I’m convinced that buying UK shares is one of the best ways to build a big nest egg for retirement. It’s why I continue to invest in my Stocks and Shares ISA whatever chance I get.
The economic outlook remains laden with danger as the Covid-19 crisis rolls on. But this hasn’t sapped my appetite for investing. There remain many top UK shares I think should deliver big shareholder returns over the short-to-medium term. Here are several I’d happily add to my ISA right now:
#1: A UK share for growth and dividends
I consider Vodafone Group to be a very attractive UK value share right now. It’s not just because the FTSE 100 business trades on a forward price-to-earnings growth (PEG) ratio of 0.6, created by broker expectations that earnings will soar 38% in the fiscal year to March 2021. The telecoms giant carries a gigantic 6% dividend yield as well. I like the exceptional sales opportunities that 5G rollout and Vodafone’s huge emerging market footprint provides. I’m aware, though, that Vodafone carries a lot of debt. And its profits could take a hit if tough economic conditions in its critical European marketplace remain subdued.
#2: Game on
Grabbing a slice of the online gambling market is another good investment idea, in my opinion. I’d do this by investing in Gamesys Group, the owner of popular gaming brands like Jackpotjoy. The Covid-19 crisis has significantly boosted the long-term outlook for the internet gaming sector. It’s why the company’s half-year report showed the number of average active monthly players on its books soar 14% in the year to June 2020. City analysts reckon earnings here will rise 15% in 2021. This results in the company changing hands on a PEG ratio of just 0.7. One possible fly in the ointment is that gambling firms always face the prospect of serious trading clampdowns from regulators. This is something that could hit future profits growth.
#3: No bargain bin leftover
B&M European Value Retail is another UK share I consider a wise buy in these tough times. We all love a bargain, but hunting for low-cost goods becomes (largely speaking) a necessity during economic downturns. This is why City analysts reckon annual earnings at B&M will soar 90% this fiscal year (to March 2021). It’s not all sunshine for B&M though: retailers like this face future pressure from slim margins, rising business rates and increasing labour costs. Today this UK share trades on a low forward PEG ratio of 0.2. This merits attention, in my opinion.
#4: More big dividends
I like Tate & Lyle because it offers all-round value. The food ingredients manufacturer trades on an undemanding forward price-to-earnings (P/E) ratio of around 14 times. This is based on City expectations that annual earnings will rise fractionally in the current financial year (to March 2021). It sports a chubby 4.2% dividend yield too. I think this UK share’s essential products make the company a great defensive buy in these troubled economic times. That’s not to say that the Covid-19 crisis doesn’t present some risk, however. Further lockdowns could continue to damage the revenues at Tate & Lyle generates from restaurants.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value. 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.