I’ve started to plan my investment strategy for 2021. Despite the risks facing the UK and global economies in the near term, I’m optimistic about the long-term potential of UK shares. With that in mind, here are my best shares to buy for 2021 and beyond.
Best shares to buy for the long term
Car insurance giant Admiral (LSE: ADM) is one of the best stocks on the London market, in my opinion. The group has an impressive track record of growth. Year after year, the company strives to improve its relationships with customers and offer customers a streamlined experience.
This has helped the business go from strength to strength. Profits have increased annually and so have profit margins. Over the past five years or so, the group has also diversified into new markets in Europe and the US. I expect these to be key growth engines for the business in the long term.
It is unlikely the business will see a significant impact on its revenues linked to economic uncertainty, because car insurance remains a legal requirement in the UK. That’s why the stock makes it onto my list of the best shares to buy for 2021.
Another insurance group I have been buying recently is Prudential. After spinning-off its UK business last year, and putting plans in place to sell its US arm, the company is now focused on building its Asian business. I’m expecting big things from this division over the medium term. The Asian financial services market is still relatively undeveloped, and there’s enormous potential here, especially for well-known brands.
Not only is the company well-known across the region, but it also has distribution agreements with large financial institutions. In my opinion, these agreements should help the enterprise outperform its Western peers in the short-to-medium term.
Drinks giant Diageo is also on my list of the best shares to buy for 2021. The firm has suffered a drop in demand for its products during the pandemic. However, in the long term, I don’t see the demand for its flagship products such as Guinness contracting. In fact, I reckon the demand for these products should only grow in the long term. As such, I think the stock looks to be a long-term investment bargain right now. I believe investors have been spending too much time focusing on Diageo’s short-term issues, rather than its potential over the next decade or so.
The bottom line
All in all, while the outlook for UK stocks is highly uncertain right now, I think the companies above should prosper in 2021 and beyond. Their size, competitive advantages and market domination should enable these firms to weather the near-term uncertainty and flourish in the years ahead. In the meantime, all three stocks offer investors a dividend yield. Therefore, investors will be paid to own the shares.
Rupert Hargreaves owns shares in Admiral Group, Diageo, and Prudential. The Motley Fool UK has recommended Admiral Group, Diageo, and Prudential. 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.