7 stocks I’d buy right now following the UK’s approval of the Pfizer/BioNTech vaccine

This global market strategist reckons we are on the cusp of a new bull market. And I think he could be right, so I’d buy these seven stocks right now.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

“Approval of a highly effective vaccine may mark the beginning of the end to the COVID-19 economic turmoil and the beginning of a new bull market for equities”. So said Mike Bell, a global market strategist at JP Morgan Asset Management, adding “The scientists have come to the rescue and delivered what investors were hoping for Christmas this year”. Is it time to search for stocks to buy?

I could buy cyclical stocks right now

Santa may have arrived early for investors given this week’s big news that the UK has been the first country to approve the Pfizer/BioNtech vaccine for Covid-19. The government issued a statement yesterday saying the vaccine will be made available across the UK from next week. 

So, the light at the end of the coronavirus tunnel is getting brighter. And news like this makes sense of the big snap-back rally we’ve seen in many London-listed cyclical stocks such as banks, housebuilders, travel firms, and hospitality companies. I’m thinking of the sharp share price rises in November from the likes of Lloyds Banking Group, Barclays, Taylor Wimpey, Barratt Developments, Greggs, and Whitbread among many others.

But where should I invest now? One approach would be to pursue the cyclical recovery trade further. Indeed, the best time to invest in cyclical stocks is when they are recovering coming out of a recession. Although I wouldn’t try to hold a cyclical share for the long term. Indeed, cyclical companies must be watched closely. They are never a buy-and-forget investment in my book.

That said, cyclical stocks tend to look superficially attractive when they are at their most dangerous. Look at how the London-listed banks sported high dividend yields and low earnings multiples for years leading up to the spring crash of 2020. They looked cheap, but those stocks were waiting to crash. There’s just no escaping the negatives arising from the cyclicality in an underlying business.

Defensive quality suits me best for the long term

Another approach now is to hunt for quality businesses with as little cyclicality in their underlying operations as possible. In other words, more defensive enterprises. And to me, it’s those high-quality, cash-generating defensive businesses that make the best potential long-term investments for my portfolio. If I pick my stocks well, each one could become a compounding machine and wealth generator for me.

And, right now, I see a window of opportunity to pick up my favourite defensive stocks at better prices. Indeed, it looks like there’s been something of a ‘dash to trash’ as investors moved money from defensives that had performed well to cyclicals that were on the floor. So, some of my favourites look attractive right now. I’m thinking of stocks such as AstraZeneca, British American Tobacco, GlaxoSmithKline, National Grid, and Unilever.

But they aren’t the only shares I’d buy for the new bull market. I’m also keen on selected smaller companies with high-quality underlying businesses such as Oxford Metrics and Oxford Instruments, as well as several others without Oxford in their name.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Barclays, GlaxoSmithKline, Lloyds Banking Group, and Unilever. 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.

More on Investing Articles

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »