Following this year’s stock market crash, volatility has been the watchword for shares in 2020. Even after this week’s positive vaccine update, and the subsequent positive market response, many stocks continue to trade significantly below the levels at which they began the year.
However, I think this could be a great opportunity. As such, I’ve been buying a basket of stock-market-crash bargains to get rich in the long run. Here are five of my favourites.
Stock market crash bargains
The pandemic has gutted the hospitality sector. Despite government support, forced closures have plunged businesses into the red. As long as the virus continues to race around the world, hospitality will continue to suffer. But it won’t last forever. People will return to pubs and restaurants at some point. That’s why I’ve been looking at these stocks recently.
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Two of my favourites are J D Wetherspoon and Fuller Smith and Turner. Both of these businesses have seen sales fall as a result of the pandemic. The good news is, they both have a balance sheet strong enough to weather the storm.
What’s more, both firms have a definite competitive advantage in the form of their brands. Wetherspoon is known for value while Fuller is known for quality. These advantages should help both groups recover on the other side of the pandemic.
Another stock market crash bargain that’s struggled to recover is Jet2. Owner of the Jet2 holiday brand, the group has seen the value of its shares crumble this year. It is easy to see why. Overseas travel has effectively been banned in 2020.
Unlike other holiday companies, Jet2 acted quickly to refund customers. I think this has really helped the firm’s reputation. It’s also the main reason why I’d buy this business as a recovery play. When consumers start spending again, I reckon Jet2’s reputation will prove to be a strong tailwind for the company.
Bargain blue-chips
Investors rushed to sell everything in this year’s stock market crash. They even dumped stocks that have managed to escape the worst of the slump. British American Tobacco and GlaxoSmithKline are my favourite examples of this. Both companies have informed investors that they expect profits to hold up in 2020.
Nevertheless, negative investor sentiment has pushed down the value of the two businesses to low levels. Following these declines, I think both stocks appear deeply undervalued. That’s why I’d be happy to own them at current levels.
I reckon all of the above companies have what it takes to stage a recovery in 2021 and beyond. In most cases, I think the shares can yield large returns from current levels, possibly even beating the broader market over the next few years. In my experience, once a recovery stock gets going, it can be tough to stop.
