Global stock markets might have rallied in recent weeks, but the outlook for the global economy remains as clear as mud. Indeed, UK share investors need to remain mindful of a number of issues before parting with their cash.
News that Covid-19 infection rates are still hitting record highs casts doubt over the economic recovery in 2021. Fears of renewed trade tariff hostilities between US and China when Joe Biden assumes the American presidency in January is another thing that could shake market confidence. UK share investors need to be prepared for an economically-damaging no-deal Brexit happening in the coming weeks too.
A top stock for 2021
The economic and political outlook remains exceptionally foggy. But it doesn’t mean UK share investors won’t be able to make monster returns in the near term and beyond. I’ve continued to invest in my Stocks and Shares ISA in recent weeks. And I plan to keep adding to my shares portfolio as we head into 2021.
Centamin (LSE: CEY) is one UK share that’s on my ISA radar today. It offers terrific profits possibilities and huge near-term dividend yields to sink one’s teeth into too.
Gold to soar again?
Considerable geopolitical and macroeconomic tension has helped gold prices rocket since early 2019. The onset of the Covid-19 crisis this year drove the yellow metal to record highs above $2,000 per ounce too. Further interest rate cuts and quantitative easing from central banks also fuelled demand for inflation-proof hard currencies like precious metals.
Gold prices have fallen back on strong profit taking since late summer’s all-time highs. A resurgent US dollar and news of a coronavirus vaccine have also punctured demand for the flight-to-safety asset. But those same issues that lifted safe-haven demand for the metal remain very much in play. I wouldn’t be shocked to see gold soar to new peaks before too long.
A UK share with 6% dividend yields!
Now, Centamin is expected to endure an 8% annual earnings fall in 2021. Current City estimates reflect the FTSE 250 digger’s recent announcement that production will fall to around 400,000-430,000 ounces next year. This compares with the 445,000-455,000 ounces it anticipates in 2020.
This wouldn’t discourage me from investing in the UK share though. Firstly, my view that gold prices could fly again next year offsets my fears an output fall could have on Centamin’s bottom line.
Besides, the production fall forecast for next year reflects the work the company is carrying out to increase the number of open pits from which it can dig for gold. While not good in the near term, these measures will give Centamin’s profits an extra boost over the medium to long term.
Today, Centamin trades on a low forward price-to-earnings (P/E) ratio of 13 times for next year. What’s more, it carries a mammoth 6.1% dividend yield at current prices. I reckon this UK share is a brilliant all-round buy for what could be a turbulent 2021.
Royston Wild has no position in any of the shares mentioned. 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.