The stock market tends to slow down as Christmas approaches. Few firms announce earning results or big news, and everyone starts to wind down before the holiday. A calmer market can be the perfect time to pick up some good stocks, however. Here I consider my top two UK shares to pick up right now.
What makes these my top 2 UK shares?
My criteria in my choice of the top two UK shares are fairly simple. I am choosing stocks from the FTSE that I think have a balance of low risk but high potential gains. As with most of my stock picks, I look for dividends as a nice addition to any investment. With that in mind, here are my choices.
The oil giant is my first choice of UK shares to buy. BP (LSE: BP) has a nice dividend yield, despite cutting its payout earlier this year. I also think the share price itself has been under pressure that might begin to ease.
The coronavirus outbreak acted as a catalyst for the oil price slump earlier in the year. The oil market does have its fundamental weaknesses that still hold true. Number one of these is the large amount of spare capacity in the market. However, with vaccines now being rolled out, the future is hopefully looking brighter.
OPEC and Russia, meanwhile, will be keeping production lower in order to bolster the price of crude. While I don’t think this will be enough to see oil prices sky rocket, companies like BP don’t need them to.
I think AstraZeneca (LSE: AZN) could be the perfect UK share to buy this side of Christmas. Naturally, most of the press surrounding the company is dominated by its joint vaccine effort with Oxford University. While I doubt this will have any immediate positive impact on the company’s profits, it certain will help sentiment towards its shares.
Given the timeline we saw with the Pfizer vaccine, I suspect January or February will see AstraZeneca’s start to roll out. I would expect its share price to bounce when this happens.
The pharmaceutical giant also currently sees it share price under some pressure after it announced a $39bn acquisition of US biotech Alexion. This is a normal reaction given the payout AstraZeneca is making, but the deal will add both to its portfolio and its cash flow. Long term I think it is a good move.
In addition, the likely boost all pharmaceutical firms will see with increased interest in pandemics and vaccines, likely with government support, I think makes the sector one well worth looking at.
I am of the opinion that AstraZeneca is currently seeing a lower stock price than it perhaps should, making it another top pick for my choice of UK shares.
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Karl has shares in BP and AstraZeneca. The Motley Fool UK has no position in any of the shares mentioned. 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.