With many expecting the UK economy to bounce back this year after the damning impacts of the pandemic, I think now is a great time for seeking UK shares to buy and hold for the long term. My colleague Jonathan Smith recently looked at cheap UK shares, highlighting the benefits of owning these for a decade. With that said, here I’ll look at two UK shares that I’d buy today for long-term growth.
Scottish Mortgage Investment Trust
The Scottish Mortgage Investment Trust (LSE: SMIT) has seen spectacular returns over the past 18 months. Up over 135% from the beginning of 2020, and 13% year-to-date, the trust run by Baillie Gifford continues to go from strength to strength. I like it because it measures performance over a five-year period. Within the last five years, SMIT has seen returns of over 345%. Its top holdings are diversified — and as of June 2021 included Illumina, Moderna, and NIO. To further this, I have confidence in the fund managers and their judgment; seen by their recent decision to halve SMIT’s position in Tesla.
The trust saw a near 30% fall in February, in part due to the tech sell-off, which highlights that it’s not immune to periods of volatility, regardless of its diverse portfolio. However, for me, this doesn’t pose an issue. I’d buy this UK share today to own it for a minimum of five years. If the next five years follow a similar pattern to the previous five, there’s the potential for me to see a healthy return. Large exposure to tech stocks, however, could lead to issues in the future as we see the uncertainty surrounding regulation.
Recently in the spotlight due to its Covid-19 vaccine, AstraZeneca (LSE: AZN) is up 12% in the past six months. Although this UK share has been volatile over the past year amid concerns over possible vaccine side-effects and late deliveries, late July saw the release of its half-year results for 2021. There were many positives to take away. Revenues were up 23% (14% without vaccine sales) compared to half-year 2020, while product sales rose by 24%. With this said, an issue was the 25% fall in profits for Q2 2021.
However, what really draws me to AstraZeneca is its long-term outlook. As highlighted in its latest results, its recent acquisition of Alexion Pharmaceuticals should help the company achieve a transition to sustainable growth, allowing it to expand into the rare disease medicines industry through Alexion’s complement-biology platform. Pascal Soriot, the firm’s CEO, also mentioned the continued investment in R&D, showing a strong focus on a long-term outlook.
Why I’m buying
These are two UK shares that I deem a good addition to my portfolio. Both stocks have seen solid growth over the past five years – and I expect this to continue. While SMIT offers access to a variety of sectors, most notably the expanding tech sector, AstraZeneca is in a pharmaceutical industry that has the capability to flourish and grow in the future. With the UK economy still on the road to recovery post-pandemic, I think now is the perfect time for me to buy.
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Charlie Keough owns shares of Scottish Mortgage Investment Trust and NIO. The Motley Fool UK owns shares of and has recommended NIO Inc. and Tesla. The Motley Fool UK has recommended Illumina and Moderna Inc. 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.