Home Stock Market The Evraz share price crashes to penny stock levels. Should I buy it? – The Motley Fool UK

The Evraz share price crashes to penny stock levels. Should I buy it? – The Motley Fool UK

by callingemout
Young woman sat at laptop by a window


The Evraz (LSE: EVR) share price has seen quite the fall from grace in the past weeks. Until recently, the company had the highest dividend yield among all FTSE 100 stocks. But then the war happened. The company happens to be a Russian one. It is not hard to put two and two together. 

First its share price tanked. It is trading at penny stock levels now. And it has also decided not to pay dividends. This is disappointing for an investor in the stock, like me. But not all is lost. There is a catch here. 

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Evraz share price recovers a bit

Despite the crash in the Evraz share price recently, it has already shown a pretty smart recovery. In a week, its share price is up 65%. This means that some investors might already be seeing it as a stock with value. 

And it might just be. We really do not know what is going to happen tomorrow. It is possible that peace could be struck and Russia will cease to face the heat from the rest of the world. And that could provide some respite to the likes of Evraz. 

But that is one possibility. And not necessarily one with the highest probability. The war could also be a protracted one and it is even possible that it will have catastrophic consequences. But let us not get there. My point here is only to highlight that the future of the stock in discussion is hanging in balance for now. 

What happens next for the FTSE 100 stock

At a time like this, I find it difficult to make a case for Evraz for the medium-to-long term. Sure, there could be short-term speculative gains to be made. Buy on bad news on the war, sell on hopes that it will end. But that is not investing. That is just speculative trading. And that is fraught with risk. 

On my part, I am just letting my Evraz holdings be. They do not look like they are worth a whole lot anyway, so even selling them now will not do very much for the health of my investments. But if I just let them hang around in my investment portfolio, maybe in a few years they could provide an opportunity for a respectable exit from the stock. Or even growth in my capital, who knows?!

What I’d buy now

If I had to buy stocks, though, I think there are some pretty good choices available from among its peers. One example is Anglo American, which I wrote about recently as being a deeply undervalued stock despite its strong performance. But there are plenty of other FTSE 100 stocks that look both safe as well as potentially lucrative investments too. I would much rather focus on these. 

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Manika Premsingh owns Anglo American and Evraz. The Motley Fool UK 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.





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