The recent market crash has caused a wide range of UK shares to trade at lower prices. Economic uncertainty may mean their valuations decline further in the short run. But, over the long term, the past performance of the FTSE 100 suggests they’re likely to recover.
As such, now could be the right time to build an ISA portfolio that includes the two UK shares discussed below. Investing £3k, or any other amount, in them may boost your ISA’s prospects and improve your financial situation in the coming years.
HSBC: a low share price after the market crash
The market crash has contributed to a sharp fall in the HSBC (LSE: HSBA) share price. It currently trades 40% lower than it did at the start of the year. Its disappointing financial performance caused investor sentiment to weaken.
For example, the bank reported a 9% fall in revenue in its interim results. This was largely caused by a lower interest rate environment. This could also continue to have a negative impact on its financial prospects in the medium term.
However, the company will now accelerate plans to improve its efficiency to become leaner and more profitable over the long run. This may include an increased use of technology and a reduction in headcount that leads to a more sustainable rate of profit growth. Alongside a resilient performance from its Asia operations in recent months, this could catalyse its financial prospects in the coming years.
Furthermore, its lower share price seems to factor in many of the risks it faces after the market crash. This suggests it offers a favourable risk/reward opportunity for long-term investors.
ABF: a FTSE 100 stock with recovery potential
ABF (LSE: ABF) is another FTSE 100 stock that’s experienced a disappointing share price performance due to the market crash. Its stock price is currently down 23% since the start of the year, with store closures in its retail segment a main reason for weaker investor sentiment.
The company’s recent trading update highlighted that the vast majority of its Primark clothing stores have now reopened. They’ve delivered encouraging sales performances despite the busines offering minimal markdowns on its products. This suggests its medium-term outlook could be relatively robust following a short-term decline in sales.
Furthermore, ABF’s performance within its other segments has generally been encouraging. Its grocery and sugar segments performed relatively well. This will help to mitigate the overall financial impact of temporary store closures, and could help to support the company’s share price in the short run.
With weak consumer confidence and an uncertain economic outlook after the market crash, ABF’s focus on value retailing could make it a relatively popular option for price-conscious consumers. As such, now could be the right time to buy it while it offers a wide margin of safety.
The post £3k to invest after the stock market crash? I’d buy these 2 bargain UK shares in an ISA today appeared first on The Motley Fool UK.
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Peter Stephens owns shares of HSBC Holdings. The Motley Fool UK has recommended Associated British Foods and 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.
Motley Fool UK 2020