Stock market crashes like the one of early 2020 don’t come along that often. On average they happen once every couple of decades. But when they do, those with money available to invest in UK shares need to make the most of them.
The panic that defines stock market corrections always causes quality stocks to be sold off alongside the more vulnerable ones. This allows eagle-eyed investors to steal in and pick them up at low cost, and then get stinking rich as they steadily rebound in price.
Remember that successful investors buy for the long term. It may take a number of years but UK shares will rise in price again. Global stock markets recovered from a litany of economic and political crises during the 20th and 21st centuries (so far). And there’s little to convince me that they won’t rocket again once the world economy moves into recovery mode following Covid-19.
3 cheap UK shares on my ISA watchlist
Let me talk you through three top UK shares I reckon will surge from their current low prices. I reckon they’re ‘must-own’ stocks for those who want to seriously supercharge their long-term returns and they’re on my ISA watchlist:
- Legal & General offers plenty of all-round value for UK share investors. The FTSE 100 colossus trades on a rock-bottom forward price-to-earnings (P/E) ratio of 7 times. It also boasts a monster 9.5% dividend yield at current prices. Life insurers tend to see their profits recover strongly during the early stage of the economic cycle. And so this particular blue-chip should recover in price much sooner than most others. But I’d buy it for the long term as Britain’s ageing population should deliver robust demand for its pension products for years to come.
- Sabre Motor Insurance continues to struggle for traction and its share price is down 25% in 2020. This provides a great opportunity for value hunters to nab a bargain as the car insurer boasts a P/E ratio of just 13 times for this year. The FTSE 250 firm boasts a mighty 7.9% dividend yield too. Things are already looking up for Sabre Insurance following the Covid-19 shock and gross written premiums picked up remarkably in Q3. I reckon this is one of the best dip buys available to investors right now.
- Vistry Group doesn’t offer the mighty dividend yields of Legal & General or Sabre Insurance. But the UK share’s forward P/E ratio of 12 times still makes it a terrific value buy in my opinion. It had been suggested that Covid-19 would have dire consequences for the housebuilders. But this couldn’t have been further from the truth. In fact, a blend of low interest rates and significant government support for buyers mean that demand continues to outstrip homes supply. And the gap will get even worse when the British economy eventually breaks out of its current downturn.