Despite the FTSE 100‘s recent surge on the back of the Pfizer vaccine announcement, I think investors should still be concerned about the impact that widespread pandemic restrictions could have on UK shares. After all, we’re only near the start of the latest English lockdown. As such, it’s highly likely that we’ll continue to see companies struggle for the foreseeable future.
With that in mind, I’m going to take a look at the types of stocks I think make for wise investments for the remainder of 2020 and beyond.
UK companies that don’t fear Lockdown 2.0
In my view, there’s no better place to start than with companies that look poised to continue performing strongly despite the lockdown restrictions. While such businesses are few and far between, they offer investors the prospect of superior returns, I feel. That’s even in the midst of an uncertain and shaky macroeconomic climate.
For example, consider online food order and delivery service Just Eat Takeaway. After all, people still have to eat during a pandemic. Additionally, having the food delivered straight to your door is a huge bonus. What’s more, the company reported an increase in first-half earnings and revenue as it benefited from the first lockdown. Overall, Just Eat has performed outstandingly over recent months, and I reckon that trend looks set to continue.
With many e-commerce stocks thriving throughout 2020, I think it also makes sense to consider their appeal. While more than 11,000 shops closed for good in the UK in the first half of the year, online retailers such as ASOS and Boohoo reported a surge in profits. Both companies have watched their sales boom and look well-positioned to navigate the second round of restrictions with ease. In my eyes, that’s largely thanks to their popular and affordable products.
I’d play it safe with defensive shares
While there’s certainly a possibility that some companies will continue to thrive throughout the rest of the year, I think investors like me looking to play it safe would do well to focus on hoovering up a handful of UK shares with defensive characteristics. Since some companies’ dividends and valuations are less affected by the overall state of the economy, their shares tend to be more resilient and less volatile.
For instance, companies in the healthcare sector often possess attractive defensive qualities. Considering the products and services provided, healthcare stocks are also often less cyclical in nature. Companies such as GlaxoSmithKline and AstraZeneca immediately spring to my mind. Both manufacture various essential pharmaceuticals, medicines and healthcare products, which are in demand no matter the economic circumstances.
Finally, I rank well-established consumer goods giants among the best defensive stocks to invest in during a pandemic. Think of the many much-loved brands of Unilever that line the shelves of supermarkets. Similarly, Reckitt Benckiser’s health, hygiene and home products are perpetually in demand among consumers.
