!

Discover which cheap UK shares and investment trusts our writer Royston Wild will consider buying if the FTSE 250 slumps.

Read more »

Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.
Investing Articles

Near $200, might Palantir stock become the next Microsoft?

This writer is wondering if he should buy Palantir stock, just in case the AI firm goes on to become…

Read more »

Rolls-Royce engineer working on an engine
Investing Articles

The hidden risks behind the Rolls-Royce share price rally (and why they may not matter)

The Rolls-Royce share price has soared in recent months but beneath the optimism, several hidden risks could threaten future growth.

Read more »

Road 2025 to 2032 new year direction concept
Investing Articles

Starting with £100k, how long would it take to build a million-pound SIPP?

Harvey Jones shows how long it would take an investor to build a SIPP or ISA worth a cool £1m,…

Read more »

Portrait Of Senior Couple Climbing Hill On Hike Through Countryside In Lake District UK Together
Investing Articles

Prediction: in 12 months Shell and BP shares could turn £10k into…

Harvey Jones says BP shares have had a rotten run but there are signs they are starting to climb. Can…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

£10,000 invested in Aviva shares at the start of 2025 is now worth…

We've been told that 'elephants don't gallop'. But someone forgot to tell Aviva shares! Paul Summers looks at just how…

Read more »

Investing Articles

Rolls-Royce could become the largest company on the London Stock Exchange, according to CEO Tufan Erginbilgiç

Rolls-Royce is currently the sixth-biggest company on the London Stock Exchange. However, CEO Tufan Erginbilgiç believes that one day it…

Read more »

Black woman using smartphone at home, watching stock charts.
US Stock

Here are the latest forecasts for Tesla stock

Jon Smith takes a look at Tesla stock predictions from some of the main banks and brokers and tries to…

Read more »