The outlook for the global economy remains less than obvious as we enter 2021. Worsening Covid-19 infection rates threaten to disrupt the effectiveness of a vaccine rollout and, as a consequence, the economic rebound. The profits picture for many hundreds of UK shares remains as clear as mud.
That’s not to say I won’t be investing in my own Stocks and Shares ISA in the months ahead though. The London Stock Exchange is packed with shares that remain on course to deliver delicious long-term returns. Here are a few I reckon are too good to miss following share price weakness.
UK share #1: Big Yellow Group
Self-storage play Big Yellow Group’s share price has dropped by mid-single-digit percentages this year. It’s a mild dip compared with the eye-watering declines other UK shares have endured. And it’s a drop that still leaves the business dealing on a meaty forward P/E ratio of 26 times.
But it’s a reversal that fails to reflect just how strong trading has remained at Big Yellow in Covid-19 times. Not even a pandemic, nor the worst economic crash for 300 years on these shores, could stop like-for-like revenues from continuing to rise (up 2.4% in the six months to September). And supportive factors like a huge buy-to-let market and the growth of online shopping mean demand for its storage pods should keep soaring over the long term.
UK share #2: Avon Rubber
Body armour builder Avon Rubber has had a much stronger 2020 by comparison. In fact its share price doubled in value during the first 11 months of the year before strong profit taking and a troublesome trading update last week sent it plummeting. This UK share’s now up just 50% from January 1.
I’d use this weakness as a fresh buying opportunity. The mask maker’s dizzying forward earnings multiple has now been chopped down to a much-more palatable 24 times. And this reading’s quite reasonable, in my opinion, given Avon Rubber’s mighty profits outlook. Grand View Research reckons the company will grow at a compound rate of 5.5% through to 2025. It’ll be worth a colossal $3bn at the end of the period, it reckons.
UK share #3: Prudential
Like that of Big Yellow, Prudential’s share price is down by mid-single-digits since 1 January. The FTSE 100 life insurer has regained acres of ground in recent months, but at current prices it still looks too cheap to miss. Today, this UK share trades on a P/E ratio of just 9 times for 2021.
It’s a reading that fails to reflect its immense profits opportunities in Asia. Soaring product demand in these emerging regions have turbocharged Prudential’s bottom line over the past decade. Covid-19 disruption is likely to have whacked the brakes on such impressive profits growth.
But growing wealth levels and rising populations mean The Pru’s long-term investment case remains in tact. One final thing. The Footsie firm’s decision to hive off its Jackson division in the US will allow it to double-down on Asia and exploit these huge markets to the maximum.
