3 UK shares that should do well in the last quarter of 2021

With just 74 days to Christmas, even if we don’t get a Santa Rally, Andy Ross expects these three UK shares to do well.

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We’re in the last quarter of 2021 with just 74 days to go until Christmas. Time really does fly. In these three months, as investors have a lot to be worried about, which UK shares could do well for me?

Long-term hold

On the assumption that the last quarter of 2021 might be challenging for stock markets because of inflation concerns and so on, two of my picks are consumer defensive companies. The first is Reckitt (LSE: RKT), owner of brands such as Air Wick, Durex and Veet.

A cold winter could see an increase in its health business. Increased coughs and other illness may once again encourage people to clean their homes and offices more often, which should help Reckitt’s large hygiene business.

On the downside the share price doesn’t have momentum, having fallen from highs achieved in summer 2020. The business has also initially struggled to pass on increased costs from inflation, which isn’t good for margins. Also, if we get a mild winter, with Reckitt very reliant on hygiene and over the counter medicines for revenues, it could be impacted negatively.

I think though that Reckitt could do well in the rest of this year and I’m confident about its prospects looking at a multi year timeframe. I may buy more shares.

A recovery play

Diageo (LSE: DGE) is the second of the consumer defensive UK shares I’m thinking could do well in the potentially tricky months ahead. The drinks group owns brands such as Captain Morgan’s and Smirnoff. It also sells internationally, like Reckitt, reducing its currency and market risk.

Demand for alcohol is unlikely to reduce and indeed consumers will likely want more in the run up to Christmas.

With its premium brands, Diageo has plenty of pricing power and therefore I don’t expect its margins to come under pressure. The company is also a natural beneficiary of the economy reopening, especially bars, restaurants and nightclubs. Strong recent results from Revolutions Bars indicate Diageo’s end customers will need its products, which is good for revenue growth.  

The risks, I think, primarily come from any further lockdowns, which would inevitably hit the share price. Otherwise, I fully expect Diageo shares to do well in the coming months and years. Again, I may well buy more shares to add to my holding.

A UK share that could get a boost from Christmas

Lastly, thinking directly of a company that might benefit from Christmas, ASOS (LSE: ASC) is a UK share that could do well. It had been far less in the spotlight than rival Boohoo. That was until a profit warning yesterday. But that potentially creates an attractive entry point as the shares fell 13%. I’m now more tempted to buy the shares. 

 Even before the latest fall, the shares were much cheaper than they’ve been historically.

Over the past 12 months, the e-commerce retailer has been acquiring new brands. For example, when Arcadia Group fell into administration it bought Topshop, Topman, Miss Selfridge, and HIIT for £330m. This should help it do well longer term. 

The shares could be hit by supply chain issues, increased competition or an online sales tax. Also, there could be further profit warnings. 

My personal experience with ASOS has always been pretty good, so on that basis I might be tempted to buy the shares.

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.

Andy Ross owns shares in Reckitt and Diageo. The Motley Fool UK has recommended ASOS, Diageo, and Reckitt plc. 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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