It’s fair to say that 2020 has been a dismal year for investors. While the FTSE 100 has staged a recovery over the past couple of months, it is still down around 16%, with travel and leisure stocks the most badly affected. Although coronavirus cases are still very high and Brexit offers further problems, I am optimistic for many of these battered UK shares to make strong recoveries in 2021. However, the difficult economic situation means that not all stocks will recover. As such, it is important to be discerning when picking stocks. These two are my top picks and I believe that they can double in value in 2021.
A pub stock
The closure of pubs around the UK on multiple occasions has seen the Marston’s (LSE: MARS) share price drop significantly. In fact, since the start of the year, its share price has dropped nearly 50%. This is hardly surprising, especially considering that it made of loss of around £400m in its recent full-year results. This was mainly due to impairment charges of £305.7m, triggered by the coronavirus situation.
But overall, I think that Marston’s has dealt fairly well with the whole situation and this makes it one of my favourite UK shares right now. For example, its joint venture with Carlsberg, in which Marston’s will have a 40% equity share in the business, should create value through productivity improvements. Marston’s were also paid £273m upon completion of the deal which can be used to reduce debt.
The company also saw a net cash inflow of £51m, thanks to reduced capital investments. This included the sale of 172 pubs and the suspension of dividends in 2020. As such, the company looks in a good position to make a recovery throughout 2021. This is especially true if the vaccine proves effective and can be rolled out quickly. For these reasons, I believe that Marston’s shares can make a full recovery and double in value in 2021.
This UK share has great growth prospects
Airtel Africa (LSE: AAF) is the other UK share I believe can double in 2021. Airtel Africa is a provider of telecommunications and mobile money services within Africa. According to the company, Africa is an “unpenetrated market”, and this has helped 2020 operating profits rise over 20% to $910m. It also pays a progressive dividend which currently yields around 6%.
Such strong results have seen the share price double since March and reach all-time highs of over 90p. Nevertheless, last week, news that an institutional investor sold 60m shares at 80p each saw the share price fall by 20% in a day. This does not take away from the quality of the stock though and I believe that this recent fall offers a perfect time to buy.
With the customer base growing year-upon-year, I therefore reckon Airtel Africa can continue its growth into the next year. This is especially true because of the company’s leading market position within Africa. As such, provided that the company continues to develop its services into 2021, I believe this UK share could be a stand-out performer. After its recent dip, I also think it could now double in value next year.
Stuart Blair owns shares in Airtel Africa. The Motley Fool UK has recommended Marstons. 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.