The massive volatility we’ve seen in the market over the last week or so has created more than a handful of buying opportunities. Here’s three stocks to buy while they’re down.
Massive yield
Stocks in the financials sector are understandably the worst-performing assets across Europe right now. Some are down for good reason, but many aren’t, in my opinion.
For me, pensions manager Legal & General (LSE: LGEN) is one baby getting chucked out with the banking bath water. The stock is down 13.3% since the banking crisis started on 9 March.
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That’s not to say the sell-off in L&G shares is totally unwarranted. The company has countless portfolios of assets, many of which will have some exposure to banks. That could be a concern.
However, I don’t expect this to be too damaging. For example, I note that the Legal & General European Equity Income Fund has just 0.84% of its portfolio in Credit Suisse, the Swiss bank that’s been rescued.
The company has vast experience in global pension risk transfer (PRT) markets and reinsurance capabilities. PRT is the process of transferring the financial liability of a defined benefit pension plan away from an employer which sponsors it.
If that sounds somewhat complex, that’s because it is. It’s a highly specialised area in which the firm has deep expertise and therefore a competitive advantage. So it’s highly unlikely upstart competitors are going to come along and eat L&G’s lunch here.
The stock’s forward-looking dividend yield stands at a market-thumping 9%. I’ll be adding a few more shares to my holding in the coming days.
Mega-projects
Another stock I’d buy without hesitation during this choppy market is Ashtead (LSE: AHT). The stock has fallen 16.7% in just two weeks.
As a reminder, Ashtead is a US-focused company that rents out everything from diggers and generators to scaffolding and traffic cones.
While that presents risks associated with an economic downturn — construction being a cyclical industry — the firm continues to expand significantly. Its earnings per share have grown at a compounded rate of 17% over the last five years.
As the company describes it: “We continue to build market share because we are in the right locations, providing better equipment and delivering a higher quality of service than our competitors.”
The “right locations” part is especially true. It is poised to directly benefit from the construction mega-projects being kicked off by the US government’s $1trn infrastructure bill.
This will see the US upgrade its transport links and onshore manufacturing activity to strengthen its own supply chains. Catering for every construction need imaginable, Ashtead should carry on growing for many years.
I’m sorely tempted to buy more shares.
Diversity
The final stock I’d buy is BlackRock World Mining Trust, which is down 12% in two weeks.
This trust operates a global portfolio of mining companies that will directly benefit from the green transition. Iron ore, copper, lithium, and more, they’ll all be necessary to build a net-zero future.
The mining sector can be stomach-churningly volatile. But the trust provides diversity and portfolio management expertise.
Plus, the projected dividend yield is 6.3%, which is well above the market average. If I didn’t already have a large position in this stock, I’d snap it up today at 647p.
