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Why I think these are the best shares to buy now

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Will companies that have performed well in the coronavirus pandemic continue to shine as we head into 2021? In many cases, it’s hard to be sure. Today, I want to look at three companies I think will perform well, whatever happens next. If one’s building a share portfolio, I think these could be the best shares to buy now.

#1: You’re probably a customer

My first pick is FTSE 100 consumer goods group Reckitt Benckiser (LSE: RB). With a portfolio of brands including Gaviscon, Dettol and Durex, most of us have been customers at some point.

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As one would expect, sales of disinfection products have risen sharply this year. Reckitt’s like-for-like sales rose by 12.4% during the first nine months of the year. The company expects to maintain this momentum for the full year, beating previous forecasts.

Health, hygiene, and nutrition are areas where many consumers are often loyal to familiar brands. Reckitt’s focus on these defensive areas has supported growth that’s seen the stock triple since the start of 2007.

I think there’s more to come. Newish CEO Laxman Narasimhan is streamlining the organisation and finding new opportunities for growth. Underlying profit margins are still high, at around 25%.

Against this backdrop, I think Reckitt stock looks fairly priced on 22 times earnings, with a useful 2.4% dividend yield. I rate the shares as a long-term buy.

#2: This could be the best share to buy now

One company I’ve watched with interest since it joined the London market in 2013 is Coca Cola HBC AG (LSE: CCH).

This firm bottles and distributes Coca-Cola products and many other drinks in 28 countries. By supplying a wide range of everyday drinks to retailers and the hospitality trade, the group has built a diverse and stable customer base.

The benefit of this strategy has become clear this year. Despite most countries applying a period of lockdown on pubs and restaurants, sales only fell by 15.5% during the first half of the year. CCH maintained its annual dividend and is only expected to report a 24% drop in earnings for 2020. In the circumstances, I think that’s a decent result.

Analysts’ forecasts suggest that CCH’s profits will recover strongly next year. That puts the stock on a 2021 forecast price/earnings ratio of 16, with a dividend yield of 2.9%. Coca-Cola HBC’s share price has fallen this year, leaving it down by 25% since January. On a long-term view, I reckon this is a share to buy now.

#3: Defence could be a safe haven

Defence giant BAE Systems (LSE: BA) has proved a safe haven for investors this year, delivering consistent results with only minimal disruption from coronavirus.

Despite this, BAE’s share price has fallen by around 16% this year. That’s left the shares trading on just 10 times 2021 forecast earnings, with a dividend yield of 5.2%. I think that’s a clear buying opportunity. BAE hasn’t cut its dividend for more than 20 years and I don’t see any reason for this to change.

Although the group’s dependence on Middle Eastern and US markets is a potential risk, BAE has a diverse portfolio that includes electronics, ships, and aircraft. I think this mix will support long-term growth.

Profit margins have been stable at around 9% in recent years and BAE’s cash generation is generally good. At under 500p, I rate BAE as a share to buy now.

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Roland Head owns shares of BAE Systems. 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.

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