As the UK economy rebuilds after the pandemic, I have been searching for shares to buy to invest in the recovery.
Here are three companies in three different sectors I would buy with £3k today.
Recovery shares to buy
The first company is the construction group Balfour Beatty (LSE: BBY). This might not be suitable for all investors. Indeed, construction businesses can be risky to own because profit margins in the industry are razor-thin. As such, these corporations can struggle to pass on rising costs to customers, which can impede profit growth.
Still, I think this company is one of the best shares to buy for its exposure to the UK construction sector. The industry is already reporting strong growth. Moreover, the government’s infrastructure spending plans should only drive growth higher in the medium term.
As one of the largest construction businesses in the country, Balfour should be able to capitalise on this trend over the next few years. Its size should also help it navigate any headwinds at the same time. That’s why I would buy the stock for my recovery portfolio today.
In the property sector, I would acquire LSL Property (LSE: LSL). The property industry is one of the largest sectors of the UK economy, and LSL is one of the few genuinely diversified property businesses listed in London.
The company owns estate agent brands, provides financial services, and works as a surveyor for some of the largest mortgage providers in the country. The group is a one-stop-shop for property in the UK.
That’s why I think this is one of the best shares to buy today and would require it for my recovery portfolio. I feel that no matter what happens over the next few years, LSL’s diversified portfolio will help the business navigate any environment.
That does not mean the enterprise is without its risks and challenges. For example, the property market could come under pressure if interest rates suddenly increase. That would curb demand for the group’s services, weighing on profitability and the stock price.
Travel and tourism
The last company I would acquire for my recovery portfolio is SSP Group (LSE: SSPG). I think it’s fair to say this enterprise, which owns a portfolio of food and beverage outlets in travel locations worldwide, has had its business model decimated by the pandemic. Revenues for the six months ended 31 March 2021 declined 79% on a like-for-like basis.
Considering the challenges facing the enterprise, it’s certainly not for the faint-hearted. Not only have SSP’s revenues collapsed over the past year, but it has also built up an enormous debt mountain. At the end of March, net debt, including lease liabilities, was £2bn. In comparison, revenue for the six month period was £257m.
Management doesn’t expect revenues to return to pre-Covid-19 levels until 2024. That implies SSP is set for several years of uncertainty. So the risks of investing here are clear. Nevertheless, I would buy the stock for my portfolio because I believe it has excellent recovery potential. I think the company can outperform expectations as the global economy reopens, which could make it one of the best shares to buy today.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended SSP 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.