The stock market crash has left many cheap shares available to purchase for long-term ISA investors. Although they may face further challenges in the short run, over the long run they have the potential to improve your prospects of retiring early.
With that in mind, now could be the right time to buy these two FTSE 100 stocks. Their strategies, valuations and growth potential could improve your financial outlook.
A buying opportunity among cheap shares
RSA’s (LSE: RSA) valuation suggests that it offers strong capital growth prospects relative to other cheap shares. For example, the insurance group is forecast to post a 14% rise in its bottom line next year. Despite this, it trades on a price-to-earnings growth (PEG) ratio of 0.7. This suggests that it has a wide margin of safety.
The company’s recent interim results highlighted its improving performance in recent months. For example, it reported an improving underwriting profit performance following business improvement actions. Many of its regions also outperformed their expectations, which suggests that the company’s recovery could be relatively sound.
Of course, risks remain in place for RSA and its sector peers. The course of the pandemic continues to be uncertain. However, its low valuation relative to other cheap shares and sound strategy could mean that it delivers share price growth over the long run. As such, now could be the right time to buy it.
An improving market position
Morrisons (LSE: MRW) also appears to offer investment appeal relative to other cheap shares. The company’s recent trading statement highlighted its expanding online presence in recent months, with digital sales capacity doubling since the start of the pandemic.
This could position the company for long-term growth. It was relatively slow to put in place an online grocery service while its rivals grabbed market share. However, after significant investment over recent years, it now seems to be well positioned to benefit from a likely shift in spending from in-store to online.
Certainly, Morrisons faces an uncertain near-term outlook. Its sales may be volatile, while additional costs may be necessary to quickly adapt to fluid operating conditions. However, its price-to-earnings (P/E) ratio of 13 suggests that it offers a margin of safety relative to other cheap shares and could be worth buying for the long term.
Buying stocks after the market crash
Clearly, buying cheap shares after the market crash is likely to be a tough process for any investor. Risks are high, and a second downturn cannot be ruled out.
However, history shows that buying high-quality businesses while they trade at low prices can be a sound means of generating high returns over the long run. It could even improve your prospects of retiring early, with Morrisons and RSA appearing to offer capital growth potential when purchased in a diverse portfolio of stocks.
