The Motley Fool

5 of the best shares I’d buy now for the stock market rally in 2021

Image source: Getty Images

The stock market, in general, has been rallying since the spring of 2020. Of course, not all shares have done equally well. Some sectors have been more badly damaged by the pandemic than others.

But the arrival of vaccines to fight Covid-19 suggests the potential for a return to more-normal general economic conditions down the road. And, overall, the stock market has been rallying in anticipation of recovery for many businesses.

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...

Businesses look set to thrive

An investment made in index trackers last spring will have done well, for example. But my assumption is that many businesses will thrive as the pandemic fades. And I reckon the gains we’ve seen in the stock market recently could be the beginning of a much larger move higher over many years to come.

So, it could be a good time right now for me to consider opening a Stocks and Shares ISA and filling it with some good-quality share investments to hold for the long term. I like the tax advantages offered by ISAs. I’m expecting my shares to appreciate in value in the coming years, so it’s good that ISAs are exempt from capital gains tax. There’s also no dividend tax. And I won’t need to pay income tax when I eventually take money out of my Stocks and Shares ISA.

One approach to selecting shares involves looking for companies with businesses that have suffered a setback because of the pandemic. Such ‘cheap’ shares could do well as recovery gains traction in their underlying businesses. For that kind of strategy, I’m keen on shares such as FTSE 100 housebuilder Persimmon and banking company Natwest.

But I’d also consider investing in smaller cyclical companies that have more room to expand their operations. One example is the bathroom and kitchen products manufacturer Norcros, which owns the Triton shower brand among others.

Compounding long-term gains

Another approach to share selection involves targeting defensive businesses with steady cash-generating qualities. I’m keen on a number of companies like that on the London stock market and believe them to be excellent vehicles for compounding gains over a long period of time. But I’d aim to buy the shares when they show weakness in order to lock in a better-value purchase.

Right now, I’m keen on the pharmaceutical giant AstraZeneca. The company appears to have plenty of potential left in its research and development pipeline. And new medicines could emerge in the years ahead with the potential to drive further growth in sales and profits.

Meanwhile, we are seeing the first sparks of a turnaround in the underlying business of fast-moving consumer goods company PZ Cussons. A new chief executive has his sights set on reviving the company’s fortunes and the stock has risen in anticipation of that. But it’s recently fallen back a bit and I see the recent lull in the price as a decent buying opportunity.

The high-calibre small-cap stock flying under the City’s radar

Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…

You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.

And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.

Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.

But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!

Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Norcros and PZ Cussons. 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.