Coronavirus uncertainty muddies views on buying opportunities for plunging stocks

U.S. stock valuations are tumbling in the wake of the coronavirus-fueled market rout, but determining when equities are cheap enough to buy is a tricky proposition.

“It’s a little bit difficult to look at the P/E even for this year. The estimates are going to come down; they are still too high,” said James Ragan, director of wealth management research at D.A. Davidson. “It’s just so hard to even figure out what the impact is going to be.” Companies may begin to shed some light on the economic damage when they start reporting first-quarter results in the middle of April.

While price-to-earnings valuations are a moving target, the extent of the drop has enticed investors seeking a potential bargain, particularly those who can hold stocks for a long time. “We are getting to the point where stocks are already compelling economically even if the emotional context may still take them down further.”

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