When it comes to finding the best shares to buy now, I am focusing on a few key sectors.
The sectors that I believe will achieve the best performances over the next few years are homebuilding, resources, and green energy.
To a certain extent, they are all linked. For example, the resource sector produces materials for the homebuilding and green energy sectors.
Rather than trying to pick out winners in the resource sector, I would buy Glencore. I think this is one of the best shares to buy now because it is a commodity trader. As well as owning mines around the world, it buys and sells a whole range of commodities, earning a small profit in the process.
Glencore’s advantage is its size. Trading commodities requires a vast amount of capital, and this company is one of only four that virtually control the international commodity market. This is why I would buy the stock today.
However, it might not be suitable for all investors. Glencore has mixed ESG credentials, as it is a large coal producer. This may put some investors off from investing in the business.
Best shares to buy now in the homebuilding sector
In the homebuilding sector, I would Berkeley and Taylor Wimpey. The former targets the higher end of the property market, while the latter produces homes nearer the average UK property price of approximately £250,000. By acquiring both, I think my portfolio will benefit from exposure across the market.
I think these are the best shares to buy now in the sector because Taylor has a cash-rich balance sheet. Meanwhile, Berkeley has a solid reputation for luxury properties. The UK property market is structurally undersupplied, and this lack of supply, coupled with rising demand, means property prices look set to continue rising for the foreseeable future. Demand for new homes should also continue to rise, setting up some solid tailwinds for these firms.
Still, their growth is unlikely to come without any negative surprises. Rising labour and materials costs could hurt profits and lead to reduced profit margins. Therefore, both Taylor and Berkeley may fail to live up to the market’s lofty growth expectations.
I think the best shares I can buy now in the green energy sector are Greencoat Wind and SEE.
Estimates suggest hundreds of billions of pounds will flow into the renewable energy industry over the next few decades. I want to have some exposure to this.
Greencoat has built a portfolio of wind energy generation assets. SEE is planning to spend billions building out its renewables portfolio over the next few years. I think owning these two firms could provide broad exposure to the renewables sector and offer the potential for growth in the years ahead.
Key challenges the companies may face include high costs for developing new renewable assets, reducing returns on these assets when they are finalised. They may also struggle to invest if interest rates rise substantially.
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. 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.