When the FTSE 100 crashed back in March, there were plenty of bargains to be had. Despite the crash occurring over six months ago, I believe there are still some bargains out there.
One stock I consider a great opportunity right now is Evraz Plc (LSE:EVR). EVR is an integrated steel and mining business with operations in Russia, USA, Canada, Czech Republic, and Kazakhstan. It is one of the top producers of steel in the world. In addition to producing and selling steel, it also produces the raw materials. I believe this provides it a great advantage over its competitors in a competitive market.
FTSE 100 opportunity
Between the beginning of 2020 and the height of the crash, EVR lost 50% of its share price value. At the beginning of 2020 you could pick up shares for 406p but in mid-March shares could be purchased for 203p. At the time of writing shares have recovered somewhat and can be picked up for close to 380p per share.
I consider EVR a FTSE 100 bargain at current prices. If you rewind to five years ago, shares in EVR were trading for less than 90p per share. EVR reached a high of 696p per share in January 2019 which is a 700% increase. This shows excellent performance and growth in my eyes.
Latest trading update
In August, Evraz released its half-year results for the period ending 30 June 2020. The Covid-19 pandemic had an impact on EVR’s business. The update pointed towards lower demand and the price of steel dropping sharply due to the economic downturn.
Despite this, it managed to increase profit by 49% compared to the same period last year. In addition, it managed to maintain a positive free cash flow of over $300m which shows it has a good level of liquidity.
Many other FTSE 100 companies have cancelled or suspended interim dividends. EVR declared an interim dividend for 2020 of a total of $291.37m which equates to $0.20 per share. Based on this amount, earnings per share increased by nearly 60% compared to the same period last year. I feel this is a positive move and shows how confident EVR is in its financial position as well as future outlook.
I firmly believe EVR is a bargain buy at its current price. Although the outlook could be viewed as uncertain in the short term because of the economic downturn, its competitive advantages should see the business thrive in the long run.
As I mentioned earlier, EVR produces the raw materials involved in the steel manufacturing process as well as selling the steel it manufactures. Another advantage is the fact its management owns a lot of the business. In simple terms, they will be motivated to achieve the best results for investors. For me this is an attractive trait as an investor. Finally, EVR offered one of the best dividend yields in the FTSE 100 prior to the pandemic.
As the economy begins to grow once more, do not be surprised if Evraz is a top performer in the stock market. For me, it is currently too good an opportunity to pass up.
The post Why I think this FTSE 100 stock is a bargain buy right now appeared first on The Motley Fool UK.
Jabran Khan 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.
Motley Fool UK 2020