2021 could be an excellent year for UK shares, in my opinion. The economic slump of 2020 could reverse if the Covid-19 pandemic is brought under control. Several pharmaceutical giants have announced vaccines and deployment should start this week.
The roll-out of vaccines over the coming months could help release the country from lockdowns and social-distancing restrictions. I’m expecting an economic recovery to follow as the UK public get back to shopping, eating out, and socialising with friends and family.
UK shares in the spotlight
I think several UK shares that are related to the UK consumer could double in 2021. Marks & Spencer (LSE: MKS) is one on my watchlist that I’d consider for my Stocks and Shares ISA. Its share price is down by over 30% so far this year. M&S was a former star of the high street, but it has struggled in recent years in the battle against online shopping and a rapidly changing retail environment.
Competitors such as Boohoo and ASOS have grabbed market share in clothing. Online-only business models enable them to operate with lower costs versus the higher rents and rates payable by traditional high street clothing retailers.
Nonetheless, M&S is undergoing a business transformation. Already several years in so far, I think 2021 will be the year for M&S to recover.
M&S is undergoing a digital transformation. Its food business holds a strong brand and consistently performs well. Now available through Ocado, so far it seems to be doing well online. It’s also aiming to sell 40% of its clothing online within the next three years. I reckon that’s a step in the right direction.
Chairman Archie Norman is well respected and led prior transformations at Asda and ITV. M&S has a strong management team and I reckon they will lead a successful transformation at this popular high street retailer.
A growing retailer
UK shares in the consumer discretionary sector are currently in a sweet spot, in my opinion. Another British well-known retailer that I’d consider is B&M European Value Retail (LSE: BME). 84% of its revenue comes from the variety retailer B&M and the remainder comes from Babou in France and Heron Foods.
I like founder-led, entrepreneurially run companies in structurally growing sectors. I’d say that B&M fits these characteristics perfectly. I like that it’s also cash generative and revenues are improving.
During the lockdown, B&M was classed as an essential retailer and was permitted to stay open. In this period, it even attracted new customers, and trading was consistently described as “strong”. A string of positive trading updates followed throughout the year.
In its half-year report in November, chief executive Simon Arora reported that “The Group delivered a strong performance in the first half, with our business model proving well-attuned to the evolving needs of customers”.
Although both are retailers, I’d say M&S could be described as a potential recovery stock and B&M as a low-volatility growth stock. Regardless, I consider both M&S and B&M to be UK shares that could double in 2021.
Harshil Patel owns shares in boohoo group. The Motley Fool UK has recommended ASOS, B&M European Value, boohoo group, and ITV. 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.