Many investors may naturally be cautious about the prospect of buying UK shares after the recent market crash. After all, the global economic outlook is very uncertain at the present time. And a second decline in stock prices can’t be ruled out.
However, many stocks now appear to offer good value for money after their recent falls. Here are two such companies that, while facing substantial risks in the near term, could produce high returns in the long run.
As such, now could be the right time to buy them in an ISA to improve your prospects of making a million.
A turnaround opportunity for long-term investors?
While many UK shares have declined since the start of the year, Shell’s (LSE: RDSB) share price performance in 2020 has been especially challenging. The oil and gas company’s shares have declined by 45% year-to-date, with its recent updates highlighting the difficulties faced by the sector.
They include asset impairments due to a fall in the forecast prices of oil and gas. Add in lower demand for energy as a result of a weak economic outlook.
Despite this, Shell appears to have the capacity to deliver improving financial performance over the long run. It has a relatively solid balance sheet that could allow it to invest in renewables. This may help to reposition the business in a period where the shift towards greener forms of energy is likely to continue.
The company also plans to become leaner and more efficient, according to its recent update. This could help to mitigate a weaker top line performance. It may also mean it’s able to offer improving total returns within a diverse portfolio of UK shares.
Solid performance relative to other UK shares?
While the performance of many UK shares has improved over the last few months, Vodafone’s (LSE: VOD) 17% rise in the past three months is significantly ahead of many of its index peers. For example, the FTSE 100 has risen by 8% over the same time period.
The company’s recent results appear to have boosted investor sentiment. They showed a rise in sales and profit. They also included news of continued progress in its digital transformation and further investment made in infrastructure. This suggests the business is performing relatively well despite a challenging global economic outlook.
Furthermore, Vodafone’s shares appear to offer good value for money. They have a dividend yield of over 6%, which suggests they include a wide margin of safety. With fewer UK shares offering attractive yields and improving financial performances, the stock could become increasingly popular among investors.
This could lead to impressive total returns that contribute to improving returns for your portfolio. They may even help you to make a million over the coming years.
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Peter Stephens owns shares of Royal Dutch Shell B and Vodafone. The Motley Fool UK has no position in any of the shares mentioned. 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.