Recently, I’ve been searching for the best UK shares to buy now and hold for the next 10 years.
While the market has recovered somewhat from the lows printed at the height of the stock market crash in March, I think there are still plenty of bargains to be had.
Research shows that buying stocks trading at low levels is the best way to generate high returns in the long run. That’s why I’ve been searching for bargain UK shares.
However, I’m not going to buy just any old cheap stocks. Some shares are cheap because they deserve to be. Some examples include Carnival and Cineworld. No one knows what the future holds for these firms.
What I’m looking for are businesses that have seen an improved trading performance over the past 12 months. I think that, when acquired at low levels, these stocks could yield high total returns for my portfolio in the long run.
UK shares to buy
Premier Foods (LSE: PFD) is one such company I have my eyes on right now. This firm used to be a UK champion. However, management overstretched itself before the financial crisis. The Mr Kipling owner has been struggling to pay off its enormous debt pile ever since.
As the corporation has strived, investors have given the business a wide berth. But, this year, everything has changed. A landmark pension deal, coupled with increased pandemic profits due to stockpiling, have helped Premier significantly reduce its obligations.
With debt falling rapidly, I’m excited about the company’s future. After a decade of standing still, I think the business can return to growth in the next decade. I clean balance sheet may also provide firepower for acquisitions to boost the bottom line.
As such, I reckon now could be a great time to buy this consumer goods champion while the stock trades at a low level. As it returns to growth, I think the stock may yield high returns for my portfolio.
Avon Rubber (LSE: AVON) is one of the most sought after UK shares. It’s easy to see why. The firm is one of the world’s leading producers of respiratory equipment for the military and emergency services. It also manufactures body armour.
The great thing about this business is it’s highly specialist. This plays into Avon’s hand. The company is trusted by suppliers, which means it’s less likely to lose existing contracts. The firm’s reputation suggests it’s also more likely to win new deals.
This tells me the business may be able to maintain its impressive growth rate in the long run. Indeed, the demand for its services is high and growing. In the past 12 months, Avon has secured $600m of body armour contracts with the U.S. Department of Defense.
Management has also pushed ahead with select acquisitions to improve the group’s offering. These deals, combined with the firm’s existing divisions, suggest to me Avon’s growth may only accelerate in the years ahead. That’s why I’m seriously considering buying this stock as part of a basket for UK shares for my buy and hold portfolio.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Avon Rubber. 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.