To say that UK shares have had a bumpy ride in 2020 is an understatement. The global pandemic has hammered some stocks and now that there’s at least one Covid-19 vaccine, sentiment towards them is improving. Even Goldman Sachs is telling its clients to fill their boots with UK equities.
While the coronavirus crisis is far from over, here’s a look at my five favourite UK shares for 2021.
#1 – Investment trust
I really like Scottish Mortgage as it’s run by two fund managers who have delivered an impressive performance. The investment trust has exposure to both public and private companies.
There’s a bias towards US stocks and investments include the likes of Tesla and Amazon, which have rallied in the pandemic. The share price is close to an all-time high, but I think the stock calls made by the managers justify the premium. I expect Scottish Mortgage to keep rising in 2021.
#2 – Accountancy software specialist
Sage, the accountancy software group, has fallen 22% in 2020 and I think there’s potential for the shares to recover next year. The company has a strong product for SMEs and the pandemic has reinforced the role of technology in business.
In recent years the company has been shifting its customers from older software products to cloud-based accountancy subscription services. This process has been challenging at times. While this may be limiting growth at present, I expect Sage to reap the rewards in years to come from its recurring revenue. This is an attractive entry point for the shares and I’d pile in.
#3 – Video games
2020 has been a stellar year for video game studios as most people have been stuck at home during lockdown periods. Instead of making and releasing the games, Keywords Studios offers services, such as art and audio, to other gaming houses.
The company has a strong reputation in its field and has worked with major game distributors. It has recently upgrade it guidance for FY20 and expects strong demand for its services to continue, aided by upcoming console launches. I see potential for Keywords Studios shares to keep on rising.
#4 – Gold miner
Greatland Gold shares have rallied in 2020 and I think this stock is well positioned for 2021. The miner has had a series of drilling successes especially with its Havieron project due to its partnership with Newcrest. Greatland Gold has secured additional agreements to explore other sites.
While the miner is still loss-making, I think it has strong potential in 2021 to deliver some great returns.
#5 – Logistics
The coronavirus pandemic has resulted in an online shopping boom and Clipper Logistics has reaped the rewards. While the stock is trading at an all-time high, I think it has further to go in 2021. Clipper Logistics offers a range of services such as warehousing and delivery to large retailers including ASOS and John Lewis.
The stock has a lot of momentum right now and I expect this to continue. E-commerce is here to stay and the pandemic has been a catalyst causing a long-term behavioural shift to online shopping. The company is positive on the long-term outlook and believes it’s well positioned for UK and international growth.
