Even the Covid-19 crisis and continued Brexit saga haven’t stopped me from investing in 2020. As a long-term investor I’ve continued to build my Stocks and Shares ISA with top-quality UK shares.
If anything, the huge number of bargains that emerged following the stock market crash of early 2020 encouraged me to get busy buying for my ISA. The modest share price recovery (certainly compared with overseas stock markets) means that there are still plenty of cut-price stars out there waiting to be snapped up. So I’ll keep investing in 2021 too.
3 cheap UK shares on my ISA wishlist
Here’s a cluster of cheap UK shares I’m thinking of buying next year and holding for years to come:
#1: Kainos Group
Profits are lifting off at Kainos Group as the Covid-19 ‘test and trace’ system turbocharges sales at its healthcare division. City analysts reckon annual earnings here will leap 82% as a consequence in this fiscal year (to March 2021). This leaves the software company trading on a bargain-basement price-to-earnings growth (PEG) ratio of 0.5.
However, this UK share is no flash in the pan. It can expect demand for its cloud-based IT and other services to continue rocketing during the ongoing digital revolution. Kainos currently has a “robust pipeline” of business with FTSE 100 companies and government organisations and this is only going to grow and grow.
#2: Centamin
Gold prices might still be some distance off the summer’s record peaks above $2,050 per ounce. But I don’t think the bull market has run its course yet. There’s still plenty of macroeconomic and geopolitical uncertainty (Covid-19 and otherwise) that will keep investor nerves on tenterhooks. The likelihood that central banks will keep printing money and will maintain low interest rates to support the recovery is another reason I’m expecting gold values to rise again.
I’d invest in gold-producing UK share Centamin to ride this train. Firstly, it trades on a reasonable price-to-earnings (P/E) ratio of 12 times for 2021. Secondly it carries an enormous 5.3% dividend yield for next year. And thirdly, revised plans to develop its world-class Sukari mine in Egypt announced last week will significantly bolster profits in the years ahead.
#3: Tharisa
Platinum digger Tharisa is another mining stock I’m thinking of adding to my ISA today. Like Centamin, it can expect strong investor demand to drive sales of its platinum group metals over the next few years at least. It can expect industrial uptake of its product to take off as the decade progresses too. This is because environmental legislation being introduced all over the world means that higher and higher PGM loadings are required in car exhaust systems.
Today Tharisa share trades on a P/E ratio of 4 times for 2021. It boasts a chunky 4.8% dividend yield too. Combined, I think these factors make the company a terrific buy for ISA investors seeking cheap UK shares.
