The Motley Fool

Stock market rally: how I’d invest £5,000 right now in UK shares

Image source: Getty Images

The track record of UK shares shows that a stock market rally is likely over the coming years. Even though the near-term outlook for many companies is uncertain, over the coming years, they are likely to experience stronger operating conditions that lift their valuations.

As such, buying businesses with sound strategies and solid market positions could be a shrewd move. They may be in a stronger position to take advantage of an economic recovery. And they could have a more positive impact on a £5,000 investment in the coming years.

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...

Buying UK shares with sound strategies ahead of a stock market rally

Companies that can successfully adapt their operations to changing consumer tastes may benefit the most from a long-term stock market rally. For example, they may have the flexibility to close unprofitable stores and switch their focus to online operations. Or they may be able to respond to consumers who are becoming increasingly environmentally and socially aware.

As such, I think companies like Burberry and Unilever could prove to be sound buys. They are investing heavily in increasing their sustainability focus. They also have the capacity to expand online. And that means they can capture a growing market share of the digital consumer goods industry. This may help them to generate higher profitability, and could strengthen their market positions.

Investing money in dominant businesses

Companies with solid market positions may also deliver relatively high returns in a long-term stock market rally. In the short run, UK shares with dominant market positions may be better able to survive a period of weak economic growth. They may be able to expand their presence at the expense of weaker rivals. And they could even move into new market segments that produce greater diversity and profitability in the coming years.

As such, FTSE 100 shares such as British American Tobacco and AstraZeneca could prove to be sound buys today. British American Tobacco is investing in next-generation products that may catalyse its financial performance. Meanwhile, AstraZeneca is engaging in acquisition activity to strengthen its long-term growth prospects. Over time, both companies could outperform other UK shares.

Investing money in UK stocks today

Clearly, investing £5,000, or any other amount, in UK shares today may lead to paper losses in the short run. A stock market rally, although likely, may come with numerous ups and downs along the way.

However, the track record of indexes such as the FTSE 100 show that the stock market has always fully recovered from its difficult periods to post new record highs. Investors who are able to identify companies with solid business models and sound strategies may be able to capitalise on the stock market’s growth prospects. Over time, this could improve their portfolio’s performance and lead to greater financial freedom.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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

Peter Stephens owns shares of AstraZeneca, British American Tobacco, and Unilever. The Motley Fool UK has recommended Burberry 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his 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 click below to discover how you can take advantage of this.