The uncertain economic outlook isn’t harming my plans to keep buying for my Stocks and Shares ISA. I think there are still plenty of UK shares that should deliver fat profits in 2021 regardless of the Covid-19 crisis.
Here are three British stocks I’d happily add to my ISA today. I’d buy them for these nervy times, but hold them until the end of the decade.
#1: Meat and drink
The rising popularity of vegetarian and vegan diets in the West will impact Devro’s profits growth over the next decade. But I think the sausage casings maker is still likely to see bottom-line momentum as global meat consumption rises on improving wealth levels in emerging markets.
Devro announced last week that it had seen higher volumes and margins in the final months of 2020. This reflects demand growth as broader meat consumption increases. It reflects the efforts this UK share is making to cut costs to boost margins too. An effort to embrace higher-margin food products should help the business keep momentum on the margin front too. And in the meantime I believe it should be able rely on its defensive operations to keep the bottom line ticking over.
#2: A rebadged UK share
The threat of harsh regulation always poses danger for gambling operators like Entain. This company — known as GVC Holdings up until recently — was hit hard by the banning of fixed-odds betting terminals in its shops two years ago in Britain, for example. It’s been suggested that trading rules could be tightened in some markets following the online gambling explosion of 2020 too.
MGM Resorts International might have pulled out of buying Entain last week. But I think the future remains bright for the firm. The online gambling segment has room for significant growth in the years ahead. And that’s particularly so in Entain’s US marketplace, a territory that Hargreaves Lansdown says is “already worth many billions of dollars a year.” I’d also buy this particular stock on account of its heavyweight brands like Coral and partypoker and its market-leading online platforms.
#3: The key to huge returns?
Plenty of stocks have been hit by the Covid-19 crisis. But changing lifestyles in response to the pandemic have boosted trading at many other firms. Such companies include those involved in the business of video games development, like Keywords Studios. This form of entertainment was already exploding before last year’s public health emergency. It’s received an extra boost as locked-down citizens the world over have sought escapism.
Keywords Studios — which supplies a variety of support services to games developers — is busy on the acquisition front to make the most of this rapidly-growing market. Amongst the flurry of acquisitions its made in recent months include those of High Voltage Software and Heavy Iron Studios. These moves significantly bolster the UK share’s position in the colossal US marketplace.
That said, Keywords’ valuation is high with a price-to-earnings (P/E) of 49 times. This could leave it in danger of a correction should market growth slow.
