I’m not going to dispute that the global economic outlook remains laden with hurdles as we edge further into 2021. The near-term profits picture for a great many UK shares remains as clear as mud.
The economic rebound is linked directly to the battle against Covid-19, of course. So it’s no surprise that investor appetite for UK shares remains in the doldrums as news of virus variants — and evidence that they might be immune to some vaccines — has tempered hopes over mass vaccination rollouts.
Could UK share prices treble again?
All that said, I’ve not been put off from continuing to invest in my Stocks and Shares ISA. I take a long-term view when it comes to buying and owning UK shares. And I believe there are plenty of quality stocks out there that will recover strongly from the Covid-19 crisis. I reckon the ones I’ve bought over the past year will soar during the new bull market too.
Remember that UK share prices rocketed in the decade following the last major economic catastrophe. Stock markets collapsed as the banking crisis unfolded and the huge debt levels of advanced economies came into focus. However, they soared during the following 10 years as economic conditions recovered and corporate profits bounced back. In the nine years to 2018 the FTSE 250 trebled in value while the FTSE 100 more than doubled.
I’m building my shares portfolio in the hope that the companies I bought following the 2020 stock market crash will also balloon in value in this new decade. Ashtead Group (LSE: AHT) is one UK share I fully expect to deliver delicious returns through to 2030 at least.
A FTSE 100 cracker
Rental equipment giant Ashtead was one of the standout performers of the 2010s. And it’s a FTSE 100 share I’m pleased to say I already own in my ISA. The company soared more than 2,800% in value during the last decade as the construction sector roared back into life. The combination of huge organic investment and acquisition activity that Ashtead embarked on to build its market share around that time went some way to delivering titanic shareholder returns too.
I’m backing this UK share to rip higher again during this new decade as well. It still has a nose for aggressive M&A action and has the financial firepower to follow through. Steps to build its fleet size and its geographic exposure helped drive Ashtead’s US market share to a whopping 10% in 2020 from 4% a decade earlier.
A lumpy economic recovery might damage Ashtead’s profits generation during the next few years. A stunted rebound would damage equipment demand from the construction industry and other cyclical sectors. But I believe this threat is fairly priced into the company’s share price today. City analysts reckon earnings here will soar 22% in this fiscal year (to April 2022). And this leaves it trading on a rock-bottom price-to-earnings growth (PEG) ratio of 1. Bear in mind, though, that profits forecasts could change based on future developments and can’t be relied on.
Royston Wild owns shares of Ashtead Group. 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.