The Motley Fool

Top stocks for an ISA! 2 UK shares I’d buy for a long economic downturn

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

As much of the UK enters a second lockdown, it looks as if the dangers to the economic recovery are growing by the day. However, I don’t think we should stop buying UK shares. 

The beauty of investing is the wide choice on offer. This means I can invest in companies that should thrive and avoid those that may struggle in the weeks and months ahead. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

With that in mind, here are two UK shares I’d buy right now for an economic downturn. 

UK shares to buy in an ISA

The first company I’d buy for a downturn is insurance group RSA (LSE: RSA). For many consumers, insurance is an essential item. For products such as home insurance or pet insurance, users have little choice but to shell out for these essentials. If they don’t, they’re running the risk of a potential hefty bill in the future. 

That’s why I think RSA is well-positioned for a prolonged economic downturn. The firm has registered some impact from the pandemic, but these losses have been contained. So far, management is optimistic that costs won’t exceed initial projections

As such, the firm recently announced it would be resuming dividend payouts to investors. Analysts have pegged a total dividend for this financial year of 28p. That implies the stock could provide a yield of 6.2%. 

Based on RSA’s defensive nature, I think it’s likely the firm will be able to maintain this level of income for the foreseeable future. Therefore, based on all of the above, I’d buy this business as part of a basket of UK shares in an ISA.

Investing in the home 

The other company I’ve my eye on right now is HomeServe (LSE: HSV). I think most readers would agree that when we’re confined to our homes, we want to be as comfortable as possible. That’s where this outfit comes in handy. The group provides home emergency, repair and heating installation services to the UK, US and European markets. 

Firm profits are expected to surge this year. Analysts have pencilled in a 44% increase in earnings for the current fiscal period. I think that makes HomeServe one of the fastest-growing companies on the London market. 

And as we settle into a second lockdown, I reckon this trend can continue particularly as we approach winter. There could be a rush in demand for the group’s services as customers, who are confined to their homes, request improvements. 

What’s more, HomeServe has a good record of acquiring other businesses to boost growth. I believe 2020’s influx in profits will provide additional firepower for the group to pursue this strategy in the years ahead, further improving the company’s growth trajectory. That’s why I’d buy the business as part of a portfolio of UK shares to weather the current economic turbulence. 

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Rupert Hargreaves owns RSA Insurance. The Motley Fool UK has recommended Homeserve. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.