The chances of winning the National Lottery jackpot are very small. The most likely outcome for many people is they’ll lose money over time by betting every week in the lottery. But UK shares in the stock market are weak because of the coronavirus crisis. There’s a good chance that many of them will go on to recover and grow, driven by progress in their underlying businesses.
UK shares I’d pick for an ISA
Rather than putting money into the lottery, I reckon a better way to aim to get rich is to invest in shares within an ISA. For example, I like the look of FTSE 100 pharmaceutical company GlaxoSmithKline (LSE: GSK).
After bouncing back in May, the share price has dropped back a bit giving investors a second chance this year to buy at a reasonable valuation. With the stock near 1,550p, the forward-looking earnings multiple for next year is around 13 and the anticipated dividend yield is about 5%.
I reckon that’s a decent dividend income that you can plough back into your investments to help compound your gains. Meanwhile, the company is making decent operational progress as we can see by a constant stream of announcements related to the research and development pipeline. Progress in the business could drive the share price higher over time, which could add to your gains. I’d buy the shares and aim to hold them for at least 10 years.
Meanwhile, the coronavirus crisis has delivered an opportunity to invest in one of Britain’s best-loved brands in FTSE 250 company Greggs (LSE: GRG). With the share price near 1,350p, it’s still almost 45% below the level achieved in February before the coronavirus crash.
Covid-19 has affected Greggs’ food-on-the-go and restaurant operations more than GlaxoSmithKline’s business has suffered. But before coronavirus, Greggs had a vibrant expansion programme, which I reckon will continue one day.
Dealing with Covid-19
City analysts following the company have pencilled in a robust recovery in earnings for 2021. And I reckon the shares could recover fast if the pandemic fades – perhaps because of one or more vaccines. Meanwhile, the company has reopened its doors to trade in a Covid-secure way, which has removed much of the uncertainty surrounding the stock.
On 28 July in the half-year results report, chief executive Roger Whiteside said: “Greggs is now well prepared to deal with the challenges of social distancing and operate through the conditions we are faced with.” Once again, I’d buy some of the shares and hold them with a 10-year investment horizon in mind to benefit from recovery and growth.
Of course, there are no guarantees about the timing of recovery in the economy and in the stock market. But I reckon these are solid companies that look set to survive and thrive. You won’t get instant riches from such shares like you (very rarely) can via the lottery. But a regular programme of investment could help you build wealth steadily.
