I will be glad to see the back of 2020. However, the pandemic and the market crash did allow me to pick up some share price bargains. These three UK shares performed the best for me in 2020.
Buy price: 933p on 18 March 2020
Current price: 2,538p
I bought FTSE AIM UK 50 index member Fevertree (LSE: FEVR) right in the depths of the market crash. At the time, I was looking to buy shares in companies with strong liquidity and solvency positions that could survive a protracted pandemic. But, I also wanted solid profit margins and high revenue growth. Shares like that should not only survive the pandemic but prosper as the situation improved. Fevertree fit the bill on all counts.
Fevertree outsources manufacturing; thus, it can respond to disruption quickly, like that brought by the pandemic. It has very low debt, and its operations generate plenty of cash. It was even able to increase its dividend in September. Once the pandemic is over, the company should continue expanding its product offering and market presence in the UK and overseas.
Buy price: 2,150p on 23 March 2020
Current price: 4,786p
FTSE 250 member Wizz Air‘s (LSE: WIZZ) share price was flying before the pandemic left planes grounded worldwide. Based in Central and Eastern Europe (CEE) with a fleet of young planes, the company was in a strong position. Operating costs are lower there, and competition for routes is not fierce. The market for air travel in CEE is growing faster than average, meaning Wizz Air was flying more and more passengers at a low cost. Cash was pouring in, and a €1,501m pile had built up before the pandemic hit.
My thinking was that this cash pile would see the company through a protracted pandemic. It has done more than that. Wizz Air has been adding routes and bases and expanding its fleet. People will start flying in large numbers again eventually. When they do, Wizz Air should be able to fly more passengers than ever before. Yes, 2021’s annual report (covers up to March 2021) will be ugly. However, given the company has a track record of generating profits, I expect it to hit smooth air soon.
Buy price: 1,355p on 18 May 2020
Current price: 1,829p
I bought FTSE 100 member Burberry (LSE: BRBY) after the lows seen in the market crash. Since then, it has been a bumpy road, but overall I am happy with the double-digit gain the position is now sitting in. My reasons for buying were simple. The Asia-Pacific region, including China, is Burberry’s largest market. That region was handling the pandemic relatively well, and sales there looked set to recover quicker than the knocked down share price was suggesting.
That region did on the whole recover in line with my expectations, especially in China and South Korea. The US also saw a strong recovery, but the European, Middle Eastern, and Japanese markets are still suffering. International travel needs to recover before Burberry really gets going again. However, I am glad I bought Burberry when I did.
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James J. McCombie owns shares of Burberry, Fevertree Drinks, and Wizz Air Holdings. The Motley Fool UK has recommended Burberry, Fevertree Drinks, and Wizz Air Holdings. 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.