2 of my best shares to buy now

Jonathan Smith runs through Taylor Wimpey and Pearson, two shares he’s keen to buy right now given what’s going on at both companies.

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There are plenty of shares in the market that I could buy. In fact, around the world there are over 100,000 public listed companies! I prefer to stay closer to home, but I still have a lot of choice in the UK. If I don’t know what to choose, I could just buy a tracker fund. This should closely mimic the movement of an overall index like the FTSE 100. But I want to try and outperform the index, so want to be specific in what I buy. Here are two of my best shares to buy now.

Shifting lanes

First up is Pearson (LSE:PSON), the publisher and educational products provider. The business is at a crossroads as it tries to shift away from traditional books and move more into the virtual learning tools space. After all, textbooks and general courseware, unfortunately, are less needed in this world we live in. 

Full-year results can be looked at from two angles, one bad, one good. Sales were down 10%, and profit down 40%. But the drag was mostly down to traditional revenue streams. What impressed me was 23% growth in profit from the “global online learning” division. The business has outlined that the virtual learning sector is worth £1.5bn in the US alone. Pursuing this area going forward makes it a share I’d buy now on the positive outlook.

The downside with Pearson is whether this transformation can be done in time, and at what cost. The business also will have to contend with a new range of competitors in this digital space. For example, Udemy has become very prominent in this area over the past year.

My best share from the construction sector

A second top share I’d buy now is Taylor Wimpey (LSE:TW). I’ve been positive on this stock for a while now, and it’s been delivering. Although the share price is down 3% over one year, it’s up 58% over the past six months, and I think it’s got momentum to go higher. 

The business accelerated land purchases from summer last year onwards, raising over £500m worth of capital to support this in the process.

Incredibly, the UK forward order book stood at 10,685 homes on 31 December 2020. This was higher than 2019, with 9,725 homes in the book. Combine this with the positive news surrounding lockdown easing and extended stamp duty holiday, and I think the company could enjoy a very strong 2021. Buying the share now should help me to benefit from this potential move.

Taylor Wimpey does need to keep an eye on costs, as this has reduced the operating profit margin. It’s down almost 50% from 2019 operating profit margins, something that did make me raise my eyebrows. Yet one of the pledges for 2021 is to drive cost savings of £16m. If this is realised then the issue of the receding margins should be resolved.

Both Pearson and Taylor Wimpey are shares I’d look to buy now. Given the ISA deadline next month, I’d look to buy them and hold them using my remaining allowance for the year.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has recommended Pearson. 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.

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