It’s a tough time to be a stock market investor right now. With the Russia-Ukraine conflict, rising interest rates, and sky-high energy prices all creating uncertainty, share prices are falling across the board.

My strategy in situations like this is always the same. I stay calm, and look for high-quality stocks that have been sold-off unfairly. With that in mind, here are three shares I’d buy in the current stock market carnage.

This UK stock looks oversold

One FTSE 100 stock that strikes me as a ‘buy’ right now is Rightmove (LSE: RMV), which owns the UK’s largest property website. Its share price has fallen from around 800p to near 630p this year, and I think this weakness has created a fantastic buying opportunity.

I can’t see Rightmove being impacted that much by what’s going on in the world today. As the owner of a UK property website, its fate is largely tied to the health of the property market. Of course, if rising interest rates were to cause a recession, or a huge slowdown in the property market, RMV could suffer.

However, I think the chances of this happening are relatively low. It’s worth noting that full-year 2021 results, posted today, were strong. And City analysts expect healthy growth in 2022.

After the recent share price weakness, RMV has a forward-looking P/E ratio of 27. I see that as an attractive valuation, given the company’s brand power and growth track record. 

Incredible growth

Turning to the US market, I really like the look of Alphabet (NASDAQ: GOOG). Earlier this month, the owner of Google and YouTube saw its shares trading near $3,000. However today, they’re near $2,650 and I see a lot of value at that level.

Alphabet’s recent Q4 2021 results were phenomenal. For the period, the group generated revenue growth of 32% year-on-year, along with a 38% increase in earnings per share.

Looking ahead, I expect Alphabet to get much bigger. This company has a lot of growth drivers, and I don’t think it’s likely to be impacted that much by the current geopolitical crisis.

The biggest risk here, to my mind, is regulatory intervention. In the years ahead, Alphabet could be fined, or even broken up by regulators. I’m comfortable with this risk however. At its current valuation (the P/E ratio is in the low 20s), I see GOOG as a strong ‘buy’.

I expect this stock to bounce back

Finally, in the UK small-cap space, I now see a lot of appeal in Cerillion (LSE: CER). It’s an under-the-radar software company that provides billing, charging, and customer relationship management solutions. At the start of the year, its share price was above 900p. Now it’s near 650p.

Cerillion has generated strong growth in recent years and in its last trading update it was very confident in relation to its growth prospects for 2022.

“Prospects for ongoing growth remain very strong. With a record back-order book and strong new business pipeline, we remain confident of continued momentum over the new financial year,” said CEO Louis Hall. So I believe the recent share price fall here is unjustified.

I’ll point out that if technology stocks were to keep falling, Cerillion’s share price could fall further. However, with the stock now trading on a P/E ratio of around 22, I think the long-term risk/reward skew here is attractive.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Edward Sheldon owns shares in Alphabet (C shares), Cerillion, and Rightmove. The Motley Fool UK has recommended Alphabet (A shares), Alphabet (C shares), and Rightmove. 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.

With global stock markets in retreat, the first thing that I’d try to do is avoid panicking. At a time of crisis, volatility can rise and it’s important to take a step back and not make any rash decisions.

One billionaire investor who has witnessed multiple wars, recessions and market shocks is Warren Buffett. Often referred to as the Oracle of Omaha, he has over 70 years of investing experience. Over that time, he has shared many words of wisdom that I often re-read.

Warren Buffett tip: buy quality

His investment philosophy frequently mentions finding high-quality businesses. He notes that “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”. It’s a belief also followed by popular investor Terry Smith – sometimes referred to as the UK’s Warren Buffett.

So what is a high-quality business? It could be described as a profitable, cash-generative and financially stable company. One of the main measures of business quality is return on capital employed. That’s a measure of management’s ability to turn assets into returns. Generally speaking, the greater the better.

Long-term thinking

Once I’ve found an excellent business, according to Warren Buffett I should try to hold onto it for as long as possible. He said that “if you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes”. As a buy-and-hold investor, Buffett has owned some companies for several decades.

For example, his investment company Berkshire Hathaway has owned Coca-Cola shares for 34 years. Given the strength of the brand, I’m not sure if he will ever sell it. He even famously once said that “our favourite holding period is forever”. When looking for quality shares to buy, I’d try to find those that are likely to survive and thrive over long periods too.

Put out the bucket

Share prices move up and down for multiple reasons. Often the share price of a good-quality business will get knocked down regardless of the company’s encouraging fundamentals. It may be due to short-term uncertainty, like during the onset of the pandemic in March 2020.

History shows that these periods of shock and fear can be excellent opportunities to buy quality shares on sale. I’d try to recognise an opportunity as such, and make a sizeable purchase in my Stocks and Shares ISA. As Warren Buffett once quipped: “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

Bear in mind that recognising a good opportunity can be difficult and takes some experience. Also, in the short term, even share prices of quality companies can still fall further. I’d need to do plenty of homework to be confident that a company will eventually recover. I might also need patience to be able to hold on for long periods while my investment grows.

Overall though, I’d hope to learn these lessons and more from one of the richest investors on the planet.

Harshil Patel 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.

Shares in hydrogen energy group ITM Power (LSE: ITM) have risen by more than 1,100% over the last year. Yesterday’s market slide had little impact on that big gain. But with the share price down by nearly 60% in 12 months, investors may be wondering whether the stock will ever regain its former highs.

I’ve been taking a fresh look at ITM as a possible buy for my portfolio. Should I pick up some stock today, or could the shares have further to fall?

Hydrogen: the right time?

The world’s largest market for hydrogen is ammonia production (used in fertiliser). At the moment, the hydrogen used here is mostly produced by burning gas.

ITM makes electrolysers that can generate so-called green hydrogen by using renewable electricity instead of gas. The company’s hope is that buyers will switch to ITM equipment in order to decarbonise their operations.

This group is already working with a number of large industrial partners in large-scale trials. Long-term partners include Shell and German chemicals giant Linde, which is also ITM’s largest shareholder.

More recently, a deal with Norwegian fertiliser group Yara will see ITM supply a 24MW electrolyser for the company’s Porsgrunn plant. The ITM system will generate around 10,000kg/day of hydrogen, or about 5% of Porsgrunn’s daily consumption. It’s expected to reduce carbon emissions by 41,000 tonnes per year.

Why I like ITM

ITM is hoping to target newer markets for hydrogen, such as transportation. But one thing I really like about the group’s business is that existing markets for hydrogen already provide plenty of growth opportunities.

If the firm can deliver green hydrogen reliably at a reasonable price, I’m confident industrial customers will buy its equipment for their existing operations. This is more attractive to me than a business which relies on unproven hydrogen markets such as aviation or shipping.

I’m also encouraged by ITM’s roster of heavyweight industrial partners. This tells me the group’s technology is seen as credible, with commercial potential.

Why has ITM’s share price been falling?

Valuation has been the reason why its share price has suffered. When the ITM share price peaked at over 700p last year, the group’s market-cap reached nearly £4bn. In my view, this was just too much. After all, ITM only generated £8m of revenue over the 12 months to 30 October.

Today, it has a market-cap of £1.4bn. The company is building a second factory, and management says backlog of orders and bid opportunities are now worth £473m, up from £408m a year ago.

Are ITM shares cheap at this price? It is hard to say. Using any standard valuation metric, the stock still looks expensive to me. For example, forecast revenue for the 2022/23 financial year is just £61m. That values ITM at 23 times forward sales (with no profit).

However, I think there’s a chance this business will deliver rapid growth as its technology and manufacturing facilities mature.

ITM isn’t cheap enough for me to buy yet. I’m not comfortable with the risk/reward balance and my feeling is that the stock may have further to fall. Even so, on a long-term view, I think it’s possible that ITM shares could deliver gains from current levels.

Roland Head owns Shell plc. 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.

I think dividend stocks are a great way to earn passive income. It’s important I look for reliable dividend-paying companies, but with high yields, too. So with this in mind, here are two of my best dividend stocks to buy now.

A financial stalwart

I’d first top up my position in financial services company Legal & General (LSE: LGEN). It’s diversified across investment management, retirement solutions, and also insurance. This should mean it has more reliable revenue streams.

Legal & General has been a dependable dividend payer for a number of years now. In fact, it didn’t miss a payment during the pandemic, nor even the financial crisis. It’s average dividend yield over the past 10 years has been a punchy 5.8%, too. Looking ahead, City analysts are expecting a dividend yield of 7.1% in 2022. Dividends are never guaranteed, of course, as anything can affect the profitability of the company. Nevertheless, Legal & General’s robust dividend history does give me confidence of receiving my income in the years ahead.

Although the dividend yield is high, I don’t expect huge returns from the share price. Earnings per share is only forecast to grow by 6% in 2022, and by 7% in the following year. Also, there’s always risk of a stock market crash. This would reduce Legal & General’s assets under management, and hence the fees that it earns.

Beyond the risks though, I’m confident in the prospects of the company over the long term. The UK is facing an ageing population, too, which should help Legal & General’s retirement solutions business. I think the dividend yield is more than high enough to compensate for the risks, so I’d buy more of the shares today.

Another of my best dividend stocks to buy

The next company I’d buy is the investment trust The Renewables Infrastructure Trust (LSE: TRIG), or TRIG for short. It specialises in making investments across renewable infrastructure assets, such as wind and solar farms.

TRIG has also been able to pay sustainable dividends over the years, and has an average 10-year dividend yield of 5.2%. City analysts are expecting the yield to rise to 5.3% this year.

I’m bullish on renewable energy stocks as we look to transition away from using fossil fuels. TRIG’s infrastructure assets should be in increasing demand as the world uses more renewable energy. Its portfolio is spread across wind and solar assets right now, but with a concentration in wind turbines. This does increase risk as any income depends heavily on whether the wind keeps blowing. Having said this, TRIG did just recently increase its exposure to solar assets in Spain, so it recognised the need to diversify its portfolio.

Forecasts for earnings growth do look attractive, too. For the year 2022, net income is expected to rise by an impressive 28%. In the following year, this is expected to rise again by 12%. Looking much further ahead, I think earnings can carry on rising due to the increasing demand for renewable energy. Therefore, I’d buy the shares today to pick up what I think will be a healthy dividend stream in the years ahead.

Dan Appleby owns shares of Legal & General. 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.

I have been consistently bullish about the outlook for the Scottish Mortgage Investment Trust (LSE: SMT) over the past couple of years. However, considering its recent performance, I have been starting to wonder if I have made a mistake with the SMT share price.

I should note that my recent thoughts are not based on the performance of the stock price alone. Just because shares in a company are falling does not necessarily mean it is a bad investment. 

Instead, I am starting to question my decision based on the company’s allocation towards Chinese equities and high-flying growth stocks. 

Fall from grace

Last year, the SMT share price surged as the company’s exposure to high growth tech stocks pushed its net asset value to new highs.

Over the past couple of months, the share price and the corporation’s net asset value have gone into reverse. Over the past year, shares in the trust have fallen 14%, and the net asset value is down 13%. 

The trust’s approach to investing has always been to take prominent positions in the companies it believes have the best growth prospects. This strategy can generate significant returns, although it also has a downside. Managing a concentrated portfolio can lead to high levels of volatility. That is precisely what we are seeing today. 

What’s more, growth investing is a challenging game. Investors and managers need to get in early to generate the best returns. This can mean they end up buying firms at excessive prices. It can also lead to losses if they do not meet their lofty growth expectations. 

SMT share price headwinds 

I think this is precisely what is happening today. Three of the top five holdings in the portfolio are Moderna, Tesla and Tencent. Each one of these companies is suffering from its own problems.

Moderna’s growth is not living up to the market’s lofty expectations. Tesla’s output is expanding, but the company’s regulatory issues are causing angst among investors. Meanwhile, Tencent faces growing pressure from Chinese regulators, who want the enterprise to deprioritise profits and invest more in society.

Still, while these companies seem to be facing short-term headwinds, I think they still have fantastic long-term potential. Unfortunately, it looks as if the shares got ahead of themselves last year, and investors are now paying for this optimism. 

I think the SMT share price will likely remain volatile for the foreseeable future. However, this company has a long track record of finding unique growth opportunities. Its managers are not particularly bothered about performance figures over the next year or so. They are looking for companies that will grow for the next 10 or 20 years. 

As such, I do not think I have made a mistake here. As a buy-and-hold investment, I still believe the trust is one of the best investments to own for exposure to international growth equities. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. 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.

Market volatility in recent days and weeks has left plenty of top-class UK shares looking seriously undervalued. Here are several penny stocks that have fallen sharply in value of late. I think they could be too cheap for me to miss.

A top contrarian share to buy

Recruitment and training business Staffline Group (LSE: STAF) has fallen to its cheapest for a year in recent sessions. As I type, it remains 9% lower than it was 12 months ago too. Investors have been selling because of fears that soaring inflation will derail the economic recovery and, by extension, the labour market.

This is a risk investors like me need to take seriously, though encouraging news surrounding the jobs market is helping to soothe my fears. And so I’m considering buying Staffline shares following the recent dip.

Last month the penny stock lauded its “strong new business pipeline” and said that important sectors like automotive, manufacturing, aerospace and travel are expected to continue recovering in 2022.

Since then, the Recruitment and Employment Confederation (REC) has echoed the positive outlook for the jobs market too. This week, it said hiring intentions for both permanent and temporary staff have continued to improve in recent months.

It might not all be plain sailing for Staffline however. The recruiter could suffer if labour shortages leave it with a lack of candidates to market. However, I still believe the possible rewards of me owning this particular penny stock outweigh the risks.

At current prices of 52p per share Staffline trades on a forward price-to-earnings (P/E) ratio of just 11 times. This offers serious value for money, in my book.

Another dirt-cheap penny stock

Building products manufacturer Brickability Group (LSE: BRCK) has also fallen sharply in recent days. And, like Staffline, it also offers attractive value for money today. At 93p, the business trades on a forward price-to-earnings growth (PEG) ratio of 0.3. This is well below the benchmark of 1 that suggests a stock could be undervalued.

Brickability’s share price has dropped 7% in value in just the past seven days. It’s slumped amid broader risk aversion on financial markets and fears that central bank action in the months ahead could hit demand for its product. Higher interest rates usually translate to a slowing of the housing market.

It’s still important to remember that Brickability’s shares are still more than a third more expensive than they were a year ago. This is because the outlook for UK house prices remains rock solid despite the risk created by higher interest rates. Indeed, Brickability said last month that its order book reflects the sense of optimism in the housebuilding industry.

I’m confident that lending conditions for first-time buyers will remain ultra supportive for years to come. And as a consequence, I think home construction levels will need to pick up to accommodate them.

Against this backdrop, I think brickmaker Brickability could deliver terrific profits for its shareholders.

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.

These are testing times for stock market confidence. The largest military campaign since the Second World War has sent UK share prices sinking in recent hours.

Market volatility has been particularly severe for penny stocks as traders sell smaller and more financially vulnerable companies.

The immediate outlook for penny stock prices is packed with uncertainty as the crisis in Eastern Europe worsens. But as I recently explained, I plan to continue investing in UK shares, despite this near-term risk.

I’ll keep taking a long-term view and search for quality companies on course to deliver great returns. With some decent research I’m confident of finding top stocks that will deliver strong eventual returns, despite the impact of near-term market volatility.

AFC Energy

Take AFC Energy (LSE: AFC) for instance. I expect profits here to balloon over the next decade as demand for low-carbon energy soars. This penny stock not only manufactures hydrogen fuel cells, but it uses renewable sources to produce the gas rather than fossil fuels.

It’s been estimated that hydrogen cells using the latter emit larger emissions than coal and gas compared with AFC’s ‘green’ hydrogen. As a consequence, it threatens to become more and more unfashionable.

I am worried that AFC Energy probably won’t generate profits for many years. In that time it might be forced to take on lots of debt, or even tap its investors for cash.

Still, as a long-term investor, I could be persuaded to accept this risk and buy it. Research house Facts and Factors think the ‘green’ hydrogen market will be worth $1.42bn by 2026. That’s almost double its valuation in 2020.

I believe AFC’s sinking share price provides an opportunity for me to grab the stock at a bargain price. The energy business fell to fresh 14-month lows in recent hours and has halved in value over the past 12 months.

Jubilee Metals Group

I also think Jubilee Metals Group’s (LSE: JLP) share price also looks mighty attractive at current levels. The platinum group metal (PGM) producer has fallen by a more modest 6% during the past year. It has also dipped fractionally following Russia’s invasion of Ukraine, the prices of the precious metals it produces rising on strong safe-haven demand. This has helped limit the fall.

However, at recent levels, I think Jubilee Metals still looks mighty cheap on paper. The penny stock now trades on a forward price-to-earnings (P/E) ratio of just 10.5 times. I don’t think this rating reflects the fact that, like AFC Energy, sales look set to soar as the battle against climate change heats up.

Platinum and palladium are critical materials in reducing pollution from catalytic converters in cars. On the one hand, Jubilee Metals is therefore exposed to the supply chain crisis hitting auto production right now.

But to my mind, this danger is outweighed by the possible long-term rewards the company could reap as legislators demand more and more of its metal be loaded into cars to cut carbon emissions. I think its a top stock for me to buy.

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.

Soaring inflation is something that many people have never experienced. But the risk of such an unsettling period returning is climbing. Right now, I’m looking for the best shares to buy to battle inflation. But before I do that, let me explain why it’s such a big issue.

On average, prices in the UK rose by 5.5% last month. And the Bank of England warned that inflation could climb above 7% this year. Prices are rising for several reasons that have hit global economies at around the same time. One of the main culprits is the global price of energy. Also, supply shortages across various industries and increased labour costs make it more expensive for companies to produce. Some firms can pass on these costs to customers in the form of higher prices. However, those that don’t have enough pricing power may have to absorb the extra costs, which reduces their profits.

Best shares: the energy sector

So I’d like to buy the best shares that are well-placed to manage this crisis. I’d start with energy companies like BP and Shell. I reckon both FTSE 100 energy shares should perform well if oil prices keep climbing. The price of crude oil is already up by over 20% this year. This follows a 50% gain in 2021. Some of the gain can be explained by growing tensions between Russia and Ukraine. But much can be attributed to an economic recovery post-pandemic restrictions.

Oil prices could remain volatile, which could feed into both share prices. Considering their ability to keep up with rising costs, it’s a risk I’m willing to take. Earnings are rising at both companies, as are dividends. That’s a real plus point for me. Both BP and Shell offer a 4% dividend yield. That’s not the greatest among Footsie dividend shares, but I reckon it’s relatively stable and reliable.

Commodities boom on the way?

Commodities tend to perform well during times of high inflation. That’s why I’d consider buying FTSE 100 miner Rio Tinto (LSE:RIO). Some 66% of its sales come from iron ore, and I reckon Rio’s share price is likely to keep pace with rising commodity prices. Rio is a profitable and cash-generative miner.

On Wednesday it reported underlying earnings for 2021 of $21.4bn. That’s a gain of 72% from the previous year, helped by higher iron ore prices and strong demand from China. It also declared a whopping $10.40 per share in dividends. That gives it a phenomenal 13.5% yield. That’s one of the highest in the FTSE 100. Bear in mind that also includes special dividends and yields this high tend not to be sustainable over long periods.

Miners like Rio are cyclical and there will come a point when the market cycle turns down and its current fortunes may grow slower or even fall. I think we are a long way from that happening, so for now I’m happy to be a buyer.

Harshil Patel 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.

Let us be clear, today is an awful day for the the stock markets. Russia has declared war on Ukraine, sending global markets reeling into the red. Some stocks, like the FTSE 100 aero-engine producer Rolls-Royce (LSE: RR), however, have been impacted more than others. As I write, it is trading almost 15% below yesterday’s close, a decline only smaller than those of the two FTSE 100 Russian companies, Polymetal International and Evraz.

Roll-Royce swings back into profits, but valuations are high

So why has the Rolls-Royce share price reacted this badly? I can think of plenty of reasons, including its latest results, released earlier today. They are not bad, to be sure. In fact, the company has just swung back into full-year profits after not one, or two, but three whole years of reporting losses. Ideally, this should be huge positive. But here is the catch. The profits are quite small at £124m. This translates into a price-to-earnings (P/E) ratio of 80 times! This is a huge market valuation, by any standards. The FTSE 100 index has a P/E of around 16 times, for example. 

I could still go with it, if the company was optimistic about its future. That could imply far bigger profits in the future, and by extension a far more reasonable forward P/E at today’s prices. To be fair, Rolls-Royce isn’t exactly pessimistic. But it is not terribly upbeat either. I mean, it expects its operating profit margin to remain broadly unchanged. And this is the only reference in its guidance to its future profits. 

Civil aerospace is vulnerable to macroeconomic fluctuations

Moreover, its biggest source of revenue is its civil aerospace division, which posted an underlying loss in 2021 for obvious reasons. Airlines were impacted throughout 2021 because of the pandemic, and that reduced demand for both aero-engines and their servicing. It is probably because of this that over the past year, Rolls-Royce’s share price has fluctuated but is essentially unchanged. I am not sure if it will be completely out of the woods in 2022 either. All restrictions have been removed but another variant could come along and spoil the party. 

Also, oil has touched $100 per barrel, a risk I had highlighted in context of the stock earlier. there is a good chance that some of the increased flying costs could be passed on to consumers. This in turn could impact demand. Moreover, rising oil prices are bad news for inflation, which is already super-elevated. Runaway inflation poses the risk of derailing the ongoing economic recovery. And if that happens, travel would be one of the impacted sectors.

What I’d do about the Rolls-Royce share price

Yet, there are silver linings to the stock. Its defence segment is doing quite well. It is the biggest contributor to the company’s earnings. And Rolls-Royce is positive about is prospects for 2022 as well. It could soon overtake civil aerospace as the mainstay for the company, which in turn could make the company less vulnerable to fluctuations in the macroeconomy. For now though, the stock remains a risky buy for me. I am only just watching it for now to see how things develop. 

Manika Premsingh 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.

When markets get too active, people sometimes lose their sense of perspective. If anything, I think that a stormy stock market makes it even more important for me as an investor to stay calm and think. I like the sorts of shares that I can buy for the long term, tucking them away in my portfolio without constantly checking on them. Here are two names on my list of UK shares to buy now for my portfolio I would be happy to hold for the coming 10 years.

Rolls-Royce

Like the planes it powers, aerospace engineer Rolls-Royce (LSE: RR) has certainly had its ups and downs over the past couple of years.

There have been lots of downs. Reduced levels of air travel cut the need for airlines to service their engines. That ate into a key source of profit for Rolls-Royce. Liquidity concerns led the company to dilute shareholders by issuing new shares. Both of those are risks that could come back in future.

But there have been highs too. Today’s annual results revealed a return to both profitability and free cash flow. I see that as a key step on Rolls-Royce’s return to long-term financial health. Any future downturn in demand could hurt liquidity again. But Rolls-Royce is a well-regarded supplier in a market for aircraft engines that is set to grow – and has very few participants. That should support long-term customer demand and profitability.

A sizeable share price fall today has pushed Rolls-Royce back into penny share territory. The shares trade for 10% cheaper than a year ago, despite what I think are much brighter prospects. I see them as UK shares to buy now for my portfolio and hold for the long term.

Associated British Foods

Another share on sale is Associated British Foods (LSE: ABF), which has seen its share price plummet 21% over the past year.

Like Rolls-Royce, the past couple of years have hurt ABF in more ways than one. Cost inflation in its food business continues to threaten profit margins. The same story is true at its discount clothes retailer Primark.

With a longer-term perspective, though, I see value at the current share price. ABF has as much experience of dealing with input price inflation as anyone, thanks to its decades of experience dealing with bulk sugar purchases in the commodities market. Its brands such as Twinings and Dorset Cereals should give it revenue streams for decades to come. Such premium brands also give ABF pricing power. That should help it to offset the impact of inflation on its profit margins, over time.

I think the risk of lockdowns hurting revenues and profits at Primark is now markedly lower than even just a couple of months ago. That has made me more confident on the outlook for Associated British Foods.

Two cheap UK shares to buy now

I do not think Rolls-Royce or Associated British Foods are exciting companies. In fact, that is what I like about them. They are big players in well-established markets with ongoing demand. They each have strong brands that give them competitive advantages.

Their share price falls mean that both shares look like good value to me. I would be happy to tuck them away in my portfolio for the coming decade.

Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods. 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.