As a result of the outbreak of Covid-19, the stock market crashed, sending share prices tumbling across the board. In the depths of the sell-off, the FTSE 100 index lost a staggering 32% of its value. Since then, however, many global stocks have made impressive and somewhat surprising recoveries. In fact, many investors are beginning to fear a second market crash with a deep recession impacting company earnings.
While there may or may not be another major sell-off lurking right around the corner, I think there’s an opportunity here for investors to buy good-quality, cheap UK shares. Hold them for long enough and your prospects of making a million greatly increase.
Best UK shares to buy now
Investing in shares while they’re cheap is an ideal strategy for building wealth over the long term. When it comes to evaluating whether a stock is ‘cheap’ or not, there are multiple methods, with some being of more use than others. Moreover, it’s important to remember that when buying cheap shares, you shouldn’t be buying simply because the share price has fallen. Rather, buy because the share price has fallen too much.
I’m thinking about stocks such as Carnival, Cineworld, easyJet, and Taylor Wimpey. Despite taking a huge hit to earnings and watching their valuations tumble, I think they look oversold and thus, undervalued. That’s even after their recent respective share price surges. With the potential for a swift recovery in the underlying businesses, they could be among the best shares to buy now in order to realise attractive returns in the long run.
Buying stocks with exciting growth prospects is also a solid way to make some potentially serious gains through share price appreciation. To spot these shares, I recommend looking for companies with innovative business strategies that are capitalising on new and emerging trends.
Take tech companies such as Sage and Ocado, for example. But don’t just limit yourself to big names in the FTSE 100. The best growth gems are often found outside the index and are much less well-known.
Ploughing dividends back into your investment can be a fantastic way to aid the process of compounding. Picking the best dividend stocks usually entails looking for well-established companies that are generating vast sums of cash as a result of being at the top of their game.
For example, I’d recommend taking a look at market-leaders such as Imperial Brands Group, GlaxoSmithKline, and Unilever. Each boasts an attractive yield and has plenty of cash to cover pay-outs.
You really can make a million from the market crash
The concept of making a million in the stock market may seem like a fanciful dream to you. What you may not realise, however, is how simple the process actually is. Thanks to the unassailable combination of time and interest, it’s entirely possible to turn a small investment into a huge final figure.
Let me give you an example. Suppose you invested £250 a month and managed to make an annual return of 12%. After 33 years, your investment would be worth £1,092,919!
With that in mind, don’t miss out on the opportunities the stock market crash brings. I’d invest in cheap UK shares today to kickstart the process of building wealth over the long term.
The post I think these are the best UK shares to buy now if you want to make a million from the stock market crash appeared first on The Motley Fool UK.
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Matthew Dumigan owns shares in Carnival and Cineworld. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended Carnival, Imperial Brands, and Sage Group. 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