Investor confidence took an almighty battering last week as news of coronavirus ‘super variant’ B.1.1.529 emerged. Shareholders all over the world engaged in heavy selling as they considered the possibility of a fresh stock market crash. The FTSE 100 and FTSE 250 both sank on Friday and I wouldn’t be shocked to see extra weakness in the days and weeks ahead.
So what’s my plan as a UK share investor myself, you may well ask? It’s probable that the cyclical stocks I own will slump in value if Covid-19 cases soar again and the economic recovery hits the skids. But I’m not planning to cut these loose from my shares portfolio. I’m a long-term investor and I look at what returns I can expect to make over a number of years from the stocks I buy. And I’m confident the companies I own will make me great returns over the next decade even if another stock market crash occurs in the near future.
A long-term boost to UK share prices?
While no-one, of course, wants to see the public health emergency worsen, such an event could actually be beneficial for my long-term returns. As chief investment offer at BMI Wealth Management, Dan Boardman-Weston, commented: “if [B.1.1.529] is going to take the world backwards from a Covid perspective then it’s likely that inflation will abate and monetary policy will stay looser for a long time”.
Low central bank interest rates and quantitative easing programmes boost stock prices as they encourage consumers and businesses to borrow money. This in turn boosts the amount they spend, in turn providing a helping hand to the economy.
Two penny stocks I’d buy right now
This is why today I’m continuing to scour the market for the best cheap UK shares to buy. Here are two top-quality penny stocks I’d buy even if the Covid-19 situation worsens.
Sylvania Platinum could be a great way for me to hedge my bets as economic uncertainty rises. Investment demand for the safe-haven precious metals it produces will rise if concerns over the Covid-19 saga worsen. Conversely, the outlook for industrial demand will improve if concerns over the destructive potential of the B.1.1.529 variant prove unfounded. I’d buy this penny stock even though production problems are a constant threat to mining shares like this.
Energy generators like Greencoat Renewables provides a service that will remain essential even if coronavirus cases balloon. As an investor this gives me terrific peace of mind as revenues should remain largely stable. And I think profits could rise strongly over the long term as demand for low-carbon electricity soars. I’d buy this renewable energy stock even though it could suffer if the wind refuses to blow.
I always treat stock market crashes as an opportunity to go bargain hunting. There are many other dirt-cheap UK shares I’d consider buying if markets continue reversing, too.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.