Despite the stock market’s rebound after the market crash, there are still numerous UK investing opportunities available.
Although further challenges may be ahead for the economy, the stock market’s track record of growth suggests that now could be the right time to buy undervalued UK shares.
With that in mind, here are two stocks that appear to offer long-term capital return potential. Buying them today as part of a diverse portfolio of stocks could boost your long-term financial outlook.
Fresnillo: UK investing opportunity for an uncertain economic outlook
The uncertain outlook for the world economy could mean that investors are cautious about taking advantage of UK investing opportunities. However, gold and silver producer Fresnillo (LSE: FRES) could benefit from continued economic challenges that cause investor sentiment towards defensive assets such as gold to improve.
This trend has thus far contributed to a 27% rise in the gold price since the start of the year. Should there be a further rise in coronavirus cases that causes additional lockdowns across the world, it would be unsurprising for the precious metal’s price to move higher. Furthermore, a period of lower interest rates looks set to remain in place over the coming years, which may increase gold’s appeal on a relative basis.
Fresnillo’s earnings forecasts suggest that it is a relatively attractive UK investing opportunity. For example, in the current year it is due to post a 65% rise in its earnings. This puts it on a price-to-earnings growth (PEG) ratio of just 0.7, which suggests that it offers a wide margin of safety. As such, it could be worth buying now for the long run while it offers further capital growth potential.
Sainsbury’s: growth potential in an uncertain sector
J Sainsbury (LSE: SBRY) is another FTSE 100 UK investing opportunity that could produce impressive capital returns in the coming years. The company’s recent first-quarter update showed that its digital sales doubled during the period, with Argos sales increasing by over 10% as click-and-collect and home delivery services became more popular. This could put it in a strong position to capitalise on a likely rise in demand for online grocery and general merchandise shopping in the long run.
The business is also becoming increasingly innovative. For example, it is rolling out a one-hour grocery delivery service in cities across the UK that could help to improve its competitiveness. Similarly, its use of technology in stores, such as where customers scan their own shopping, means it may be able to reduce costs to become more efficient.
Although further uncertainty is likely to be ahead for Sainsbury’s, its share price is currently trading 15% down since the start of the year. Therefore, it could represent a good value UK investing play that is worth taking advantage of after the recent market crash.
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Peter Stephens owns shares of Fresnillo. The Motley Fool UK has recommended Fresnillo. 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.