Buying UK shares with the expectation they’ll soar in value in the near term is never a bad idea. That’s provided you don’t buy some truly-awful shares that threaten to eventually come hurtling back down to earth though!
The key to successful investing is to buy shares you think will be winners, not just today or tomorrow, but several years from now. That said, timing your buys in the hope of a share price spike is a shrewd way to give your returns an extra little bump. And, following the stock market crash, there are many undervalued UK shares which have plenty of scope for big share price rises in August.
A top-value UK share to buy now
I believe Tharisa (LSE: THS) is one of the best UK shares to buy right now. The PGM (platinum group metal) producer’s share price is down 15% since the start of the year. And, as a consequence, it trades on a forward price-to-earnings (P/E) ratio of just 8 times. It’s a reading that fails to reflect the possibility of booming precious metals prices in August (and beyond).
Investors in UK shares haven’t given Tharisa the time of day because of plummeting metal demand from the auto sector (platinum and palladium are used to reduce emissions in catalytic converters). I reckon these individuals have failed to reckon with both metals’ robust appeal as safe haven investments in uncertain economic times.
Gold and silver’s march to new multi-year highs grabbed the headlines last week. The PGMs have also gone on a tear though. Platinum barged through the $900 per ounce marker for the first time since late February last week. Palladium also soared to multi-month highs above $2,000. Rhodium also stomped to its highest since March above $6,800 per ounce.
The precious metals suite has boomed again on a cocktail of social, macroeconomic, and geopolitical worries. And they threaten to spill into August too, a scenario that would boost the prices of many UK shares like Tharisa.
5% dividend yields!
As I say though, you should buy UK shares today with a long-term view. Buying them on the back of how they’ll perform in the short term is a recipe for disaster.
But this isn’t the case with Tharisa. The PGM giant can expect a long economic hangover from Covid-19 alone to keep demand for its metal in rude health. It can also expect low interest rates and subsequent inflationary concerns to boost the prices of hard currencies like the PGMs. A recovery in the auto sector will give demand for its product a shot in the arm too.
However, Tharisa doesn’t offer the biggest near-term dividend yields. For 2020, it sits at 1.4%. But the rate at which City analysts predict dividends to boom thereafter makes it one of the most exciting dividend-paying UK shares out there. This means the yield for 2021 sits at an enormous 5%.
I expect dividends to keep ripping higher further out too, as Tharisa’s bottom line explodes.
