Here are two prime examples of such stocks. Although they may yet face further share price volatility in the short run due to weak operating conditions, in the long run they could deliver strong capital growth. As such, now could be an opportune moment to buy them in a diversified ISA portfolio.
Shell: a cheap oil and gas company among UK shares
Of course, a key reason for its share price decline is reduced demand for oil. Alongside supply growth, this has caused the price of oil to fall to exceptionally low levels in recent months. As a result, the company has reduced its long-term oil price expectations, which has caused huge impairments in its recent results.
Looking ahead, Shell plans to pivot towards cleaner forms of energy. Although this process may not be smooth, it appears to have the financial means to invest heavily in low-carbon energy assets. Over time, this could not only improve its financial performance, but lead to stronger investor sentiment that boosts its share price.
As such, now could be the right time to buy a slice of it while it appears to offer a wider margin of safety than many other UK shares.
Glencore: recovery potential after its share price fall
The company’s recent half-year results showed its marketing division has produced a relatively strong performance. This may help to differentiate it from other commodity companies, and could provide the business with strong growth during a period of weaker economic performance.
Glencore also announced its divisions have largely been able to operate in recent months, despite ongoing challenges posed by the pandemic. Its diverse range…