Making a million by investing money in the stock market is a realistic goal for many investors. However, that task could be made easier by identifying the best UK shares to buy now.
Clearly, different investors will have differing views on which companies are the best stocks to purchase. However, those businesses with competitive advantages, low share prices and industry growth potential could be among the top performers over the long run.
Searching for sectors containing the best UK shares to buy now
The best UK shares to buy now may not necessarily be found in industries that have clear long-term growth prospects. Certainly, sectors such as healthcare and online retail may contain attractive businesses with clear growth potential.
However, other sectors that have struggled since the start of the coronavirus pandemic may be able to offer strong recovery prospects as the world economy returns to improved levels of growth.
For example, sectors such as financial services and energy may enjoy significantly improved operating environments in the coming years. As confidence returns, consumers and businesses may increase their spending and investment.
This could increase demand for a range of goods and services. These include petrol, loans and many other areas that have experienced low demand in recent months.
Identifying stocks with competitive advantages
Of course, sectors with recovery prospects may experience further challenges in the short run. This could cause UK shares operating within them to post disappointing financial performances that puts pressure on their financial positions.
As such, the best UK shares to buy now are likely to be those businesses with a large competitive advantage over their peers. They may be able to more easily overcome a period of weak growth.
They may also be able to capitalise on long-term growth trends through increasing their market share, enjoying higher margin growth and delivering rising profitability. Ultimately, this may produce a rising stock price that makes them more attractive buying opportunities at the present time.
Buying undervalued stocks
Where a company with long-term recovery potential and a competitive advantage trades at a low price, it could prove to be one of the best UK shares to buy now. A margin of safety may mean less risk in the short run. As well as scope for higher returns in the long run. Such companies may offer the chance to earn a higher return than the wider stock market.
Even if an investor matches the returns of the wider market over the coming years, they could make a million. For example, assuming the same 9% annual total return as the FTSE 250 has posted in the last 20 years would turn a £500 monthly investment into a £1m portfolio in just over 30 years.
By investing in the best UK shares today, it’s possible to beat that return and reduce the amount of time it takes to make a million.
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.