Buying the best UK shares could be a means of overcoming a potential second stock market crash. They may have stronger market positions and superior financial standing that increases their ability to survive a second decline in share prices.
Furthermore, in the long run, they may offer higher returns than their weaker sector peers. As such, it could be worth paying a premium for more attractive British stocks during an uncertain time for the economy.
Buying the best UK shares today
Clearly, deciding which UK shares are the most attractive ones to buy is based on an individual’s own preferences. However, the most appealing stocks generally have the most solid finances. This may mean that they have low debt levels. Or they have access to large amounts of liquidity should it be required during a difficult economic outlook.
This should mean they’re able to survive a second market crash better than their peers, and may be viewed as less risky by investors.
The most attractive British stocks may also have enviable positions within their industry. For example, they may have a unique product. Or they may have strong brand loyalty that allows them to charge higher prices for their products than competitors.
Similarly, they may have a lower cost base, or a capacity to move faster in response to changing consumer tastes versus their peers. This may allow them to generate higher profitability in the long run, which could produce impressive capital gains relative to other UK shares.
An uncertain future
Clearly, it’s difficult to know which UK shares will perform well in such a fluid economic situation. Consumer tastes have already changed rapidly this year. This trend may or may not continue. So this could increase the importance of diversifying across a range of British stocks.
Not only could this reduce risk, it may also mean you have exposure to a wider range of growth areas over the long run. Through identifying the strongest businesses in a range of sectors, you could maximise your returns while reducing risks.
The uncertain economic future and the prospect of a second market crash mean paying a premium for the best UK shares could be a worthwhile move. It may mean you don’t purchase the cheapest stocks around. However, their lower risks and long-term growth opportunities may mean they outperform more inexpensive shares in the coming years.
Some investors may wish to avoid the threat of a second market crash by selling UK shares and buying less risky assets. However, there are no guarantees a further fall in stock prices will take place in the short run.
Therefore, buying the most appealing stocks available now could be a sound move. It could be a means of improving your chances of surviving the near term. And benefiting from the stock market’s long-term growth prospects.
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.