The election in the USA has caused a lot of volatility and decline in stocks across the board. Price declines don't have to be a bad thing though as they can create an opportunity for brave investors.
The worst point of the 2009 crash would have been the best time to buy, giving investors a great starting dividend yield and good growth since then.
As Warren Buffett famously said "be fearful when others are greedy and greedy when others are fearful".
The upcoming days, weeks or even months may present a great buying opportunity. Good value has been hard to come by in recent months, but now everything may go on sale.
Of course, some underlying businesses will be less affected than others. Here are five businesses I'd buy with $5,000 to take advantage of the price declines:
Challenger Ltd (ASX: CGF)
Challenger is by far Australia's largest provider of annuities. I think there's a lot to like about Challenger, it ties in well with the growth of superannuation and the increasing number of people hitting retirement age who want guaranteed income.
In fact, I think the market turmoil will encourage more people to get an annuity for the peace of mind.
Challenger dropped 3.53% yesterday, it currently has a grossed up dividend yield of 4.6% and it's trading with a price/earnings ratio of 18.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
'Soul Patts' is one of the oldest businesses listed on the ASX. It's been paying a dividend every year for 100 years and a changeover of the president of the United States isn't likely to break this run.
With large holdings in growing Australian businesses like TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW) it can keep growing no matter what the rest of the world is doing.
Soul Patts dropped 1.17% yesterday and is trading at a grossed up dividend yield of 5.45%, with a price/earnings ratio of 23.5.
Healthscope Ltd (ASX: HSO)
Healthscope is the second biggest operator of private hospitals in Australia. The aging population will visit hospitals more later in life and the government will find it increasingly difficult to afford the public hospital system.
This will all turn into more patients for Healthscope and its hospitals. The recent large price decline presents a great opportunity for potential investors.
Healthscope dropped 0.87% yesterday and is trading on a dividend yield of 3.2%, with a price/earnings ratio of 21.5.
InvoCare Limited (ASX: IVC)
InvoCare is one of the most defensive businesses on the whole ASX. It currently has roughly 33% of the funeral and cemetery market in Australia. This market is expected to keep growing as the number of deaths is expected to increase each year until 2034. With its recent move into the USA, there is a lot of growth InvoCare can still capture.
InvoCare dropped 0.47% yesterday and has a grossed up dividend yield of 4.41%, with a price/earnings ratio of 21.5.
WAM Research Limited (ASX: WAX)
Geoff Wilson and his team have done very well with this listed investment company. Over the last five years it has given shareholders an average total return per year of 25.2%.
Of course, past performance is not an indicator of future performance but it has done well up to this point. With an average cash position of 25% to 30% WAM Research has a lot of money it can deploy on bargain opportunities.
WAM Research dropped 2% yesterday and has a grossed up dividend yield of 8.26%, with a price/earnings ratio of 9.5.
Foolish takeaway
A new American president doesn't mean the end of the world. For us as investors it creates a great opportunity to buy great businesses at discounted prices. The market could be volatile and keep dropping further than yesterday, but who knows for how long? Keep calm, carry on and keep investing.
