Investors love shares that increase in value. I’m always on the lookout for shares that could appreciate in price, whether by 1,000%, 100%, or even just 10%. Here I single out three UK shares I think could increase by 25% in 2021. That is a more modest target than others, but I would still welcome any 25% return in less than a year!
Here are three UK shares I think could increase by a quarter in 2021.
A retailer going from strength to strength
The UK retail space can be highly competitive. That makes the performance of discount retailer B&M even more impressive in my view.
The home and gardenware specialist saw a sales boom during the first lockdown last year. But that wasn’t a one-off. Rather, it reflected the strong management from B&M’s leadership team. The company nearly doubled its adjusted earnings for the second half of its most recent financial year. B&M was also elevated into the FTSE 100 index of leading shares.
Despite paying out a special dividend of 20p already this financial year, the company recently gave up some of its earlier gains. At around 500p, a 25% increase would take it to about 625p. That is higher than it has been before. But with its proven strength during lockdowns, I expect the retailer to continue to do well. I wouldn’t be surprised to see it gain 25% before 2021 is out.
Two UK shares I think could move up
For an oil company such as BP, a lot of the share price movement is linked to the oil price. After a torrid 2020 in the oil markets, the price of a barrel of crude has been moving up lately. The benchmark WTI crude price rose above $50 a barrel this month for the first time since a pandemic-induced crash last spring.
That is good news for BP. Its shares have already gained 50% since the start of November. However, they remain significantly below their pre-pandemic levels. If oil prices continue to rise, BP could well be a beneficiary.
British brickmaker Ibstock remains in the doldrums. Its shares are around 40% off their high point from the past year. However, housebuilding continues to be very big business. For now it shows little sign of losing steam. That should help UK shares of materials providers such as Ibstock. With its own network of clay mines, the company has a differentiator in a market where it is a key player. That gives it pricing power. In its most recent trading statement it reiterated its confidence in the recovery of its markets over time. I think the company is right to be confident. I believe that by the end of the year, the shares could put on 25% from today’s level.
B&M, BP, and Ibstock all look like undervalued UK shares to me. Over time I expect the market to reprice them. I wouldn’t be surprised if any or all of them climb 25% or more this year.
