All the headlines suggest we’re heading for a stock market crash, or rather, that we’re in the middle of one.
With the Stocks and Shares ISA allowance deadline fast approaching on 5 April, many will be wondering whether now is the right time to invest.
Fears over Donald Trump’s tariffs are spooking investors, making it a worrying time to commit fresh cash.
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Despite the headlines, the FTSE 100 is actually doing okay. In fact, it’s up around 5% this year. Wall Street has taken a bigger hit, with the S&P 500 down 5% amid US recession fears. So, let’s not panic just yet.
Still a good time to buy UK shares
Some may be tempted to swerve the stock market altogether and opt for a Cash ISA. That’s understandable, but history shows stocks tend to outperform cash over the long run, despite periods of volatility.
The ISA allowance is issued on a use-it-or-lose-it basis, but here’s some good news. Most investment platforms allow clients to park cash inside the Stocks and Shares ISA.
This buys time to decide which shares to purchase, without losing the valuable allowance. Most platforms pay a bit of interest too
That said, I wouldn’t leave funds sitting in cash too long. The stock market works best when given time to grow, and leaving money uninvested means missing out on potential gains and dividends.
A more exciting but riskier option is to take advantage of current uncertainty by picking up shares that have been oversold.
One example? Budget airline easyJet (LSE: EZJ). Its shares have tumbled 18% in the last three months and are down a whopping 47% over the past year.
As a result, the easyJet share price now looks seriously cheap, trading at a price-to-earnings ratio of just 7.7. That’s roughly half the FTSE 100 average of around 15.
EasyJet is risky but may be rewarding
Airline stocks are naturally volatile, facing risks from fuel price swings, economic downturns, geopolitical tensions and even unexpected disruptions like natural disasters or power outages. Heathrow’s recent blow-out was just the latest setback.
Despite these challenges, easyJet is showing resilience. The board reported a 13% rise in revenue to just over £2bn for the three months to 31 December. It also managed to halve its pre-tax losses to £61m, down from £126m the year before. Summer bookings are holding up.
The 20 analysts covering easyJet have produced a median price target of 695p for the next year. If correct, that’s a staggering 50% jump from today’s price.
Of course, forecasts are just that – forecasts. Many were made before recent volatility and may not fully reflect today’s challenges.
But for those willing to consider a bit of risk, there could be long-term opportunity here. There’s even a 2.4% dividend yield, which should grow over time.
Navigating a volatile stock market can be nerve-wracking, but that doesn’t mean investors should shy away completely.
The key is to secure that ISA allowance, keep a level head and focus on long-term opportunities. EasyJet is just one FTSE 100 stock to consider. I can see plenty more out there for investors willing to turn today’s turbulence to their long-term advantage.
