UK shares to watch: here are the shares I think could do well in what’s left of 2020

Covid-19 may have hit many shares hard this year, but these stocks may bounce back says Andy Ross, making them UK shares to watch.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

With a lot of uncertainty still hanging over the UK economy as a result of the pandemic, it’s not the easiest time to be an investor in shares. Yet the markets can reward the brave. With schools back, we’re entering the final months of the year. These two contrarian shares are my UK shares to watch as a remarkable year heads towards its final three months. 

Aviva becoming a UK share to watch

Once again, it seems to be all action at Aviva (LSE: AV) under yet another new boss. It has now decided to sell off its Singapore operations, something the old boss was unwilling to do. This has pleased investors. There could well be a further scaling down of international operations that could make the group leaner and more profitable and give it cash with which to reduce debt.

The new CEO has also put her money where her mouth is by buying up £1m worth of the shares. This is a decent token of faith and is reassuring for investors.

The pandemic has hit the shares hard, but there are reasons to think the share price could recover. New leadership is the most likely reason and Aviva is now a stronger business than it was a decade ago. Investors now could reap the rewards of the improvements that have been made under consecutive chief executives.

The struggling and undervalued banking giant

Shares in Lloyds Banking Group (LSE: LLOY) have been hit hard so far this year. The shares are down 60%.

But the share price has stabilised in recent weeks, despite ongoing concerns about a Covid-19 vaccine, the US presidential elections and US-China relations. This suggests to me that most sellers have already sold out and moved on. The most likely short-term boost could be from bad debts being less bad than expected. Lloyds has already set aside significant capital in anticipation of a weakening economy.

Good news on the dividend front could also be a catalyst. Given that the European Central Bank has given tentative approval for dividends to recommence before the end of the year, UK banks could be in a similar position soon. As the yield was one of Lloyds’ main attractions pre-pandemic, its return – even if at a lower level – would be very welcome.

Again, a change in leadership could also be a positive at Lloyds. The current CEO will have been replaced by this time next year at the latest. The chairman is also changing. This could give the bank a new strategy and the shares impetus, if investors like the change.

Of course, it’s not just about the coming months. These shares also have plenty of potential longer term. What I do think is that now provides a potentially attractive time to buy the shares cheaply ahead of any recovery.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Andy Ross owns shares in Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking 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.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »