£2k to invest in an ISA? I’d buy these 2 cheap shares today to get rich and retire early

Buying these two cheap shares in an ISA could produce high returns, in my view. Their low valuations may not reflect their long-term potential.

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Buying cheap shares to retire early has been a popular investment strategy for many years. Even though the market crash may have caused a setback for stock prices, it could also present buying opportunities for ISA investors seeking to benefit from a long-term stock market recovery.

With that in mind, here are two FTSE 100 shares that appear to offer good value for money after their recent price falls. Over time, they appear to have turnaround potential that could improve your prospects of retiring early.

An undervalued buying opportunity among cheap shares

HSBC’s (LSE: HSBA) recent half-year results highlighted many of the risks it currently faces relative to other cheap shares. They include the impact of low interest rates on profitability, potential losses on loans due to a weak economic performance, and geopolitical risks in North America, Asia and Europe.

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While any of those risks could cause a decline in its short-term profitability, its long-term recovery potential seems to be high. For example, it trades on a forward price-to-earnings (P/E) ratio of just 9.5. Meanwhile, its restructuring programme could create a streamlined business that’s more adaptable to changing market conditions.

Therefore, following HSBC’s 45% share price fall since the start of the year, now may be the right time to buy a slice of the bank. For long-term investors, it seems to offer an appealing risk/reward opportunity as part of a diverse portfolio of shares.

A sound strategy to deliver long-term share price growth

WPP (LSE: WPP) could also offer turnaround potential versus other cheap shares in the coming years. The advertising and PR company’s recent half-year results showed declining sales and profit in a tough period for the world economy. However, its focus on reducing debt and investing in technology-related operations could improve its long-term performance.

The company continues to deliver against its cost saving targets. It’s also well-placed to capitalise on growing demand for online services and e-commerce. This may enable it to adapt to a changing world economy, and to benefit from the increasing online presence of many businesses post-coronavirus.

With WPP currently trading on a forward P/E ratio of 8.7, it appears to offer a wide margin of safety after its 40% share price decline in 2020. As such, now could be an opportune moment to buy it alongside other cheap shares for the long run.

Retiring early with a Stocks and Shares ISA

Clearly, cheap shares such as WPP and HSBC will take time to deliver high returns. However, buying stocks at low prices has historically been a sound means of benefitting from weak investor sentiment and long-term stock market growth.

Therefore, now could be the right time to build a Stocks and Shares ISA of undervalued companies to improve your prospects of retiring early.

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Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of HSBC Holdings and WPP. The Motley Fool UK has recommended HSBC Holdings. 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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