It has been a brutal day on the market today for investors.
The S&P/ASX 200 Index (ASX: XJO) closed 4.42% higher after dropping down around 8% earlier in the day. This is a drop of 22% from just 3 weeks ago.
In the midst of all this volatility, I think right now it's important to stay calm and look at the bigger picture and take a long-term view.
It's important to remember that share markets can sometimes go through very steep market corrections, like the one we are now experiencing. However, if we look at the history of the share market over the past century, it shows us that the market always bounces back eventually.
We don't know exactly when the bottom of this share market crash will be. However, what we do know is that with share prices sharply down, the price-to-earnings (P/E) ratios of most shares are now much lower, so shares can now be purchased at much more attractive prices than a few weeks ago.
With that in mind, I'm on the hunt for bargains. Here are 2 of my top picks.
Domino's Pizza Enterprises Ltd. (ASX: DMP)
I think that Domino's is relatively well shielded from the impacts of the coronavirus compared to many other restaurants and fast-food operators.
While sit down restaurants may be impacted in Australia in the months to come (due to Australians staying away from public places), Domino's doesn't have a sit-down service here locally, and any in-store pick-up by patrons is normally very quick. In addition, Domino's does a lot of home deliveries.
In its recent half year FY20 earnings announcement, Domino's delivered a solid first-half result, with online sales in particular growing very strongly by 19% to $1.11 billion.
As part of the current ASX sell-off, which has seen strong drops today, there has been a sharp correction to the Domino's share price since 20 February. I believe that now is a good time to purchase Domino's shares at relatively cheap prices.
BHP Group Ltd (ASX: BHP)
BHP now offers a fully franked dividend yield of 6.6%, and with grossed-up dividends that takes it up to a yield of 9.4%. This very high figure suggests to me that the sell-off of BHP shares has been overdone, and that a strong rebound in its share price is likely at some stage.
Long after the coronavirus pandemic is over, the global economy's demand for iron, coal and copper will still be here, and BHP is a global leader in production of all of these minerals. I think that now could be a great time to purchase shares in this mining giant at a very reasonable price.
