Investor confidence remains in intensive care following the 2020 stock market crash. Many share-pickers feel conflicted over what to do next. Buy UK shares today and risk watching them sink again as Covid-19 batters the global economy? Or put your money somewhere more stable, but which yield staggeringly-poor returns like a Cash ISA?
I personally think the stock market crash provides a rare opportunity for you and I to supercharge our eventual returns. Some top-quality UK shares have been grossly oversold as investors hit the panic button. This allows proactive share-pickers to nip in, grab a bargain, and watch these stocks jump in value as economic conditions improve and profits rise.
3 dirt-cheap UK shares on my watchlist
By following a few sound tips you can minimise the chances of your UK shares falling again in the near term too.
You can buy stocks with defensive or counter-cyclical operations that make profits even when the economy splutters. Buying companies with competitive advantages (or economic moats), like cutting-edge products or low-cost bases, is another good idea. And snapping up UK shares trading below their intrinsic value offers a margin of safety.
Here are a few UK shares I think are brilliant bargains for ISA investors to buy right now. They’re particularly attractive stocks for those seeking huge dividend yields as well.
- Sabre Insurance Group currently trades on an undemanding forward price-to-earnings (P/E) ratio of 15 times. Considering its role as an ultimate ‘peace of mind’ stock, I think this represents good value. The car insurance provider shouldn’t expect demand for its legally-required services to sink even as the economy nosedives. One final thing. This UK share carries a near-7% dividend yield for 2020.
- Buying Greencoat Wind UK is another sound pick for value investors. As well as boasting a forward P/E multiple of 12 times, this wind farm investment fund boasts a 5% dividend yield. I don’t just consider this utilities play a great buy for the here-and-now though, as rising demand for low-carbon energy sources should drive profits for years to come.
- Recent news flow from Gateley suggests it should thrive despite the souring British economy too. The legal services provider said in May that many of its counter-cyclical service lines, like restructuring and dispute resolution, have been “extremely busy” of late. And it’s redeployed some of its staff to capitalise on this development. Today, the UK share carries a meaty 9% dividend yield and boasts a corresponding P/E ratio of 7 times. I’d buy it in an ISA as the British economy cools.
More top ISA buys
Gateley et al are top dividend stocks to buy despite the economic downturn. And you’ll find even more by browsing The Motley Fool’s large library of special reports. I reckon the 2020 stock market crash provides a terrific opportunity for you and I to make a fortune by buying cheap UK shares.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. 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.
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