Are we looking at a once-in-a-decade chance to buy cut-price FTSE 100 shares?
Itâs been a volatile few weeks for FTSE 100 shares, with investors rattled by the Iran war. Itâs undoubtedly a scary time, but at The Motley Fool, our default response is not to panic.
Selling shares in moments like this can easily backfire. Weâve seen three shocks in recent years. The pandemic in 2020, the Russian invasion of Ukraine in 2022, and last year’s US tariffs. Each time, markets recovered at speed.
FTSE 100 correction
The latest crisis has triggered a correction, with the FTSE 100 falling more than 10%. Housebuilders Persimmon, Berkeley Group Holdings and Barratt Redrow have all crashed by 25%.
The sell-off looked like a classic buying opportunity but I suspect many investors hesitated, fearing worse to come. Yet history shows that moments like these present the best opportunities to buy shares.
Those who’ve held back may be kicking themselves today. The FTSE 100 climbed a meaty 4.57% in the four trading days to Good Friday (3 April). So has the opportunity gone? I don’t think so.
Markets never move in straight lines. There are good days and bad days, both in bull and bear markets. Trying to pinpoint the perfect moment to buy is well nigh impossible. At today’s reduced valuations, plenty of FTSE 100 stocks still look irresistible to me.
RELX is a different story
One top stock has fallen sharply lately and it’s got nothing to do with Iran. Data and analytics specialist RELX (LSE: REL) supplies subscription-based tools to industries including law, insurance, finance and science, helping professionals assess risk, manage compliance and carry out complex research.
It’s a British success story, combining steady growth with several decades steadily rising dividends. Over the last 15 years, they’ve climbed at an average rate of 8.3% a year. But there’s been a shadow hanging over RELX for some time.
When ChatGPT burst onto the scene in late 2023, investors feared generative AI could reduce demand for expensive specialist databases. Those concerns returned with a vengeance in February, when Anthropic launched AI tool Claude for legal teams. The RELX share price plunged and while it’s recovered a little, it’s still down about 35% over 12 months.
On 12 February, RELX reported a healthy 9% increase in underlying operating profit to £3.3bn. But it’s the future investors are worried about. The valuation has come down sharply. The price-to-earnings ratio is now around 19.35, compared with above 30 not long ago. The dividend yield has nudged up to 2.7%.
We still don’t know how big a threat AI will pose, but it could struggle to replicate the depth of RELXâs data and industry relationships. RELX is also fighting back by adding AI functionality to its platform. I think it’s worth considering. As ever, investors should take their own view.
There are always opportunities in the market, whether it’s rising or falling. Today, plenty of FTSE 100 stocks are now trading near a 10-year lows. Which means there’s already a big opportunity out there now. And I wouldn’t be surprised if we got an even bigger one in the days ahead.
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Barratt Redrow, Persimmon Plc, and RELX. 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.
