I’ve used recent stock market volatility as an opportunity to buy oversold UK shares. There are simply too many beaten-down bargains for me to ignore.
Here are two I’ve bought to hang onto for the next 30 years. I think they both offer excellent value for money.
Mining mammoth
Commodities stocks can prove to be volatile investments over a short time horizon. Demand for their products can sink when times get tough and so can their profits.
But over the longer term, companies like mining stocks can be excellent investments. Take Rio Tinto (LSE: RIO), for example. The company’s share price has soared a colossal 880% during the past three decades.
Of course, during any period of prolonged price weakness, shares prices of commodity miners can topple. And their ability to pay decent dividends can also be compromised. This could become a serious problem for my passive income.
Strength in depth
Look around you. Everything you own is loaded with commodities. The car you drive, the house you live in, even the mobile or laptop you’re using to read this article.
These raw materials are needed in increasingly large quantities as the global population increases. This in turn allows miners like Rio Tinto to generate exceptional long-term profits growth.
This particular mining stock produces a vast range of essential commodities. Copper is used in everything from wind turbines and fridges, to coins and gas pipes. Iron ore is an essential ingredient in steel, and aluminium is consumed in vast quantities for cars and soft drink cans.
Rio Tinto’s exposure to many commodities protects it from weakness in any one market. Its operations can also be found in 35 countries, as the map above shows. This provides it with further strength through diversification. At group levels this protects profits from factors like extreme weather events and rising political risk in certain nations.
I thought Rio Tinto shares were too cheap to miss when I bought them in the summer. And today I think they still offer terrific all-round value for money.
Today the FTSE 100 firm trades on a forward price-to-earnings (P/E) ratio of six times. It also sports an enormous 9.9% dividend yield.
Energy giant
Stocks like The Renewables Infrastructure Group (LSE: TRIG) are providing an increasingly essential service. Population growth means increased energy demand. At the same time, the climate crisis means that countries are having to wean themselves off dirty fuels like oil, gas, and coal.
The Renewables Infrastructure Group is helping to soothe this problem. It has invested in solar and wind power assets across Europe. It is also increasing its exposure to the battery storage sector and last month agreed to develop three more battery assets in the UK.
Profits at firms like this are at risk from unfavourable weather conditions. So The Renewables Infrastructure Group has built a wide geographic footprint to reduce the risk from localised weather patterns.
This renewable energy stock trades on a P/E ratio of 5.8 times for 2022. And its dividend yield sits at a healthy 5.5%. Its why I plan to hold this particular UK share for the long haul.