I’d use the market crash to load up on FTSE 100 giant HSBC’s shares

first_imgI’d use the market crash to load up on FTSE 100 giant HSBC’s shares Image source: Getty Images. “This Stock Could Be Like Buying Amazon in 1997” Investor sentiment towards HSBC (LSE: HSBC) shares has weakened considerably since the start of 2020. While the bank has outperformed its peers, HSBC shares are still down a third so far this year. This figure excludes dividends. As investors have priced in the uncertain economic outlook facing the broader financial services industry, they’ve rushed to sell bank shares. But this knee-jerk reaction has turned HSBC shares into an undervalued bargain. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Growing uncertaintyWeak business confidence and low interest rates could combine to limit the earnings growth rate of banks all over the world the medium term. What’s more, regulators have also demanded that banks suspend their dividends.HSBC has complied, but these actions have upset some investors. It was due to pay a dividend of 35p per share this year. This distribution is now on hold for the foreseeable future.However, looking ahead, it would appear HSBC shares could be an attractive investment at current levels. As one of the world’s largest banks, HSBC has an impressive competitive advantage over the rest of the sector. The banking group is also one of the largest lenders in China. This makes it one of the few genuinely global financial service companies.China is already recovering from its coronavirus crisis. As HSBC generates more than two-thirds of its income from the Asian powerhouse, the country’s recovery should support the lender’s bottom line.HSBC’s balance sheet also suggests the group is in a relatively stable position to overcome the current economic uncertainty. The lender’s fully loaded common equity Tier 1 ratio was 14.7% at the end of 2019. That was 4.3% above the regulatory minimum of 10.4%. For some comparison, at the end of June 2008, the ratio was just 8.8%.Undervalued HSBC sharesAll of the above implies that while HSBC shares could remain unpopular among investors in the near term, the bank’s long-term outlook is bright.HSBC’s strong balance sheet and global operations should enable it to overcome the current economic uncertainty. That’s especially true compared to other UK-based lenders.Despite this, HSBC shares now trade at their lowest level since the darkest days of the financial crisis. Indeed, shares in the lender are trading at a price-to-book (P/B) ratio of 0.7. A P/B ratio of less than one implies the market believes a business is worth less than the value of its assets.So, the stock appears to offer a wide margin of safety at current levels. As such, while the recovery in HSBC shares might not be smooth or swift, the bank appears to offer tremendous potential in the long term.When the company is allowed to reinstate its dividend, investors buying today could see a dividend yield of 8.6%. That suggests HSBC could deliver an attractive return profile for long-term investors from its current share price. Our 6 ‘Best Buys Now’ Shares I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Rupert Hargreaves does not own any share mentioned. The Motley Fool UK has recommended HSBC Holdings. 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.center_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Simply click below to discover how you can take advantage of this. Enter Your Email Address Rupert Hargreaves | Sunday, 19th April, 2020 | More on: HSBA Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. See all posts by Rupert Hargreaveslast_img

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