It’s no surprise that risk appetite for UK shares has been quite weak so far in 2021. Investors have got the rolling Covid-19 crisis to think about as well as its impact on the global economy. There’s already signs of Brexit-related disruption, too, which in turn has raised fears over long-term damage to UK plc.
These issues mean that UK share pickers need to tread carefully before investing their hard-earned cash. They don’t, however, mean that I for one will be diving for cover. I think there are still many great shares that should deliver meaty shareholder returns despite the uncertain outlook. Here are two top stocks I’d buy for my Stocks and Shares ISA and hold all the way through to 2030:
#1: A strong UK share in an uncertain world
I’m backing Avon Rubber (LSE: AVON) to thrive right through to 2030. Why? Well it’s a market leader in the manufacture of face masks for armed forces, the police, and security services. And it’s stacking up contracts at a rate — particularly so with the US Department of Defense — giving it terrific sales momentum for the next several years.
The Covid-19 crisis casts a shadow over Avon’s profits picture to some extent. It could suffer some demand weakness as governments reduce spending, including on defence, in response to the recent economic shock. But on the other hand Avon could see demand for its product move ever-higher as Western countries try to head off perceived threats from rising powers like China and Russia.
Let’s take China for example. According to recent research from Rand Corporation, “Xi Jinping and his strategists are looking beyond his 2035 ‘fully modernized’ milestone to develop military theory and concepts for a ‘world-class military’ by 2050”. Then there’s rising civil unrest in the US and Europe, and the ever-present problem of terrorism, that I think could drive profits at UK shares like Avon through the roof this decade.
#2: Fast online fashion = fat returns?
Boohoo Group (LSE: BOO) is another top UK share I’d happily stash in my ISA today. 2020 was a brilliant trading year for online-only retailers like this as Covid-19 lockdowns forced shoppers onto the Internet. In my opinion, last year was no flash in the pan, and e-commerce is tipped to keep growing and growing.
Boohoo has boosted its earnings prospects this week by acquiring the much-loved Burton, Dorothy Perkins, and Wallis brands from Arcadia. It’s paid just £25.2m for the privilege as well. Given the UK share’s successful acquisitions of PrettyLittleThing and Nasty Gal, this gives investors even more to get excited about in my opinion.
There are risks to the likes of Boohoo, of course. Weak consumer spending in the event of a lumpy economic recovery could hamper revenues progress over the next few years. Rising awareness over sustainability also poses a threat to the long-term future of fast fashion specialists like Boohoo. There’s also a danger that extra sales taxes could be slapped on online retailers like this to help the ailing high street.
