As the FTSE 100 falls, smart investors are looking for stocks to buy for recovery
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Many FTSE stocks are in free fall at the moment. Obviously, the high level of geopolitical uncertainty is disturbing few investors.
Savvy investors have seen this kind of stock market crash before though. And I have no doubt that at the moment, many are looking for stocks to buy before a possible multiple.
Buying a dip
Market volatility brought about by global uncertainty can present great opportunities for long-term investors. Because uncertainty tends to dissipate sooner or later and the market recovers.
We have seen this happen many times over the past decade. Other political events that have temporarily shaken the markets include the Russia/Ukraine war and the Israel/Hamas conflict.
Historically, the market has rewarded anyone who had the courage to buy stocks when stock prices fell. By ‘buying the dip’, investors were able to make more money.
That said, this time there are no guarantees that the markets will recover quickly. If this conflict drags on and oil prices remain high, we will see negative economic consequences.
A UK stock to check out
For those looking for market opportunities right now, one stock to watch is the British supplements powerhouse Applied Nutrition (LSE: APN). Its share price took a big step today due to a possible reduction in volumes in the Middle East due to the conflict.
Its H1 results posted this morning (23 March) were very strong. For the six-month period ended 31 January, revenue rose 56.5% year-on-year to £74.5m. Meanwhile, adjusted basic and diluted earnings per share rose 47.6% to 6.2p. So the company is growing at an amazing pace.
In the results, management noted that since the company’s IPO in 2024, it has seen profile, awareness, trust and loyalty (more than expected). This enables it to move faster and “think bigger”.
However, it also noted that there are disruptions in shipping routes and procurement activities in the Middle East and that it expects some reduction in volumes in the region in the second half of the financial year. This issue has clearly caught the attention of investors as the share price has dropped this morning.
An opportunity?
I think there could be an opportunity here. If an investor is willing to take a three to five year view, I think they can do well.
After this morning’s share price drop, the company’s price-to-earnings (P/E) ratio is around 15. That’s a really low valuation considering the growth in revenue and acquisitions being made.
Of course, the stock may go down before it goes up again. We don’t know when the conflict in the Middle East will end. And there are other risks to consider. These include competition from other brands and reduced consumer spending (higher oil prices can affect spending).
I like the risk/reward setup at current levels. I believe this stock is worth considering at current prices.
