Stock markets have been on a roller-coaster ride in 2022. During this time I’ve sought to capitalise on volatility by buying beaten-down shares for my Stocks and Shares ISA.
Buying on the dip is a favourite tactic of successful investors like Warren Buffett. By following their wealth-building strategies I hope to have given own my long-term returns a significant boost. These are two of the UK shares (in no particular order) I’ve invested in so far this year.
1. Rio Tinto
I’ve been looking for ways to capitalise on the next commodities supercycle for some time. So over the summer I used severe price weakness at Rio Tinto (LSE:RIO) to begin building a position.
The FTSE 100 business is one of the world’s biggest miners. It has the financial strength to survive any market downturn, unlike smaller-cap commodities producers. A strong balance sheet also gives it the opportunity to supercharge earnings growth through mine expansions and acquisitions.
Rio Tinto produces a broad range metals and other raw materials. These include iron ore, copper, aluminium, lithium, borates, and salt. This broad portfolio protects group profits from weakness in one or two of these markets. It also gives the company exposure to several white-hot structural opportunities.
Copper demand, for example, is tipped to soar as demand for electric vehicles and consumer electronics takes off. Iron ore consumption should climb on increased urbanisation in emerging markets. And borates sales should benefit from rising fertiliser production.
Increasing supply could pose a threat to prices of certain commodities. And this could damage profits at Rio Tinto.
Brazilian iron ore miner Vale, for instance plans to increase production steadily this decade to above 360m tonnes in 2030. This would be more than 50m above this year’s expected levels.
That said, I still believe the potential benefits of investing in Rio Tinto outweigh this risk.
2. Games Workshop Group
Buying retail stocks can be dangerous business during a cost-of-living crisis. But I’m confident that miniature wargaming business Games Workshop (LSE:GAW) could continue trading strongly. This is why I’ve bought it for my ISA.
Niche retailer products often outperform the broader market during downturns. This particular one is a market leader in the manufacture and sale of model game systems. This is a market that commands a large and loyal following.
Its Warhammer 40,000 and Warhammer: Age of Sigmar lines set the standard when it comes to tabletop gaming. And sales here look set to grow strongly in the long term as the business expands internationally.
This week Games Workshop predicted core revenue growth of £18.5m in the six months to November, to £210m. This underlines the robustness of its market and the rewards of its push into new markets.
I’m also excited by the firm’s attempts to boost licencing of its intellectual property to mass media like video games. This could supercharge royalty income and give a big boost to interest in its miniatures and other fantasy products.
