2 of my top shares to buy before the market recovers!

The FTSE 100 may have closed above 7,500 earlier this week, but many stocks still haven’t recovered. So, here are two shares to buy now.

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I’m looking for shares to buy before the market recovers. And I might be forgiven for thinking that the market has already recovered. After all, on Wednesday, the FTSE 100 closed above 7,500 for the first time in two months. The figure has become something of a benchmark for the index in recent years.

But the reality is that oil and mining stocks have been hauling the index upwards when many other stocks are still trading at discounts versus this time last year. The FTSE 250, which is a better reflection of the health of UK-listed stocks, is down 14% over the year. While the UK’s largest company, Shell, is up 50% over 12 months.

So, here are the top two shares I’d buy more of before the market really recovers!

Vistry Group

Share prices in the housing sector are down considerably this year despite many developers making record profits. Vistry Group (LSE:VTY) is actually performing far better than it did before the pandemic.

Pre-tax profit is expected to come in at the top end of market forecasts, at £417m. That’s far above pre-pandemic levels and some way above the £319m achieved last year. It’s currently offering a 6.66% dividend yield.

But interestingly, it’s currently trading for 900p a share, that’s down from highs of nearly 1,500p before the first Covid-19 lockdown.

However, there are some issues weighing on the share price. Firstly, interest rates are rising and that’s expected to have a negative impact on demand for new homes. Several core indicators are suggesting that we’ve now reached a turning point and that house prices will start falling as a result.

And then there’s the matter of the cladding crisis. Vistry Group expects its fire safety pledge will cost it between £50m and £70m. That’s a substantial figure, but it’s way less than many other developers, some of which will see a whole year’s profits wiped out after committing to the government scheme to reclad thousands of homes.

But the long-term trends, I contend, are very positive. Demand for housing in the UK will stay strong as there’s a fundamental shortage of homes. And Vistry has reported a strong order book that should help it navigate the coming months.

Spire Healthcare

Berenberg recently initiated coverage on Spire Healthcare (LSE:SPI) with a “buy” rating and price target of 300p. The brokerage highlighted its belief that the private hospital group is well placed to benefit from a record NHS waiting list that should result in a surge in both NHS referrals and private demand.

This has been my position for some months. Hospital waiting lists for elective surgeries are far into the millions, and private hospitals offer a solution. I also see private hospitals gaining more business as the NHS struggles with staffing issues.

Spire also recently announced a four-year partnership with Bupa, which should enhance revenue. The contract is inflation-linked.

The group also recently said that it was targeting a return to dividend payments in 2023, and outlined plans for a sustainable dividend policy of 25%-40% of profit after tax.

Covid-19 is still an issue here as it will continue to cause disruption for years to come, but the prospects look good and I’d buy more of this stock today.

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 assessed. Consider taking independent financial advice.

James Fox owns shares in Vistry Group and Spire Healthcare. The Motley Fool UK has no position in any of the shares mentioned. 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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