Stock market crash: I’d invest £2k in these 2 cheap UK shares in an ISA today

These two UK shares could offer good value for money and recovery potential after the recent stock market crash, in my opinion.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

The recent stock market crash has caused a wide range of UK shares to trade on more attractive prices than at the start of the year. As such, there may be buying opportunities for ISA investors who can look beyond short-term risks to a likely long-term recovery for indexes such as the FTSE 100 and FTSE 250.

With that in mind, here are two UK shares that appear to offer good value for money after their recent stock prices falls. Investing £2k, or any other amount, in them could lead to high returns in the coming years that helps to boost the size of your ISA portfolio.

Next: undervalued retailer after the market crash

The recent update from FTSE 100 retailer Next (LSE: NXT) showed it could offer good value for money after the market crash. The company’s second quarter performance was better than its own guidance, with store sales more robust than expected. It was also able to bring back warehouse capacity faster than anticipated to meet a larger proportion of online demand for its products.

Should you invest £1,000 in British American Tobacco right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if British American Tobacco made the list?

See the 6 stocks

Looking ahead, further challenges could be ahead for the wider retail sector. Weak consumer confidence may mean it takes a prolonged period of time for demand to return to 2019 levels. However, Next’s online retail exposure could allow it to successfully adapt to changing consumer trends that may quicken as a result of the pandemic.

Therefore, now could be the right time to buy a slice of the company. Its share price is still trading 18% lower that at the start of the year following the market crash. As such, it appears to offer a wide margin of safety for long-term ISA investors.

British American Tobacco’s income appeal

Another UK share that could be worth buying after the market crash is British American Tobacco (LSE: BATS). The company’s recent half-year results showed it’s performing relatively well in a weak economic environment. For example, its adjusted revenue increased by 2.4%, while adjusted operating profit moved 3.3% higher.

The business is continuing to diversify into non-combustible categories, with 10% of its revenue now derived from that sector. This could allow it to capitalise on changing consumer trends, while continuing to experience rising revenue and profit from cigarette sales due to its pricing power.

With British American Tobacco committed to a 65% dividend payout ratio, its income appeal could increase after the market crash. It currently has a strong dividend yield of around 8.5%. With its profitability rising, it could realistically deliver an inflation-beating dividend while, at the same time, providing a significantly higher income return than other stocks.

As such, demand for its shares could increase in a low interest rate environment, which may lead to a rising price level over the long term.

More on Investing Articles

Portrait of pensive bearded senior looking on screen of laptop sitting at table with coffee cup.
Investing Articles

£10,000 invested in Rolls-Royce shares during the Truss premiership is now worth…

Rolls-Royce shares have surged over the past three years. Dr James Fox explains why the darling of the UK stock…

Read more »

Bearded man writing on notepad in front of computer
Investing Articles

2 top SIPP buys I made in July: a FTSE 100 share and a global ETF

Discover what UK shares and exchange-traded funds (ETFs) our writer Royston Wild's been adding to his SIPP in recent weeks.

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

This FTSE 100 share’s almost doubled in 14 months! Have I left it too late to buy?

This FTSE-listed share has risen a stunning 94% in value since last spring. Can it continue rising, or will it…

Read more »

Small cap sticky note
Investing Articles

Just released: July’s small-cap stock recommendation [PREMIUM PICKS]

We believe the UK small-cap market offers a myriad of opportunities across a wide range of different businesses and industries.

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

2 brilliant FTSE 250 stocks hitting record highs

Up around 7% in 2025, the FTSE 250 index is in decent form. But some of its members are faring…

Read more »

Google office headquarters
Investing Articles

This S&P 500 firm just crushed Q2! Time to buy the stock?

Alphabet (NASDAQ:GOOG) continues to trade at a discount to the S&P 500 index. Our writer asks whether it's worth considering…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

How much is needed in a SIPP to aim for nearly £20,000 of passive income a year?

Our writer explains how a Self-Invested Personal Pension (SIPP) could be used to target a five-figure income for later in…

Read more »

Female Doctor In White Coat Having Meeting With Woman Patient In Office
Investing Articles

I think my favourite real estate investment trust just got better in value

This investment trust's share price has been on a slide over the past five years. Here's why I think the…

Read more »