A bad day for the stock markets could turn out to be a great one for investors. If we play our cards right that is. And today is one of those days. The FTSE 100 index is down by 2.2%. And there is a genuine crash in the prices of some stocks.
Travel stocks melt down on coronavirus variant
The biggest losers are understandably travel-centric. International Consolidated Airlines Group is down by 14% as I write. It is followed by Rolls-Royce, which is down 10%. The reason for their decline is valid, since we do not know what is going to happen next with the new coronavirus variant. In other words, these could be seen as high-risk stocks right now.
Lower risk FTSE 100 stocks to buy now
But, I think some of the other FTSE 100 stocks to drop are lower down the risk scale. Consider stocks like the oil biggie BP, Lloyds Bank, and the metals giant Glencore, which are down by 6.5%, 6%, and 6% respectively right now. This could change before end of trading today, but I think it still informs what we could see in the coming days if the panic continues.
BP could recover
I would buy them today or in the next few days. BP could be deeply affected if we go back to full lockdowns again. But realistically speaking, that does not seem likely to me. We are much better prepared to deal with the virus than when the pandemic started.
The UK has already stopped travel from six African countries and businesses are better geared to deal with lockdowns. So, while oil demand could be impacted, it would be nothing like the dip last year, I reckon. I bought BP when its price was still low, and it has been rewarding for me so far.
Lloyds Bank looks attractive
Next, I think it is finally time for me to buy the UK’s big commercial bank, Lloyds Bank. At 46p levels, it looks quite attractive to me. I have argued recently that it is undervalued anyway, and even keeping the risks of the virus variant in mind, I think that remains the case. The bank has returned to good financial health. Now that the authorities have permitted it, its dividend yields could back to their pre-pandemic highs and it still continues to trade below its early-2020 levels. It is the next stock on my buy list.
Glencore is a buy-on-dip
Lastly, I like the miner Glencore, which has had a great run in the past year. With a current price-to-earnings (P/E) ratio of 33 times, the stock is much higher priced than the average FTSE 100 stock with a P/E at 20 times. I bought it a while ago, and while it was a wait before its share price rose, it did not look back once it started rising. I might buy more of it on this dip if it remains weak.
To note
Of course, there is always a chance that the variant could be one straight out of our nightmares and everything could turn to dust now. But I will focus on the most probable outcomes. And past stock market panics normally result in fairly quick recoveries, as we saw last year.
Manika Premsingh owns shares of BP, Glencore, and International Consolidated Airlines Group. The Motley Fool UK has recommended Lloyds Banking Group. 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.
This post was originally published on Motley Fool
