Bitcoin’s price may have rallied after its downturn earlier this year, but crashing UK shares could offer greater long-term returns. A number of FTSE 100 and FTSE 250 stocks are yet to recover from the market crash, and may therefore offer good value for money.
Here are two prime examples of such stocks. Although they may yet face further share price volatility in the short run due to weak operating conditions, in the long run they could deliver strong capital growth. As such, now could be an opportune moment to buy them in a diversified ISA portfolio.
Shell: a cheap oil and gas company among UK shares
Shell (LSE: RDSB) has been among the biggest-falling UK shares in 2020. The oil and gas major is currently trading over 50% down on its price from the start of the year.
Of course, a key reason for its share price decline is reduced demand for oil. Alongside supply growth, this has caused the price of oil to fall to exceptionally low levels in recent months. As a result, the company has reduced its long-term oil price expectations, which has caused huge impairments in its recent results.
Looking ahead, Shell plans to pivot towards cleaner forms of energy. Although this process may not be smooth, it appears to have the financial means to invest heavily in low-carbon energy assets. Over time, this could not only improve its financial performance, but lead to stronger investor sentiment that boosts its share price.
As such, now could be the right time to buy a slice of it while it appears to offer a wider margin of safety than many other UK shares.
Glencore: recovery potential after its share price fall
Glencore (LSE: GLEN) is another FTSE 100 stock that has underperformed many UK shares in 2020. The mining and commodity trading giant’s stock price has declined by around 30% since the start of the year. A slowing world economic outlook has caused investors to factor in a wider margin of safety.
The company’s recent half-year results showed its marketing division has produced a relatively strong performance. This may help to differentiate it from other commodity companies, and could provide the business with strong growth during a period of weaker economic performance.
Glencore also announced its divisions have largely been able to operate in recent months, despite ongoing challenges posed by the pandemic. Its diverse range of activities could help to protect it against operational challenges in specific markets or locations.
Looking ahead, investor sentiment towards commodity stocks and other UK shares could weaken due to risks posed by an uncertain economic outlook. However, with what appears to be a sound strategy and a diverse range of operations, Glencore could offer recovery prospects over the coming years after a challenging 2020.
Peter Stephens owns shares of Royal Dutch Shell B. 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.