I invested in a few shares that doubled in price during 2020, and I’m now looking for the best shares to buy in 2021 to double my money again. Although my whole UK share portfolio didn’t double last year, the shares that did significantly boosted my average return. It shows that it’s helpful to have even a small portion of a portfolio invested in stocks that can soar.
Last summer, I wrote about Best of the Best, Codemasters, and Scottish Mortgage Investment Trust as my best shares to buy in 2020. All three increased by over 100%.
For 2021, I’ll be using the same process I used back then to pick some great investments. I typically look for small-to-medium-sized companies that show reasonable growth, double-digit return on capital, and rising share price momentum. I also like strong management with a proven history of executing plans well.
My picks for 2021
One of my top selections for 2021 is Volex. This high-quality cable manufacturer has been in transformation mode over the past few years. After a difficult period, it’s profitable, earnings are growing and profit margins expanding.
Several acquisitions over the past few years have driven growth. A move away from the low-margin end of the cabling market and a shift into higher-margin value-added solutions has driven up operating profits.
I’d say the exciting story for future growth comes from its solutions in data centres, electric vehicles, and medical devices. All three of these end markets are structurally growing. According to Deloitte’s report on electric vehicles, total electric vehicle sales are expected to rise from 2.5 million in 2020 to 31.1 million by 2030.
I also consider Sylvania Platinum (LSE: SLP) to be one of the best shares to buy in 2021. I selected this small-cap platinum group metals (PGMs) producer as my top choice in The Motley Fool’s Top British shares for 2021 article last month and I’m still bullish. Sylvania’s share price has had a strong start to the year, up by around 30% so far. But it’s not too late to buy this share, in my opinion.
Strong metal price trends and limited competition support this low-cost producer. Fiscal and monetary support from global central banks and governments could push commodity prices higher. A post-vaccine economic recovery could also support demand for commodities.
It offers an undemanding price-to-earnings (P/E) ratio of 6.8, a return on capital of 35%, and net cash on the balance sheet. With metrics like these, I think it could be a top performer in 2021.
Will it double again?
Lastly, I reckon CMC Markets could be one of the stronger shares to buy in 2021. In fact, investing in this financial trading platform would have more than doubled my money in 2020. Its shares climbed by 167%.
CMC Markets benefited from volatile market conditions in 2020 and could provide a good hedge in case further volatility arises in 2021. In November, it announced a record-breaking half-year performance with pre-tax profits up by 369%. I think business momentum will continue and would happily buy CMC Markets shares today.
Harshil Patel owns shares in Best of the Best, Codemasters, Sylvania Platinum, Scottish Mortgage Investment Trust and Volex. 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.