Omicron variant: 3 cheap UK shares I’ll be buying to navigate the crisis

Certain shares perform better than others when Covid-19 is on front pages. The author analyses three cheap UK shares that could limit downside risk to his portfolio.

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The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young woman wearing face mask while walking in the streets of London

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Share prices have inevitably had to weather a number of storms during the Covid-19 pandemic, and this has been particularly true whenever new variants have developed. In recent weeks, news stories have revolved around the new Omicron variant. While it is possible that this variant is milder, it does appear to be more transmissible and it has certainly dented share prices. As the Omicron variant progresses, I hope that these three cheap UK shares will help me weather the storm. 

Looking back to the Alpha and Delta variants and the impact on the market, however, I believe I can purchase shares that will limit downside risk to my portfolio. Just Eat Takeaway (LSE: JET), the food delivery company, is an option whenever there is a remote chance of tighter restrictions – because people will have to order food to the house instead of going out to dinner. This is reflected in the order growth from 2020 to 2021, increasing 66% in the UK and 41% overall. Technically, the JET share price benefits from lockdown news and retreats when lockdowns come to an end; JET stock dropped 12.8% when the first lockdown ended in June 2020. However, New York City has capped commissions since August 2021 and the share price has been continually trending down. For me, this company is not without its risks, but the low price is why I think this is a good addition to my portfolio.

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Another stock I’ll be watching closely is Fresnillo (LSE: FRES), the silver mining company operating in Mexico. The Q3 report showed lower silver and gold production and highlighted the possibility of mining being impacted by Covid-19, thus demonstrating that operations may be interrupted at certain times in the future. Nonetheless, interim earnings were up 59% and the dividend was increased in August 2021. I am also interested in this stock because silver can be a safe haven in times of crisis, reflected in the share price that has retraced 76.4% from its Autumn 2020 highs during arguably the toughest part of the pandemic. Recent price action shows a tentative uptrend support line, which will need to hold the price at a future point to be confirmed. 

Finally, Scottish Mortgage Investment Trust is an interesting stock to consider for wider exposure to tech companies. Its performance during pandemic times is nothing short of extraordinary, with around a 300% increase in share price since April 2020. This is a reflection of how well the tech sector has performed, but I will be looking in detail at its holdings before I make any purchases. While the holdings are geographically diverse, spanning the US and China, there are certain stocks included in the Scottish Mortgage Investment Trust that I will be checking out to make sure they do not negatively impact the share price, like Tesla and Meta.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Andrew Woods owns shares in Just Eat Takeaway. The Motley Fool UK has recommended Fresnillo and Just Eat Takeaway.com N.V. 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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