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An army of analysts and experts have been warning of a massive stock market crash for weeks. So what happens? The FTSE 100 hits an all-time high.
That tells me pretty much everything I need to know about second-guessing stock market movements. It can’t be done reliably.
The doom-mongers might still be right, of course. Global markets could crash. Artificial intelligence may have blown the biggest bubble since the dot-com boom of 1999. The $4.5trn US shadow banking system looks spooky. China’s economy is struggling. Voters are restless. These are strange times.
The FTSE 100 could fall
But calling the exact moment and place of a crash is impossible. Anyone who spends too much time worrying about it would never invest at all, and be poorer for it. Shares have delivered more long-term wealth than any other asset class, but the journey is never smooth.
The key is to be ready for turbulence. The best way to handle it is to invest for the long term and stick with it through thick and thin.
At The Motley Fool, we tend to view any sell-off as a chance to buy quality companies at lower prices. It’s often when sentiment is darkest that the best opportunities arise. I’ve already got a shopping list ready for when that moment comes.
FTSE 100 distribution and services group Bunzl (LSE: BNZL) is right at the top. Never heard of it? Bunzl quietly supplies businesses with everything from cleaning materials to disposable cups. It’s one of those behind-the-scenes businesses that rarely makes headlines, but it’s been a consistent performer for decades, boosted by its steady expansion through acquisitions.
The company has lifted its dividend for more than 30 consecutive years, which shows how resilient its model is. For ages I couldn’t find a decent entry point, but with the share price fallling 35% over the past year, I’ve finally started building a position. I didn’t have to wait for a stock market crash to do that.
Bunzl’s been hit by US tariffs, the loss of a key customer, and a tougher trading environment. I’ve bought twice and I’m currently down about 10%. I can live with that. In fact, I’m hoping the shares fall a bit further so I can add more.
Cut-price entry point
Bunzl looks attractively valued, with a price-to-earnings ratio of just 11.6 and a trailing dividend yield of 3.33%. If we do get a wider market correction, I’d be keen to buy more. If we don’t, I’ll still add before the end of the year.
Analysts seem to share my optimism over Bunzl. The consensus one-year price forecast sits at 2,578p, implying potential growth of about 16% from current levels. Of course, forecasts are never guaranteed, and risks remain. A full-on US recession could slow sales, tariffs could rise again, and every new acquisition brings its own challenges.
Patience pays
I prefer to buy shares that are out of favour, when valuations already reflect a lot of bad news. It limits the potential damage if things worsen, while giving me a better chance of profiting when the recovery comes.
Not every struggler will bounce back, but I’m optimistic that Bunzl will. And I’ve got other FTSE 100 bargains lined up in case the stock market does crash. Or even if it doesn’t.
