The stock market crash may or may not be over. Risks such as Brexit and coronavirus mean investor sentiment could weaken in the short run.
However, low valuations across the FTSE 100 and FTSE 250 mean investors may already have priced in the threats facing the world economy’s growth outlook.
As such, buying high-quality UK shares now for the long run while they trade at cheap prices could be a sound strategy. Here are two prime examples of such companies that could boost your ISA returns in the coming years.
Taylor Wimpey: a cheap stock after the market crash
The Taylor Wimpey (LSE: TW) share price has experienced a tough 2020 so far. It’s currently down 40% after the market crash. Recent half-year results highlighted why its shares have fallen heavily. The report showed pre-tax profit declined from around £300m last year to a loss of £40m this year.
Looking ahead, the company could benefit from rising demand for new homes as a result of government policies, such as the stamp duty holiday. Alongside low interest rates and continued mortgage availability, this could entice potential buyers into the housing market even while the UK’s economic outlook is very uncertain.
Taylor Wimpey’s balance sheet continues to be relatively strong. For example, its half-year results showed it has a net cash position of almost £500m.
With a strong forward order book and a large land bank, it seems to be in a good position to deliver improving financial performance over the long run. As such, now could be the right time to buy its shares while they trade at a low price level following the market crash.
BP: a FTSE 100 share with recovery potential
BP (LSE: BP) is another UK share that’s experienced a falling stock price in the 2020 market crash. Its shares are currently 40% down on their 2020 starting price. That came about as the company experienced a declining financial performance as a result of falling oil and gas prices caused by a weak economic outlook.
The business recently highlighted how it intends to adapt to a changing outlook for the wider energy sector. For example, its recent results showed it will seek to become a leaner and more efficient business that can more easily pivot to low-carbon forms of energy.
Although this process will take time, it has the potential to improve BP’s financial prospects, which could lead to stronger investor sentiment.
Although BP recently cut its dividend following the market crash, it continues to offer a relatively high yield of around 5%. As such, it could deliver an impressive total return as it embarks on a new strategy.
Therefore, now could be the right time to buy a slice of it before investor sentiment improves.
On February 3rd, 2020, Boris Johnson made a surprise announcement…
…potentially helping to grow one little-known British company’s revenues by an expected £50million+.
You probably saw this announcement in the news. But we bet you’ve never heard of the company which we believe could profit.
Peter Stephens owns shares of BP and Taylor Wimpey. 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.