Analysts say share bargains are there for the taking among the big, good quality Australian-listed companies. Top picks for bargain hunters include Telstra, National Australia Bank, Commonwealth Bank and Woolworths.
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But investors will need to be quick as the market has already started to recover from the losses it saw at the start of last week.
"How can you go past Telstra," says Michael Heffernan, a senior client adviser and economist with sharebroker PhillipCapital. The telco's shares were trading at about $6.60 in February and are now well below $6.
"That to me is just incredible," Heffernan says. "It is paying a very attractive [cash] dividend yield of more than 5 per cent, which is pretty good in my books."
After franking credits, Telstra shares can be bought on a dividend yield of about 7.5 per cent.
Of the big banks, analysts like NAB and CBA. The Commonwealth Bank's share price has come down from about $95 in March to about $75 now.
"I have always preferred CBA and it has come down a fair way," Heffernan says.
A note from Morningstar on its "best stock ideas" says NAB is trading at an attractive discount. Its shares are about $32 and Morningstar considers "fair value" to be $41.
"New chief executive Andrew Thorburn has made significant progress in solving a wide range of legacy issues," Morningstar says.
The most important of these will be the sale, by the end of this year, of the British banking assets, Morningstar says.
The bank's recent rights issue positions the bank above its peers with regards to higher regulatory capital requirements, Morningstar says.
It is expecting the bank to produce "attractive" revenue growth.
Analysts also like Woolworths. The giant retailer has been going through tough times, to say the least, losing market share to the likes of Aldi and others.
Its share price has been on the way down since April 2014 when it hit $38. With the rout on the Australian sharemarket, it has taken another leg down, to under $27.
Morningstar says Woolworths has "possibly been its own worst enemy in recent years".
It has increased profit margins and invested money and management time into the failing Masters joint venture, Morningstar says.
The researcher says "fair value" for Woolworths is $33 a share. It expects the retailer to be able to "reignite revenue and profit growth".
Medibank Private is also on analysts' bargain-hunting lists even though its share price has risen while the market was falling.
Australia's biggest private health insurer was floated on the sharemarket late last year and recently announced a profit result that exceeded analysts' forecasts.
That pushed the share price to above the $2 float price paid by retail investors.
When the market was falling, Medibank was one of the few companies whose share price rose.
"We like situations like that where there is a sea of red and there is a stock that is up," Greg Smith, head of research at Fat Prophets, says.
"Yield is there and Medibank continues to take out costs and has moved back above the [float] price but is lower than it was," he says. It was about $2.60 in February this year.
Analysts say that despite the gyrations on markets, now is a good time to buy.
"The market is volatile and there is a lot of scaremongering," Smith says.
But it is different now compared with the onset of the GFC in 2008.
"The US economy is coming back and China will do all sorts to keep growing and likewise for Europe.
Australian companies now carry a lot less debt on their balance sheets than eight years ago and the low interest rates on cash will continue to support sharemarket valuations, Smith says.
Elio D'Amato, chief executive of researcher Lincoln Indicators, agrees. "The current market volatility is investors' jumping at shadows," he says.
Companies have been cautious in their outlook statements during the recent reporting season.
They are improving their balance sheets even further, which is a good thing for companies and their shareholders over the longer term, D'Amato says.
