As a result of the 2020 stock market crash, many quality UK stocks are trading at heavily reduced prices. This is great news for investors looking to pick up a few bargains and hold them for the long term. With so many top shares on offer, it can be hard to know where to begin.
With that in mind, I’ve compiled a list of the stocks that stand out to me in the current market conditions. If you’re after long-term capital growth through investing in the stock market, I reckon these are among the best UK companies to invest in today.
The best UK stocks to invest in
First up on my list is healthcare and pharmaceutical giant GlaxoSmithKline. The company has had an impressive start to the year with group sales rising by 19%, reflecting growth across all three of its divisions. What’s more, the defensive nature of GSK shares should be a welcomed addition to any portfolio in light of the economic uncertainty that lies ahead. Regardless of what the future holds, earnings and dividends should remain resilient.
My second option caters for investors who can stomach some additional risk. Budget airlines operator easyJet has seen its share price plummet since the outbreak of Covid-19. This may come as no surprise given that the group’s entire fleet has been grounded. In my view though, the shares still look oversold, even after Tuesday’s bounce back. The group announced that it will resume a limited range of flights from 15 June, while bookings for the winter season are said to be “well ahead” of the same point last year. Ultimately, I think shares in Europe’s leading airline could continue to bounce back nicely, rewarding investors who were willing to take the plunge.
Finally, aerospace and defence giant BAE Systems comfortably earns its place as one of the best UK stocks to buy in my opinion. As well as having leading positions in the US, UK, Saudi Arabian, and Australian markets, BAE is establishing its presence in a number of other international markets. Nations around the world have been ramping up defence spending for decades and the current geopolitical scene suggests that won’t ease anytime soon. Looking ahead, I think BAE’s cyber and intelligence business could be a key driver of growth over the coming years.
In my view, all three of these companies represent great value, evidenced primarily by their respective price-to-earnings ratios (GSK: 13.4, easyJet: 6.2, BAE: 10.8) and growth prospects. Moreover, both GSK and BAE Systems boast attractive dividend yields of 4.8% and 4.6%.
One thing to remember though, is that it is important to have a long-term horizon when investing in shares. The stock market is often volatile and it’s never a smooth line upwards. Investing for the long term allows you to ride out temporary market downswings and gives ample time for your returns to compound.
Ultimately, I expect investors who capitalise on low share prices today to receive attractive returns in the long run as the global economy gets back on its feet and the stock market recovers. As such, I think now could be an ideal time to invest in some of the best UK stocks out there.
Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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.