The Motley Fool

3 UK shares I’d buy ahead of an economic recovery in 2021

Image source: Getty Images

Investors received significant vaccine news in November. Announcements from pharmaceutical giants Pfizer, Moderna, and Astrazeneca provided positive updates in the fight against Covid-19.

Global stock markets responded with strength. The FTSE 100 and Dow Jones indexes climbed by 12% in November. The strong performance came with a rapid sector rotation, from lockdown stocks to economic recovery stocks.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Economic recovery stocks, particularly those in oils, aerospace, and the banking sector were among the worst-performing shares until the end of October. Worldwide lockdowns and economic weakness prevented many of them from rising. However, vaccine news in November provided a catalyst for these beaten-down UK shares to outperform.

While technology stocks provided the leadership for much of the year, UK shares in re-opening sectors thrived in November.

Will re-opening stocks continue to thrive?

Was November’s bounce in re-opening stocks a one-off occurrence or will they continue to outperform over the coming months? 

I think there is much more room for re-opening stocks to outperform over the coming months. This week, the UK became the first country in the world to approve the Pfizer vaccine for public use. With vaccination rollout starting soon, many UK shares look well-placed to benefit from a return to post-lockdown life in my opinion.

In addition, UK shares could receive a welcome boost when Brexit negotiations are completed with the European Union. The deadline is fast approaching, and any clarity could remove uncertainty.

3 UK shares for an economic bounce-back

I reckon many people that missed out on a holiday this year are looking forward to booking a trip in 2021. Jet2 is a popular package holiday provider that could benefit from pent-up demand for holidays. Jet2 was performing well before the pandemic. It had growing earnings, a strong balance sheet, and positive share price momentum — three metrics I like to see.

I think Jet2’s fortunes will return once holiday bookings return to pre-pandemic levels, and I would consider buying more shares in my Stocks and Shares ISA.

Banking sector shares tend to be one of the first to bounce back in an economic recovery that immediately follows a crisis. This could be due to the cyclical nature of the banking industry. Investors experienced this in the global financial crisis in 2009. UK banks experienced a 60% increase in stock prices in just one month following the 2009 stock market trough.

I would consider Barclays as my top pick in the UK banking sector. It looks cheap versus peers and offers a good opportunity to invest before an economic recovery takes hold. It was encouraging to see that it delivered a resilient performance in its most recent update.

The UK high street is experiencing significant change and UK retail in 2021 could look different from previous years. This week both Arcadia Group and Debenhams collapsed, potentially leaving a large hole in the UK high street. Retailers that can survive the crisis could thrive over the coming years as competition is reduced.

One such well-known retailer is Marks and Spencer. The M&S share price has fallen from over 570p in 2015 to below 100p in 2020. I reckon it’s finally reached the bottom and it represents great value and excellent upside.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Harshil Patel owns shares in Jet2. The Motley Fool UK has recommended Barclays. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.