The stock market bull run in the latter part of 2020 created a lot of wealth. But although some UK shares have reached new highs, I expect a number of UK shares will also have a great 2021. If I was trying to double my money in 2021, here are five UK shares I’d consider buying.
Three stocks I bought for share price growth
Bank shares fell a lot due to the recession and pandemic. But the banks themselves don’t seem to be suffering as much as feared. I think the investor reaction has been overdone. That is why I recently opened a position in Lloyds Bank. While these UK shares could double in 2021, in my opinion, I admit that is demanding. But if results are strong and the dividend is restored, I think it is possible. I also see the name as a solid choice for the long term, given its strong position in UK banking.
S4 Capital is a fast-growing digital advertising company headed by the former boss of WPP. I already outlined the bull case for it when picking my top UK shares for 2021. It remains a favourite holding and in 2021, the company has announced two acquisitions of US digital agencies. The shares are hovering around 500p, but had strong spurts of momentum last month. I expect more of the same in 2021.
If shares in defence contractor Babcock can get back to where they were this time last year, they would double from their current price. I like this share because I think government defence spending tends to be resilient. Babcock also has other reliable revenue streams, such as helicopter services for North Sea oil platforms. The business continues to be profitable. I expect higher profits in 2021, which could lead to a positive re-rating of the shares.
Two UK shares I am investigating
I have been disappointed holding shares in British Gas parent Centrica. It has some hallmarks of being a value trap. That said, the shares have shown some price recovery of late. As they are far below past highs, I think they could double in 2021. That possibility would be helped if there was good news on business performance, such as a turnaround in customer losses. I think restoration of the dividend could also help the shares surge. But underperforming Centrica seems perennially speculative to me. I prefer to buy into companies that I think have a strong business moat. However, if scouting for UK shares that could double in 2021, I do think Centrica merits consideration.
High street retailer Card Factory is a riskier choice, in my view. There is a long history of listed shops struggling to survive in the brutal British retail sector, from Laura Ashley to Clinton Cards. However, the company reduced net debt during the Covid crisis. Although it reported a loss in its most recent results, I felt it did better than many retailers in handling the pandemic’s impact. I noticed my local branch was very busy when I stopped in last month. A new chief executive is set to join the company shortly. That often leads to even more focus on profitability. A retail share like this is fairly risky in my view, but high rewards often require a certain risk level. I see it as another share worth looking into.
christopherruane owns shares of Babcock International Group, Centrica, Lloyds Banking Group, and S4 Capital plc. The Motley Fool UK has recommended Card Factory and Lloyds Banking Group. 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.