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3 UK shares I’d buy and 3 I’d avoid in 2021

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There are many UK shares I want to buy for my portfolio in 2021. However, there are also many I want to avoid. So, with that in mind, here are the three shares I’d buy in the year ahead and three I wouldn’t touch with a barge pole. 

UK shares I’d buy

I want to concentrate on technology stocks for my portfolio in 2021. I think the outlook for the this sector is incredibly encouraging. And as the world becomes increasingly reliant on technology, I’ve been looking for companies that may profit from this trend. So a couple of UK shares stand out right now. 

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One of the pandemics’ biggest winners has been the food delivery service Just Eat. This business has seen the demand for its services surge over the past 12 months. Consequently, management has been using its newfound wealth to expand through acquisitions. Following these deals, I reckon Just Eat will remain a global technology champion even after the pandemic is over. 

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Although Aveva operates in an entirely different sector, is has similar qualities to Just Eat, in my opinion. It produces software to manage critical functions in the construction and engineering sectors. The group is already a leader in these sectors and has strong relationships with customers, which should underpin further growth in the years ahead. 

And the final tech stock I have my eye on for 2021 is Softcat. Unlike the UK shares above, which provide a specific service for customers, Softcat offers technology solutions. I reckon this makes the business a great way to play the tech sector’s growth. As long as global demand for technology services continues to grow, the need for Softcat’s services should too. 

Stocks to avoid 

As well as buying UK shares with exposure to technology, I’m also avoiding old-world companies. These are businesses that, in my opinion, will struggle to adapt to the new normal. 

An example is British Gas owner Centrica. This company is hemorrhaging customers to newer, more nimble upstarts, which have a better customer service record. It has repeatedly cut its dividend in the past few years, and profits have evaporated. As a result, I’m not interested in becoming a shareholder as the corporation continues to shrink. 

BP is another excellent example. While this company still has some attractive qualities, it’ll have to spend more and return less to investors to manage the energy transition for the next few years. Oil & gas isn’t dead, but it’s on the way out. Therefore, I think the next few years will be challenging for BP and its peers as they try to adapt. 

TUI is the final of the three UK shares I’m avoiding in 2021. I’ve been wary of this business for some time. High levels of debt and a very seasonal business model means the group doesn’t have much control over its destiny. What’s more, the pandemic has gutted its profits, and it could be years before Tui’s earnings recover.

I’m not willing to wait and see if the business can ever return to its former glory. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Just Eat Takeaway.com N.V. and Softcat. 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.

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