The last year has been a difficult one for the UK stock market. Covid-19 restrictions have hampered profits and share price growth for many.
After several lockdowns, the UK economy shrunk a record 9.9% during 2020, and many might think that opportunity in the stock market is limited.
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It’s not all doom and gloom, however. The FTSE 100’s rebound since the autumn has coincided with the development of a number of vaccines, and much will depend on how the UK and other countries are able to implement their vaccine programmes.
There is plenty of optimism around, particularly in the UK where more than 14m people have received their first doses of the jab.
With that in mind, here are three shares I would buy now for my portfolio or Stocks and Shares ISA.
Housebuilder Barratt Developments (LSE:BDEV) is one UK share I see a lot of upside in right now.
After the initial lockdown in March of last year, further lockdowns and restrictions have loosened for the construction sector and Barratt said they completed 9% more homes in the second half of the year than they did in the corresponding period of 2019.
The company said this was a record number of completions, and helped it to see a 1.7% rise in profits during the same time. The housing market seems resolute with demand remaining strong.
However, the housing market can be subject to booms and busts. Some will say that recent strong performance from the housebuilders is the onset of a bubble which will eventually burst.
With the stamp duty holiday and Help To Buy scheme on the way out, that poses a further risk that demand might dry up. I’m still adding Barratt to my list of shares to buy now though.
Telecommunications provider Vodafone (LSE:VOD) is another FTSE 100 share I like the look of.
Vodafone has a price-to-earnings ratio (P/E) of 27, which a lot of investors may consider to be too expensive. However, the company has one of the highest dividend yields in the index, standing at 6% based on its current share price of 130p.
Vodafone recently returned to profit growth after a strong performance in its biggest market, Germany. I must point out that sales had suffered for several quarters before that so it will take a few more quarters to see if that growth is sustainable.
I see enough value in the dividend at this stage, however, to add it to my buy list.
St James’s Place
Wealth management business St James’s Place (LSE:STJ) is a business many may not hear about on a regular basis. But the company has a record of steady share price growth stretching back years.
Its shares have recovered well after an initial fall due to Covid-19, and have gained more than 25% in the last two years.
The fund ended 2020 with record assets under management after investors placed more than £4bn with the wealth manager in the final quarter of the year.
The shares do seem expensive at 23 times P/E, and St James’s Place froze its dividend last year, so there is risk involved. However, I’m still backing the company’s strong track record as one of my best shares to buy now.