Stock market correction: Is there still time to buy UK shares cheap?

When the FTSE 100 slipped to a 2026 low of 9,670.5 points on 23 March, it technically marked a stock market correction. The top London index had dipped over 11.5% from its recent high, more than the 10% needed to meet the definition.

A stock market correction doesn’t sound anywhere near as bad as a stock market crash — which is a fall of 20% or more — does it? It actually sounds, well, correct… and correct normally means good, right? I’d say it’s definitely good for investors looking to buy cheap shares.

In the past couple of days, however, share prices have clawed back some of their losses. So can we still find bargains among FTSE 100 stocks?

Top FTSE 100 shares

For me, that’s still a firm yes. And I’m drawn to what I see as one of the best stocks in one of my favourite sectors. I’m talking about Legal and General (LSE: LGEN). The above chart shows how it’s been lagging behind the index.

Legal & General has been hit harder by recent events than the stock market in general. It lost as much as 22% from its 52-week high at the low point — so this one stock, at least, has technically crashed.

We’re looking at a 12% rebound since that bottom by the time of writing. But I really do expect insurance stocks to suffer more from economic threats, especially with warfare involved. I definitely see likely further volatility in the sector — and that’s a risk potential investors need to be comfortable with.

Big fat dividend

The share price has pushed the stock down to a forward price-to-earnings (P/E) ratio of around 7.8 now. That seems cheap to me — though it might not be as good value as it immediately appears. The problem is, analysts expect earnings to dip a bit after the current year. And that could bring the P/E up to 9.5 by 2028.

Does that offer a sufficient safety margin to compensate for the typically cyclic long-term volatility of the sector? I might give it the thumbs-down except for one key thing. That’s the predicted Legal & General dividend yield, currently put at a whopping 9.1%. It’s currently the biggest on the whole FTSE 100.

Now, dividends are never guaranteed. And insurance sector dividends are probably among the least guaranteed of the lot. But analysts don’t see a cut on the cards in the next three years, which I take as a good sign.

What to do?

Legal & General has been on my watchlist for some time. But the main reason I haven’t gone for it is because I bought Aviva shares some time ago, and I don’t want to go too big on any one sector — even if it might be my favourite.

I think investors who like the long-term cash prospects from Legal & General, and who are comfortable with some volatility, should consider the stock when it’s down. But the same goes for most stocks in most sectors. A stock market correction is our friend, in my book.

The post Stock market correction: Is there still time to buy UK shares cheap? appeared first on The Motley Fool UK.

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Alan Oscroft has positions in Aviva Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.