The Motley Fool

Forget the Centrica share price: I’d buy these UK shares in an ISA today

Image source: Getty Images.

The Centrica (LSE: CNA) share price has been a bad investment to own over the past few years. The company has struggled with several headwinds which have hurt growth and put the firm’s balance sheet under pressure.

I don’t think these issues are going to dissipate anytime soon. As such, I reckon the business is worth avoiding. Below I’ve highlighted some UK shares I’d buy instead. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Avoid the Centrica share price

During the past five years, Centrica has struggled. The company has grappled with rising competition in the UK utility market, the government’s energy price cap, falling gas demand and plummeting oil prices.

To cope with these issues, management has tried to cut costs and sell assets. This hasn’t been enough. Centrica has continued to lose customers and growth initiatives have failed to yield positive results.

As a result, the group has been forced to cut its dividend repeatedly. Meanwhile, asset sales have impacted earnings growth. The company is now a shadow of its former self.

If the group continues down this route, I think it’s likely the Centrica share price will continue to languish. As such, I would avoid the stock for the time being and concentrate on other companies with brighter prospects instead.

UK shares to buy 

If you are looking for income, rather than Centrica, I’d buy National Grid. This company operates in the same industry, but in the business-to-business market, which is much more predictable and stable than the business-to-customer market Centrica dominates.

Thanks to the stability of the market, National Grid has become a FTSE 100 income champion. The stock currently supports a dividend yield of 5.4%.

What’s more, unlike its struggling peer, National Grid’s growth initiatives are starting to bear fruit. Its US operation is producing profit and the company’s startup incubator has invested in some promising businesses.

Another alternative to the Centrica share price I believe is worth considering today is BP. The global oil giant is on a mission to transform itself into a green business in the next few decades. This means focusing on renewable energy while reducing dependence on fossil fuels.

The company could also grow into the energy market, which would bring it into direct competition with Centrica. Considering BP’s size, global diversification and international trading, I think it’s likely to come out on top.

Therefore, if I had to choose between the two businesses, I reckon BP could be the better long-term investment.

The bottom line

Overall, the Centrica share price may continue to be a poor investment during the next few years. As such, investors may be better off selling the business or avoiding the stock.

There are plenty of other companies out there that offer similar defensive qualities and income potential with brighter long-term outlooks. BP and National Grid are just two examples.

Another example of one growth stock that we think is worth buying today is outlined in the free report below.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Rupert Hargreaves 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.