Top British shares for 2021

As 2020 closes out,’s writers have revealed their top shares for 2021 – including Diageo, Natwest, ITV and Ocado.

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We asked our freelance writers to reveal the shares they’re looking to buy for 2021. Here’s what they chose:

Tom Rodgers: Open Orphan

Investing in Open Orphan (LSE:ORPH) was definitely a departure for me. At the time, the AIM-listed contract research firm had zero profit, zero dividends, and a sub-£50m market cap. But it’s been my best performer of 2020 by far, up 369% at the time of writing.

I think 2021 is going to be transformative for the world leader in the testing of antivirals and vaccines. With a £175m market cap at time of writing, Open Orphan turned profitable in Q4 2020. Revenue from providing human challenge studies to global pharma companies is expected to hit £38.3m in 2021. And two special dividends are on the cards: first from the NASDAQ spin-out of Imutex and second from the sale of wearables data to tech giants like Apple or Amazon. With a forward P/E of 9.9 and expected forward EPS growth of 1,030%, there’s huge value here. I’m doubling down for 2021.

Tom Rodgers owns shares in Open Orphan.

Rupert Hargreaves: Natwest

Natwest (LSE: NWG) has been one of the worst-performing stocks in the FTSE 100 during 2020.

However, the company’s underlying fundamentals appear to be much stronger than the share price implies. Profits are expected to leap in 2021, hitting £1.4bn as the economic recovery gets underway.

A sound capital position also makes the firm a strong dividend candidate. Estimates suggest the bank could return £7bn of excess capital to shareholders, a third of its current market cap. Management should provide investors with further information on this cash return in the new year.

With the stock trading at a price-to-book (P/B) ratio of around 0.5, now looks to me to be a good time to buy.

Rupert Hargreaves does not own shares in Natwest.

Alan Oscroft: Boohoo

After years of watching, I’ve finally bought Boohoo (LSE: BOO) shares. I’ve followed this growth stock through ups and downs, but always shied away and gone for my favourite dividend shares instead. But after 2020, I really don’t care about short-term volatility. And through those share price gyrations, Boohoo earnings growth hasn’t faltered.

Looking to the 2021-22 year, forecasts suggest a forward P/E of 28. That’s way below levels Boohoo shares have reached during the past five years. If Boohoo can keep those earnings growing, I think that valuation will come to look very cheap. I’m bullish about UK shares in 2021 in general. And though anything could happen in the short term, Boohoo is the share I have the best hopes for in 2021.

Alan Oscroft owns shares of boohoo group.

Karl Loomes: BP 

This year has been a rough one for oil majors, but I think BP (LSE: BP) could be a big winner in 2021. The pressure on oil prices form travel bans should ease as vaccines start to get things back to normal. 

The oil market does have a lot of spare capacity, which is keeping BP’s share price subdued. However I think OPEC and Russia particularly will be making efforts to prop the price up. BP doesn’t need oil to be back at $100/bbl to make money. 

Though BP has cut its dividend, even its current payout offers a yield of about 8%. Now may be the perfect time to lock this in. What’s more, I think as the market returns to normal it should increase this back near previous levels. 

With its commitment to green energy likely setting up its long-term future, for me I think BP could be seeing a good year in 2021. 

Karl has shares in BP.

Jabran Khan: Sage Group

Sage Group (LSE:SGE) is a world leader in accounting and bookkeeping technology for SMEs, and a great defensive stock in my opinion. Technology stocks weren’t considered defensive investments in the past, but the Covid-19 pandemic has reinforced technology’s fundamental role in our personal and work lives.

Sage recently reported favourable full year results, which were ahead of expectations. It announced it is committed to diverting 3% of profits towards future growth, which I like the sound of. I feel there is a sense of short-sightedness from the market’s reaction about the future growth, which has kept the Sage share price lower than expected. 

With Sage’s share price down over 20% in 2020 to date, I believe there is an opportunity to buy into a high-quality, established industry leader at an enticing price point.

Jabran Khan has no position in Sage.

Kirsteen Mackay: Micro Focus

On top of the pandemic, Brexit is weighing heavily on Britain’s economy. But lawmakers are hoping its long-standing credibility as a centre of finance, will help it rise from the ashes, renewed and invigorated. There is also pressure on the UK to produce its own stellar tech companies. For this reason, I think both financial and tech stocks will do well in 2021. 

I like the look of enterprise software company Micro Focus International (LSE: MCRO). Although it’s not a financial company it does help financial businesses upgrade and streamline their IT. The FTSE 250 company has had a tough few years but it’s recent trading update shows signs of recovery. Micro Focus also specialises in helping companies strengthen their security. Cyber-attacks have increased in 2020 and I expect this will continue to be an area of growth. I think Micro Focus’s services will be increasingly in demand during 2021.

Kirsteen Mackay does not own shares in Micro Focus.

Christopher Ruane: S4 Capital

My top share for 2021 is one I think can double in price (again): S4 Capital (LSE: SFOR). So far in 2020, it has more than doubled in price. That reflects the stellar growth the digital media agency has clocked up.

The pandemic has accelerated the shift online for many advertisers, so S4 Capital’s network of companies is in the right place at the right time. The chief executive built WPP from the ground up and is repeating the proven approach at his latest company. Bringing different parts of the digital offering under one umbrella is attractive to large clients who want a single point of contact. Recent account wins such as BMW and Mondelez provide proof of the concept. With plans to double revenue and profits in just three years, the company has had a strong year. I think 2021 will be at least as strong.

Christopher Ruane has shares in S4 Capital.

Zaven Boyrazian: Keywords Studios

2020 has been an excellent year for video game studios. With everyone stuck at home during the lockdown periods, the average person spent nearly 13.5 hours each week playing video games – a 16% increase since 2019.

While this is undoubtedly a temporary boost, it has exposed more people to the entertainment medium, which presents a unique opportunity for video game developers!

But making a video game is an expensive process that doesn’t always pay off. That’s why I think Keywords Studios (LSE:KWS) is one of the best gaming stocks out there. Instead of making and publishing video games, the firm offers premium services to other studios – services like art, programming, Audio Design, and just about everything else needed to make a game.

With a massive reputation for excellence and non-dependence on project success, Keywords Studios is perfectly placed to reap the benefit of a potentially £300bn industry by 2027.

Zaven Boyrazian owns shares in Keywords Studios.

Edward Sheldon: Clipper Logistics

My top share for 2021 is Clipper Logistics (LSE: CLG). It’s a fast-growing logistics company that offers a range of services to retailers. Its clients include M&S, John Lewis, and ASOS.

Clipper is benefitting from the online shopping boom in a big way. Its recent half-year results, for example, showed revenue growth of 20% and a 40% increase in earnings per share. Looking ahead, Clipper said that it remains positive about the longer-term outlook and that it believes the group is well positioned to achieve further growth both in the UK and internationally.

Clipper shares aren’t particularly cheap. However, they’re not overly expensive either. At the current valuation, I think there’s plenty of room for upside in 2021.

Edward Sheldon owns shares in Clipper Logistics and ASOS.

Paul Summers: Diageo

With 2020 proving just how unpredictable markets can be over a short period of time, I maintain that it’s best to simply buy and hold shares in great companies. As such, my choice for 2021 is identical to last year: premium spirit maker Diageo (LSE: DGE).

Naturally, the closure of bars, pubs and restaurants across the globe hasn’t been great news for the FTSE 100 giant. Nevertheless, the popularity and durability of its brands should mean this is nothing more than a temporary setback. Still generating income for holders, the shares remain 15% below their 2019 high at the time of writing. This opportunity won’t last forever.

Paul Summers has no position in Diageo.

Matthew Dumigan: Homeserve

After a brief stint in the FTSE 100, Homeserve (LSE: HSV) looks set for relegation after a poor share price performance over the last six months. It appears that investors have been prioritising undervalued shares over companies with stable earnings thanks to Covid-19 vaccine developments.

Nevertheless, I’m confident Homeserve shares are in for a bright 2021. After all, an outstanding performance throughout the year saw the group’s membership business sales rise by 8% year-on-year in the six months ending 30 September. On top of this, full-year pre-tax profit is still set to come in ahead of expectations.

Furthermore, the company spent around £47m on nine acquisitions in the first half of the year, which looks set to propel growth in my view. Not to mention the opportunities to expand further into the potentially lucrative US emergency home cover market, which could fuel significant share price growth in 2021 and beyond.

Matthew Dumigan does not own shares in Homeserve.

Jonathan Smith: THG Holdings

You may know THG Holdings (LSE: THG) as The Hut Group. It listed on the LSE in September, being the largest IPO on the exchange since 2013. Greater transparency of financial reporting shows the business is performing very well. Q3 results showed year-on-year revenue growth of 38.6%, with guidance that the full-year figures should show revenue of £1.43bn for growth of 25%.

Given this kind of growth is being delivered during a global pandemic, THG is a good buy for 2021 as a diversifying stock in my portfolio. The industry it operates in should continue to have strong demand regardless of what happens with Covid-19.

Jonathan Smith owns shares in THG Holdings.

G A Chester: Avon Rubber

Avon Rubber (LSE: AVON) isn’t the cheapest stock in town. But I reckon it has outstanding growth prospects for 2021 and beyond. 

The company recently sold its agricultural technology business. This leaves it focused on life-critical personal protection systems for the world’s militaries and first responders. It’s a leader in respiratory mask systems, ballistic helmets and body armour. 

Two acquisitions in 2020 have widened and deepened its relationships with the likes of the US Department of Defense and NATO. Its enhanced contract-winning opportunities, as well as its balance-sheet firepower to pursue further earnings-accretive acquisitions, make it my top stock for 2021. 

G A Chester has no position in Avon Rubber.

Manika Premsingh: Ocado

The FTSE 100 e-grocer Ocado (LSE: OCDO) has had a fantastic 2020. Its share price performance is impressive and its sales have shown a sharp ris,e too. But I think the best is yet to come for it.

If Brexit and the coronavirus vaccinations go smoothly, we are set for a pretty good 2021. Consumers will buy more, and increasingly from the likes of Ocado, having been introduced to online shopping because of Covid-19.

If there are disruptions, however, it’s still a good defensive stock that will appeal to investors, and it’s a protection from coronavirus too.

Beyond 2021, I believe Ocado will benefit as a market leader in the growing online segment market.

Manika Premsingh owns shares of Ocado.

Roland Head: ITV

2020 was a difficult year for television group ITV (LSE: ITV). But advertising revenue in the final quarter of the year is expected to be ahead of the same time last year. And programme production is returning to normal.

I think 2021 will be a turning point for this group that will see the business return to growth. ITV’s digital business is growing, and online revenues have risen in 2020.

The ITV share price has performed strongly since the start of November, but the shares are still priced at less than 10 times 2021 forecast earnings. I think that’s too cheap for a business with a track record of strong profitability and generous dividends. I expect ITV shares to beat the market in 2021.

Roland Head owns shares of ITV.

Harshil Patel: Sylvania Platinum

Sylvania Platinum (LSE: SLP) is a low-cost producer of platinum group metals (PGMs), which are platinum, palladium, and rhodium. It operates from South Africa, which is where the world’s greatest source of PGMs is located.

It benefits from strong metal price trends and limited competition. Sylvania Platinum is also a play on a shift to cleaner, more energy-efficient vehicles.

As a global economic recovery looks likely in 2021, demand for commodities could be robust. Supported by ample liquidity, central bank stimulus, and rising demand for PGMs, Sylvania Platinum could be in a sweet-spot.

Sylvania Platinum shares look cheap, trading at a price-to-earnings (P/E) ratio of just 4.3 at the time of writing. It also has growing revenues, rising profits, and no debt. It’s a well-managed, cash generative company that I think could be a top performer in 2021.

Harshil Patel owns shares in Sylvania Platinum.

Royston Wild: JD Sports Fashion

At the time of writing, there is still huge uncertainty over the economic outlook for 2021. Things remain particularly perilous for those involved in the retail sector as a blend of fresh Covid-19 lockdowns and weak consumer confidence remains a strong possibility in the new year.

The outlook isn’t all grim for Britain’s retailers, though. Indeed, I reckon JD Sports Fashion (LSE: JD) could be a standout performer in 2021. The athleisure and loungewear markets are red hot and are expected to grow by nearly 10% in the coming years. It’s a trend that this FTSE 100 share, with its huge ranges of cutting-edge and exclusive products, is in prime position to exploit.

Finally, and critically, JD Sports has invested huge amounts in its digital channels and its warehousing capabilities to ride the e-commerce boom. This sets it up nicely for what will prove to be another huge year for internet shopping. City analysts reckon JD Sports will report an exceptional 59% rise in annual earnings for the fiscal year ending January 2022. And this leaves it trading on a rock-bottom forward price-to-earnings growth (PEG) ratio of 0.4.

Royston Wild does not own shares in JD Sports Fashion.

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended ASOS, Avon Rubber, boohoo group, Clipper Logistics, Diageo, Homeserve, ITV, Keywords Studios, Micro Focus, and Sage Group. 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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