Stocks to buy as the FTSE nosedives!

As an investor, I am always looking for stocks to buy that can add to my portfolio. However, I am always wary when the market pulls back. This is because when stock prices fall, there are often buying opportunities.

Let’s explore.

This is what Buffett said

Legendary investor Warren Buffett often says that he likes when stock prices fall, because it gives him the opportunity to buy more of his favorite stocks. Buffett once said that “net buyer“Stocks benefit when the stock market goes down.

But as a value investor, it can be easier to find value stocks — those trading at a discount to book or intrinsic value — when stock prices fall. To that end, Buffett once advised investors to “fear that others are greedy, and greed when others are afraid“.

Finance

Stocks have tumbled across most sectors in recent weeks, but the biggest losers have been financial stocks. This is one area I focus on because I don’t believe the correction is warranted.

Shares in the sector fell after the failure of Silicon Valley Bank, which raised concerns about the health of other banks’ bond holdings. However, as I see it, this concern is generally overplayed.

European banks like Lloyds and Barclays it has diversified bond holdings, impressive liquidity coverage, and sticky household deposits that account for 30% of all liabilities. This is a very different bank than the US tech financier who had to sell bonds at a loss as interest rates rose.

The biggest challenge for banks is bad debt with rapidly rising interest rates. Optimistically, though, I think we’re getting close to terminal rates.

But it wasn’t just the banks that collapsed. A rich company Legal & General and Hargreaves Lansdowne suffer, perhaps unfairly.

house

Home stocks are also among those feeling the pain. persimmon down 13% over the month (down 45% over 12 months), and some housebuilders fell further after the rate hike this week – despite the positive forecast on inflation.

One of the stocks that generally bucked the trend Vistry Group. The stock is down about 6% for the month (down 25% for the year), but there is some positive news. The company posted a 21% rise in adjusted pre-tax profits to £418.4m for the year to December 31 and said buyer confidence was on the rise.

I’m the worst behind housebuilders.

So what do I do?

I focus on the hardest part of the market, the bank. Barclays it’s down over 20% in one month (17% in a year) and I really don’t think it’s warranted. The stock is currently trading at a price-to-earnings ratio of just 4.5. So I added stocks like Lloyds and Barclays.

I also think it’s time to reconsider the housing market. And Vistry is a good choice. Interest rates may go down from here, and that’s good for private sales. Also, housebuilders have an affordable housing business which should give them visibility into future earnings – we may see growth here with the government not having affordable housing targets.