Buying defensive shares is one of the key fail-safe tactics for investing in uncertain times. If we as investors may have been unconvinced of this in the past, the latest stock market crash and the time since has been a good reminder of defensives’ merit. Not only have many of them sustained performance, they have also seen impressive share price increases, making them among the best UK shares to hold in our portfolios now.
The reason for their attractiveness isn’t hard to understand. Their share prices tend to be less volatile than their cyclical counterparts because their revenues are dependable even in recessions. On the downside this means that they don’t tend to show the superlative returns that cyclicals might during booms. But over time, they may still turn out to be clear winners. And we at the Motley Fool like stocks that will make gains for investors over time. These are also some of the best UK shares to buy for investors with low-risk thresholds.
Best UK shares to buy
One of these defensive shares is the FTSE 100-listed Halma, which provides life-saving technologies. These include environmental protection technologies, medical devices, and safety equipment like security sensors and fire detection. It’s in a financially strong place that ensured it doesn’t have to draw on the government’s financing facility. It expects profits to shrink this year, but this is an exceptional year. I think Halma will ride out the year relatively unscathed. It has a high earnings ratio of 46 times, but I think that’s the price today for a safe, growing, and dividend-paying stock. In other words, it’s the price for one of the best UK shares around today.
Spirax Sarco Engineering is another FTSE 100 stock whose recent share price movements bear no recollection of the stock market crash. On the contrary, it’s near all-time highs. Despite some softening in its financials recently, it’s obvious why investors like SPX. In its recent update, SPX pointed to potential revenue stability. There are two reasons for this. One, its customers pay for its services with their operating budgets rather than their capital ones. So even if investments take a hit in the recession, the company isn’t impacted. Two, its revenues are from sectors less impacted by Covid-19. For this reason alone, I think it would be one of the best UK shares to buy today.
The FTSE 100 speciality chemicals company Croda International is also one of the best UK shares to buy for reasons similar to HLMA and SPX. Its share price too is around all-time highs as investors flock to safer stocks. It too boasts of robust financials. It has also recently completed an acquisition that’s expected to enhance its R&D capabilities.
All these stocks are comparatively pricey, but as some of the best UK shares around I’d be better hedged when I buy them and be assured capital gains. If you are still unconvinced, I’ll leave you with these alternative investment ideas as well.
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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International and Halma. 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.