I’d buy dirt cheap shares in this stock market recovery. Here’s why

 I would buy dirt cheap stocks in this stock market recovery. Here's why

Stock market records around the world show that recoveries are some of the best times to buy. Even after the worst bear markets, stocks of top companies have a habit of climbing to new heights in the long run. And those who are smart enough can make huge fortunes as long as they are cheap.Stock market performance has been less than ideal over the past few weeks. Pessimism is on the rise again after Fitch downgrades the United States' debt.

But frankly, the move from AAA to AA+ is basically worthless for long-term investors. Fun fact: the same thing happened to the UK in 2013 and the FTSE 100 has almost doubled investors' money since then. And this after the crash of the stock market and also after the correction in the last three years.Zooming out a little further shows that UK stocks are already in double digits since October. And as inflation begins to cool, the underlying economy is recovering, with a recession becoming less likely with each passing month.

While it is too early to tell, these could be strong indicators that a recovery is already underway and that we may be approaching or in a new bull market.If that's the case, then history shows that grabbing dirt cheap stocks in high-quality companies today will pave the way for higher returns. After all, buying low and selling high is the ultimate strategy for making money in the stock market.

Savings accounts and bonds have been fairly insignificant wealth-building tools for the past decade. Even as defensive tools, the lackluster returns failed to keep up with normalized inflation, leading to wealth destruction, albeit in small amounts.Today, the situation has obviously changed. Higher interest rates mean that savings accounts and bonds offer higher returns. And both asset classes carry a lower level of risk than stocks. But while their appeal has grown significantly, cheap stocks provide far greater wealth-building capacity.

In other words, while the risk is higher, so is the potential reward. And once confidence restores momentum in equity markets, capital has historically moved toward equities, accelerating the recovery exponentially.The short term remains unclearThe long-term picture for the stock market looks bright in my opinion. However, there may be a few speed bumps along the way. While inflation is cooling, rising interest rates have begun to take their toll on businesses.

As a result, the number of bankruptcies in the UK is rising and big banks such as Lloyds are already writing off hundreds of millions of pounds in bad loans. Further interest rate hikes by the Bank of England are likely to worsen the situation. it is harder for businesses to recover. This is especially true for highly leveraged companies.Predicting what will happen in the coming weeks or months is impossible. The stock market may decide to jump further, making cheap stocks even cheaper.

Therefore, I have spread my shopping activity over several months and will continue to do so. That way, if things take a turn for the worse, I'll still have the capital to pick up top stocks at even lower prices. While the media raves about Google and Amazon, this lesser-known stock has quietly risen 880% - with:

Greater than 20x increase in margins Almost 60% compounded revenue growth in 5 years - more than Apple, Amazon and Google! 3000% Profit Explosion Of course, past performance is no guarantee of future results. However, we think it is now stronger than ever. Surprisingly, you may never have heard of this company.

Still, there's a 1 in 3 chance you've used one of her 250 brands. Many of these are well-known with millions of monthly website visitors, often helping consumers compare items, shop and save. Now that the "cost of living crisis" is upon us, we believe its influence could be on the rise. And that could bring immediate new profits to investors who are in position today. Therefore, please do not leave without a FREE report

Zaven Boyrazian has no position in any of the listed stocks. Lloyds Banking Group Plc has been recommended by The Motley Fool UK. The opinions expressed about the companies mentioned in this article are those of the author 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 does

The recent decline in the stock market has created a unique opportunity for savvy investors to pick up dirt cheap stocks. In times of market turbulence, it is essential to identify promising opportunities that can yield significant returns as the market recovers. In this article, we'll explore the key reasons why I believe now is the perfect time to buy these undervalued stocks and take advantage of the coming market recovery.

 Valuable discounted shares

The recent market correction has led to an across-the-board drop in share prices, creating a unique buying opportunity. Many fundamentally strong companies are now trading at significant discounts to their true value. This is where a wise investor can make a move. By identifying companies with solid financial results and a history of growth, you can make significant gains once the market recovers.

 Market resilience

Throughout history, the stock market has shown remarkable resilience, bouncing back from various crises and economic downturns. The COVID-19 pandemic is a recent example of a severe market shock followed by a strong recovery. This resilience is a key indicator that the current market decline is likely a temporary setback. As the global economy regains its footing, these dirt-cheap stocks are poised for a surge.

 Diversification and risk mitigation

Investing in undervalued stocks allows you to effectively diversify your portfolio. While it is essential to have a mix of assets, including safer investments, allocating a portion of your portfolio to discounted stocks can provide the potential for higher returns. Risk is mitigated by focusing on companies with strong fundamentals, reducing the likelihood of a total loss in the event of any continued market volatility.

 Long-term growth potential

Buying dirt cheap stocks during a stock market rally can lead to substantial long-term gains. Many of today's undervalued companies have solid growth prospects, driven by innovative products or services, expanding market reach, or strategic acquisitions. By investing now, you will be able to benefit from the future success of these companies and potentially multiply your initial investment.