It’s been a volatile few weeks for UK stock markets, but so far FTSE100 he behaved quite well. Will this change soon?

Given that the world is facing the biggest energy shock in history, I would expect global stock prices to already be collapsing. They don’t have it. But April was uneven. The FTSE 100 ended the month roughly where it started. Investors still prefer to believe that the conflict will somehow be resolved and the Strait of Hormuz will be reopened. I’m not convinced.

Oil markets can’t make up their minds. On Thursday (April 30), the price of a barrel of Brent crude oil reached $124, more than doubling since the conflict in Iran began. It has since dropped to $108. This gives some relief. But it’s still very high. I have a bigger worry. So far we haven’t experienced significant shortages in the West, but they have reached Asia and we are reducing our supplies at a record pace. If shortages become a reality, there could be a shock.

Are we at risk of a stock market crash?

HFI Research just warned “panic buying” and hoarding as the world depletes oil supplies. He says shortages could soon push the price above $150 a barrel. Of course, we don’t know if this will happen, but I think the risk is starting to boost. Next week could be very bumpy, just like the rest of May. If UK shares crash, I have a strategy ready. I will buy companies at discounted prices whose long-term prospects remain intact. I think we may see a massive opportunity for investors willing to hold off on stock purchases for at least five to 10 years. Many of them already look tempting.

To my surprise, a FTSE 100 weapons manufacturer Babcock International Group (LSE: BAB) is currently one of them. I had watched the company’s stock price skyrocket over the years and thought I had missed an opportunity because the stock had become pricey. However, defense stocks saw an overall decline in April. British giant BAE systemswhich I hold is down 11.35%. Babcock fell 13.25%.

There are many more possibilities like this

Isn’t there a war going on? It is there and unfortunately there is no sign of it ending. Here’s what I think happened. Babcock flew a little too high. Despite April’s decline, the company’s stock is still up 270% in five years. As a result, it was pricey, with a price-to-earnings ratio of 30. Investors decided to liberate some of the profits and put them elsewhere, possibly in better value opportunities.

The mistake was certainly not caused by Babcock’s actions. There was little company-specific news last month, other than another lucrative UK government contract win. The order book currently stands at a solid £10 billion, giving investors visibility into real returns.

The only downside is that the stock still isn’t inexpensive. The P/E ratio is still 26.9, well above the 10-year average of 14.5. And if the Iran conflict is somehow resolved, its stock could fall further – while potentially bad for Babcock, it would be good for the world on both a humanitarian and economic level, so I won’t complain. I think Babcock looks tempting today. Now I’m watching him share like a hawk and I’ll take advantage of any recent weakness. I expect to see many more opportunities like this in the uncertain weeks ahead. I’m in a shopping mood.