The best UK shares to buy right now, in my opinion, are companies that are either doing well in spite of the pandemic, or doing well because of it. Some provide essential goods and services that are in demand whatever the economic or social situations. Others provide services that have become more popular since lockdown began.
Possibly the best UK share to buy now
IG Group provides traders and investors with online access to financial markets. Its clients can trade anything from the FTSE 100 index to Bitcoin. Recent pandemic-induced stock market volatility has brought the group thousands of new customers. In the quarter ending 31 May, revenue more than doubled from the same time a year earlier. Meanwhile, average daily trade volume was more than three times higher.
While management don’t expect this growth to continue at the current rate, they do think there’ll be some long-term uplift from the sheer number of new customers. Even before the events of spring, revenue was already running 9% ahead of the same period the year before. This helped propel the group to record profitability. FY 2020 saw the group report net profit of £240m, up 51% from the year before. Revenue was up 36%.
Its strong performance and prospects for the future are centred around its ambitious growth plans. IG Group is focused on growing its global business, particularly in Japan, China, and the US. These are the world’s largest markets for online trading. The group currently only serves a small fraction of these markets, so the potential for future growth is huge.
Rather than merely surviving Covid-19, IG Group is in fact thriving. This is demonstrated by its huge dividend yield of over 5%. Right now, this has to be one of the highest yields on offer anywhere across the FTSE 100 and FTSE 250. When that’s combined with a P/E (price-to-earnings) multiple of just 11 times last year’s earnings, I think these shares are a no brainer. For me, they’re definitely one of the best UK shares to buy now.
Well poised for post-Covid growth
Warpaint is a different kettle of fish entirely. The group sells cosmetics across the UK and Europe. As well as owning its own brands, Warpaint also produces white label cosmetics for major high street retailers.
While sales have inevitably suffered from the temporary closure of many of its clients’ stores, online sales have grown, to at least fill some of the gap. Encouragingly, the group has still managed to achieve an operating profit for the first half of the year. Prior to Covid-19, sales performance was at the upper end of expectations. Despite Covid-19, the group remains well placed to continue its recent growth.
So far in 2020, Warpaint has signed agreements with two major clients, Tesco and Wilko. The agreements mean Warpaint’s cosmetics will be stocked in a further 400 stores. This should be revenue enhancing immediately. I think people will always want to look good, even in this strange Covid-19 world.
With a market capitalisation of just £55m, I think these shares are too cheap to ignore. Especially when its growth prospects are taken into consideration.
Thomas 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.