Every year, some UK shares double in price. It can be frustrating, looking back and seeing well-known names that have done so well but in which one didn’t invest. I have been sifting through the UK stock market lately. Here are five shares I think could double from their current price.
Shares poised for recovery
While many shares recovered ground lost in 2020, a lot of stocks are yet to approach their pre-pandemic levels.
Take Lloyds for example. The bank has reported decent results in its latest quarter, showing a recovery from the pandemic impacts. The dividend ban imposed by the Bank of England has been lifted, which could lead to payouts in 2021. Yet Lloyds continues to languish around 35p. I recently bought into these UK shares, which I think can double once the markets feel comfortable that banking has not been holed below the waterline by the crisis.
Speaking of waterlines, maritime contractor Babcock is another name I have bought on sustained weakness. Not only has it stayed profitable throughout the pandemic – albeit at a reduced level – it also has a strong forward order book. With clients such as the Royal Navy, I expect the company to stage a strong recovery. Its shares did rally strongly in November but have fallen again since then. I see now as a good time to buy the name, which if it doubled would still sit below its price a year ago.
A slightly more contrarian pick among UK shares is Photo-Me. Lockdowns and reduced retail footfall have heavily hit the company, whose machines are often located in retail areas. There’s more to the company than its eponymous photo machines, though. In fact it has been reducing its estate of underperforming machines, while ramping up its business of laundromats. I like that business strategy. Meanwhile, its chief executive has bought heavily this year, on dozens of occasions. Trading about half down on where it stood last January, I think this is another UK share that could double so it’s on my watchlist.
These UK shares are growth stories
As well as value plays, I think there are some growth shares which could double. I picked digital ad agency S4 Capital as my share of the year. So far in January, its acquisition trail has included signing on two American agencies. This week it announced a new merger in China. With growing critical mass, I see an agreeable future for S4 Capital. Its shares more than doubled in 2020. I believe they can double again from here.
Longer term, I am looking into pizza chain Domino’s Pizza. The high street pizza purveyor trades at around the same price it did five years ago. But it has changed a lot in the interim, exiting less profitable European businesses. Its core UK and Irish business continues to perform well, with lockdowns providing more custom. The company is on a long journey of streamlining its business and focussing on its best market. Since I’m a patient investor, I think it is worth a closer look.
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christopherruane owns shares of Babcock International Group, Lloyds Banking Group, and S4 Capital plc. The Motley Fool UK has recommended Domino's Pizza and Lloyds Banking 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.