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£3k to invest in an ISA? I’d buy these 2 recovering UK shares today to get rich and retire early

Peter Stephens
·3-min read
Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Senior Man Sitting On Sofa At Home With Pet Labrador Dog

Since the stock market crash, some UK shares have delivered sound recoveries. While they may now not be among the cheapest shares available to buy in the FTSE 100 and FTSE 250, in many cases they continue to trade at attractive prices. This suggests that they could post further share price growth in the long run.

With that in mind, here are two FTSE 100 stocks that appear to offer good value for money. They could improve your long-term financial prospects through delivering rising bottom lines as operating conditions improve. Investing £3k, or any other amount, in them may even help you to bring your retirement date a step closer.

A low valuation among UK shares

Persimmon (LSE:PSN) has outperformed many UK shares over recent months. In fact, the housebuilder’s share price has risen by 65% since its March low. It now trades just 7% down on its 2020 starting price.

The company’s recent updates have shown that it has a solid financial position through which to overcome an uncertain period for the housing market. For example, it has net cash of £820m and a forward sales position of £2.5bn. Furthermore, it has been able to deliver significant improvements to customer satisfaction scores. It now has a realistic chance of obtaining a five-star HBF rating, which could reduce chances of customer redress in the long run.

Clearly, UK shares such as Persimmon face uncertain operating conditions due to the weak economic outlook. However, the company trades on a price-to-earnings (P/E) ratio of just 11.8. This suggests that investors may have factored-in the risks it faces. And, with low interest rates set to remain in place over the coming years, the company could produce growing profitability that leads to a rising share price.

A changed strategy to deliver rising profits

Kingfisher (LSE: KGF) has also outperformed many other UK shares over recent months. Its share price has gained 120% in the past six months as the company has adapted to changing consumer demands during lockdown.

For example, it has accelerated its online investment. This has paid off, with the company reporting strong e-commerce sales and being positioned to occupy a dominant market position as consumers increasingly switch towards digital sales. It has also reorganised its structure. This could lead to greater efficiencies that have a positive impact on profitability.

Looking ahead, Kingfisher could continue to outperform other UK shares. It trades on a P/E ratio of just 13.1. This suggests that it offers a wide margin of safety, and that its long-term growth prospects may not have been fully factored-in by investors. As such, now could be the right time to buy it while its growth strategy has not been fully implemented and investor sentiment towards the retail sector continues to be weak.

The post £3k to invest in an ISA? I’d buy these 2 recovering UK shares today to get rich and retire early appeared first on The Motley Fool UK.

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Peter Stephens owns shares of Persimmon. 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.

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