Recession investing: I think these are the best UK shares to buy now

The best UK shares to buy are in sectors that are fast recovering from the economic collapse seen because of the lockdowns. As the economy reopens, they can bounce back fast. 

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Headline numbers on the UK economy are dismal. Office for National Statistics data released earlier today shows that it has contracted by 19.1% in the three months to May, indicating the depth of damage caused by the coronavirus-driven lockdown. It obviously looks like a really bad time to invest. But we at the Motley Fool have repeatedly underlined that in an economic slowdown, which goes hand-in-hand with a stock market crash, some of the best UK shares are bargain buys. If there’s anytime to buy FTSE 100 or FTSE 250 stocks, that time is now.

Room for optimism

If as an investor you have remained unconvinced, however, allow me to share more data with you. It’s true that the quarterly rolling GDP numbers look bad. But the monthly numbers are actually improving. In May, GDP grew by 1.8%. I know this doesn’t sound like a lot. But compared to March, when it shrank 6.9%, and April, when it shrank 20.3%, it’s a big improvement. 

I say this because the increase has happened while the lockdown was still underway. By extension, this suggests that data for the post-lockdown period could be even better. It may even show the wished-for ‘V-shaped’ growth. In fact, Bank of England Chief Economist Andy Haldane already sees signs of a V-shaped recovery. There are risks of a precarious recovery getting derailed, of course, but I think we now have room for optimism about the economy. 

As I drill deeper into the data, the construction sector’s recovery looks quite encouraging to me. It grew by 8.2% in May, after being the biggest faller in April. It fell by a whole 40.2% during that month. On a quarterly basis, it’s still in a bad state, but the first ray of hope has begun to show. As a result, I think some of the best UK shares to buy now are construction stocks.

Best UK shares to buy

FTSE 100 Irish construction giant CRH is one example. There’s a lot to like about it. First, its share price has recovered well from the stock market crash. And this is despite the construction sector’s poor performance. Two, it’s last trading update in April was positive. Three, it’s a growing and profit-making company, with operations across geographies. Its geographical exposure hedges the risks to business from concentration in a single economy.

Similarly, FTSE 250 landscaper Marshalls is another investment option in the construction segment. Its share price was at all-time-highs before the stock market crash hit. While it suffered in the lockdown, its latest update points to a comeback in activity. Like CRH, it too is seeing rising revenues and is profitable. Unlike CRH though, it’s largely based in the UK. For investors who are keen on UK-centric shares, especially after the construction turnaround seen in today’s GDP report, I think this is one of the best UK shares to buy. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

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