It’s clear than the global economy faces significant challenges that could persist for years. A second wave of Covid-19 is accelerating as the focus turns to 2021, shrinking hopes of a V-shaped recovery. The profits outlook for plenty of UK shares is becoming cloudier by the day.
That’s not to say that stock investors should pull up the drawbridge and stop investing, though. Firstly, there are plenty of UK shares out there that should still deliver white-hot earnings growth over the long term. And a huge number of these are trading at rock-bottom prices following the 2020 stock market crash. Shares like these with robust balance sheets remain great buys despite the threat of temporary coronavirus-related disruption.
Secondly, there are stacks of top UK shares that are still expected to deliver spectacular earnings growth despite Covid-19 and its significant near-term impact on the global economy. These sorts of shares might operate in counter-cyclical industries, or they might be giants in fast-growing sectors or industries that are immune — or perhaps even benefit from — the difficult landscape.
2 top UK shares for explosive earnings growth
Here are a couple of top UK shares I’m thinking of adding to my own Stocks and Shares ISA. I expect them to deliver explosive earnings growth through the 2020s and potentially beyond:
- Games Workshop has a long record of robust annual growth behind it. It’s a trend City analysts don’t expect to run out of steam despite the economic downturn either. Profits rises of 17% and 12% are expected in the fiscal years to May 2021 and 2022 respectively. Niche retailers like this tend to outperform the broader retail sector when consumer spending comes under the cosh. But this UK share has an extra trick up its sleeve in that the global fanbase for wargaming products is rocketing. Even though Covid-19 disruptions continued, in the June to August quarter group revenues rocketed 15%, latest financials showed. Games Workshop is embarking on international expansion to make the most of this huge opportunity and deliver exceptional long-term growth too.
- UK shares with exposure to e-commerce are also great buys regardless of the murky outlook for the global economy. In fact the longer unfortunate Covid-19 lockdown measures persist, the stronger the online shopping phenomenon becomes. This means that Urban Logistics REIT for one has little to fear, I feel, and why City analysts reckon earnings will rocket 36% year on year in the fiscal period to March 2022 following a slight 5% drop in the current financial year. An added bonus for investors is that, under real estate investment trust rules, this UK share has to distribute at least 90% of its profits in the form of dividends. And consequently Urban Logistics carries a monster 6% dividend yield for fiscal 2022. I reckon this company could deliver stunning shareholder returns over the next decade at least.
Royston Wild has no position in any of the shares mentioned. 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.