2020 has been a rollercoaster of a year for UK and global stock markets. The year started off lacklustre for UK shares following a strong fourth quarter in 2019. Towards the end of February, stock markets began a decline, prompted by news flow around the spread of the novel coronavirus.
By March, stock market investors like me became nervous about the prospects for UK shares amid Covid-19-related shutdowns. The knock-on effects of unprecedented country-wide lockdowns were becoming apparent.
Governments and global central banks responded swiftly, with strong measures to support economies. Doing so provided confidence to UK and global investors. UK shares started to recover, and several sectors bounced back with strength.
The next stock market crash
Some sectors of the stock market have not only recovered from the March stock market crash but have outperformed. Has it gone too far? Is another stock market crash around the corner?
Perhaps. Lockdown restrictions were eased during the summer but are slowly being brought back due to fears of an uptick in Covid-19 cases. Further restrictions could have a knock-on effect on UK shares.
5 UK shares I’d buy on weakness
If we get another stock market crash, I will focus my efforts on these five UK shares.
I’ve liked Games Workshop shares for several years. This Nottingham-based fantasy miniatures manufacturer operates in a niche but growing market. With market-leading returns, ample cash flow generation, and long-term focus, I believe these UK shares have room for further growth.
Avon Rubber was founded in the UK in 1885. It quickly established itself as a rubber manufacturer, and during the 1940s it became a key supplier of gas masks to help with World War II efforts. Today, it is a global leader in supplying military masks. Recently it said it had agreed to acquire Ohio-based helmets supplier Team Wendy. This looks like a good fit, in my opinion. Complementary technologies and routes to markets should create a stronger business.
Computacenter is an IT infrastructure services company that has benefited from Covid-19-related shutdowns and a shift to work-from-home. It has announced several positive updates this year, which is providing momentum to its share price. I’d definitely be looking to buy some of these UK shares on any market weakness.
The Manchester-based online fashion retailer Boohoo is known for fashion-conscious low-cost clothing. It targets the 16-40-year-old market and has consistently beaten analyst expectations over the past five years or so. Some controversy around its UK supply chain caused recent share price weakness. This offers a good opportunity to buy this quality UK share at lower prices, in my opinion.
My fifth stock that I would buy in another stock market crash is SCS. This is one of the UK’s largest retailers of furniture and flooring. Recently it announced growth that had “significantly exceeded our expectations”. Post lockdown trading has been strong, both online and in-store. With strong earnings growth and plenty of cash on its balance sheet, I wouldn’t hesitate to buy these UK shares on any further weakness.
Harshil Patel owns shares in boohoo group and Games Workshop. The Motley Fool UK has recommended Avon Rubber and boohoo group. 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.