To say we live in uncertain times is possibly the greatest understatement of the year so far. The market is rocking back and forth from peaks to troughs in response to rapidly-changing world events. If the share market were to drop again by, say, 10% then I would be looking at these shares to buy for my portfolio.
Second chance value shares
For me, a value share is a good company that is underappreciated by the investing community. Moreover, when crashes happen good companies often get trampled in the rush for the exits. In March there were dozens of good companies selling at great prices.
Fortescue Metals Group Limited (ASX: FMG) is one of the shares I bought heavily during the ASX trough. I think it is undervalued even today. However, if I can get it cheaper I will try to do that. I am happy to wait to see if it is going to dip again before the economy starts to normalise. Fortescue is selling at a reasonable price to earnings ratio (P/E) of around 6.
Another great value 'buy' if the market falls would be Wesfarmers Ltd (ASX: WES). I do not own this share at the moment but I would buy in if the price were to fall by a reasonable amount. I like what this company is doing to reduce poor-performing retail outlets. Recent work to release capital and closing down smaller stores took courage. Also, and most importantly, Wesfarmers has an online asset that is a direct competitor to Kogan.com Ltd (ASX: KGN).
Great growth shares to buy
Of course, everyone wants the chance to buy into Afterpay Ltd (ASX: APT) if the share price lowers again. Personally, though, I think this is pretty unlikely. For me, I would be very interested in investing in EML Payments Ltd (ASX: EML) if the price was to lower to a more reasonable level. Currently, it has a P/E of 102 which indicates the market thinks it will earn a lot in the near future. For me, this seems a little high.
Zip Co Ltd (ASX: Z1P) has nearly doubled in the past month. It now has a market capitalisation of $2.39 billion versus the Afterpay market cap of $15 billion. At best this company has to increase its value 6 times, which I do not believe it's likely to. I would buy into Zip Co if it reduced its market cap by 25 – 50%. Given the tenuous nature of the market and of these new buy now pay later shares, I think that is a possibility.
Foolish takeaway
There is a lot of value on the share market today, and a lot more opportunity if it were to fall again in the near future. One of the keys to investing is to be patient. Another important discipline is to not get worked up if you 'miss out' on an opportunity. There will be others, and there is always something you can do to grow your capital.
