The outlook for UK shares at present is highly uncertain. The prospect of a no-deal Brexit looms large on the horizon, and the coronavirus crisis has wreaked havoc with the economy.
However, while many companies are struggling, others have defied the gloom. I think these stocks could be the best investments in the short term.
The companies that have, so far, been able to avoid the worst of the pandemic, could be the best investments to own for a second wave.
Today I’m going to take a look at two such businesses I’d buy in November.
UK shares to buy
Supermarket giant Morrisons (LSE: MRW) has seen sales growth this year. According to its latest trading updates, food sales jumped nearly 9% during the first half of the year.
Unfortunately, a decline in petrol sales and rising costs took the shine off results — underlying profit dropped 25% for the period — but I think the food sales growth highlights the group’s strengths.
As we head into the Christmas period, the company is making some significant changes. It has slashed costs and invested in its online operations. This should help the group cope with higher demand over the next few months.
In my opinion, Morrisons is one of the best retailers and UK shares to own ahead of what could be a tough winter. Unlike many of its peers, the online business is profitable and deals with tech giants such as Amazon and Deliveroo have helped the firm meet rising demand. Morrisons has doubled online volumes and capacity has increased fivefold this year.
Thanks to this growth, Morrisons has been able to maintain its dividend for the year. The stock offers a dividend yield of 5.1. It also looks inexpensive. The shares are changing hands at a forward price-to-earnings (P/E) ratio of 12.6.
Cheap opportunity
Another retailer I like the look of ahead of Christmas is Marks and Spencer (LSE: MKS). This company has made some big mistakes over the past few years. However, over the past 10 months, the stock has plunged to levels not seen for more than 20 years.
I reckon this could be a buying opportunity. It seems as if investors have written off the group, but an impressive performance over Christmas could change market sentiment. Indeed, right now, the stock is trading at a price-to-book (P/B) value of 0.5. That implies the group’s assets are worth 100% more than its current market value. There are only few blue-chip UK share that offer this kind of value. As such, I think shares in Marks are too cheap and offer a wide margin of safety.
Therefore, it seems to me as if the risk of investing in Marks and Spencer is worth the reward. It would appear that the group’s current share price already reflects most of the bad news facing the business, and I think a potential profit of 100% is more than enough potential compensation for me taking on the risks here.
