The road to a strong and sustainable economic fightback in 2021 is littered with pitfalls. Hopes of a strong economic recovery, and subsequently a sharp rebound in corporate profits, are coming under increasing strain as the Covid-19 crisis worsens. Vaccines are being rolled out across the globe, sure. But things will get much worse for many UK shares before they get better.
Stock investors need to be extremely careful before splashing the cash. But the murky economic picture doesn’t mean investors should stop buying UK shares entirely. There are still boatloads of terrific London-quoted stocks that should thrive in 2021. Even if the Covid-19 crisis rolls on and on.
2 top ISA stocks!
I’ve gone shopping for undervalued stocks following the 2020 stock market crash. There are plenty more impressive UK shares I’m thinking of adding to my Stocks and Shares ISA in 2021 too. Here are two on my radar today:
#1: The 6%+ dividend yield
Even if the global economy struggles in 2021 one thing’s for sure, investment in power plants will continue as usual. It’s a phenomenon which kept power station operator ContourGlobal (LSE: GLO) ticking over nicely last year. And it’s a theme which explains why City analysts reckon annual earnings at the business will rise 14% in 2021.
The energy needs of a rapidly-growing world population are set to shoot through the roof in the coming decades. The reasons behind this demand growth will play straight into the hands of this particular UK share too.
According to BP: “The vast majority of the growth… is driven by emerging markets, led by developing Asia (China, India, and Other Asia) and Africa, as increasing prosperity and living standards underpin higher electricity consumption.”
ContourGlobal already operates plants across Central and South America alongside Africa.
What’s more, ContourGlobal is an expert in the realm of ‘green’ energy. It operates more than 100 thermal and renewable plants across the world and stands to gain from rising demand for low-carbon energy. Today, this UK share carries a 6.1% dividend yield, putting it firmly on my ISA watchlist.
#2: A UK growth share on my radar
Mpac Group (LSE: MPAC) might be more vulnerable to an extended downturn in the global economy than ContourGlobal. But, at current prices, I think the packaging powerhouse remains too cheap to miss. City analysts reckon earnings here will rocket 48% in 2021. This leaves it trading on a forward price-to-earnings growth (PEG) reading of 0.3.
To use its own words, Mpac “is focused on creating high speed production lines that package the products that millions of people worldwide depend on.”
It therefore stands to gain hugely from the rapid automation which companies across the world are embracing.
On top of this, this UK share has elected to focus on the fast-growing healthcare, pharmaceuticals, and food & drink sectors. It’s a plan which its seismic acquisition of medical and consumer healthcare specialist Lambert Automation in 2019 significantly bolsters. I’d expect to get very rich from this British stock during the 2020s and beyond.
Royston Wild has no position in any of the shares mentioned. 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.