I have recently been looking for UK shares to buy for my portfolio that may benefit from the economic recovery. I do not think the recovery is going to be confined to any particular sector. That is why I want to build exposure to different sectors and industries in my portfolio.
For example, one of the first shares I would buy is the mining company Antofagasta. This Chile-based copper mining group should benefit from the rising demand for the red metal.
As the world transitions away from dirty hydrocarbon energy towards renewable energy, analysts project that demand for copper will increase rapidly. Companies like Antofagasta will be called up to meet this deficit.
That said, the commodity industry is incredibly volatile. Prices can rise and fall substantially every day. Therefore, this investment might not be suitable for all.
I would also buy B&M European Value for my portfolio of UK shares. This retailer has grown rapidly over the past few years as consumers have flocked to its value offering. I think it will be able to maintain this rate of growth as the economy recovers.
Inflation is pushing prices higher, which may force consumers to seek out better deals. This, coupled with increased consumer spending power, may produce a double tailwind for the group.
But risks and challenges the enterprise could face include competition and higher wages for workers, reducing profit margins.
Homebuilder Taylor Wimpey is also having to deal with rising wages. Its profit margins are coming under pressure as a result. Rising material costs are also weighing on margins.
Still, the company is benefiting from significant tailwinds in the UK housing market. Decades of undersupply and low-interest rates are pushing up prices. Homebuilders are struggling to increase output to meet rising demand, suggesting prices could increase for some time.
Considering this outlook, I would buy Taylor to gain exposure to the UK housebuilding sector.
UK shares for growth
Education is an incredibly defensive industry. There will always be a need for education, and consumers will always be willing to pay for it. That is why I would buy textbook producer Pearson.
Last year decimated the company’s revenues as students moved online. To overcome this issue, the group has been investing heavily in its online offering. We should start to see the results of this initiative emerge in the company’s results over the next few years.
However, risks and challenges the group may face include competition, and disruption as its restructuring continues.
Finally, I would buy steel producer Evraz for my portfolio of UK shares.
As countries worldwide try to build themselves out of the pandemic-induced economic slump, steel demand is rising, and this is pushing prices higher. I think Evraz is likely to benefit from this.
Challenges the company may face include higher energy costs and costs of polluting, which would reduce profitability.
Make no mistake… inflation is coming.
Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.
Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.
That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…
…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!
Best of all, we’re giving this report away completely FREE today!
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value and 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.