UK share prices continue to struggle for grip as we move towards March. Stock values have broadly reversed, in fact, as fears over what Covid-19 mutations mean for the effectiveness of vaccine rollouts have increased.
On top of this, concerns over escalating inflation have damaged appetite for UK shares in recent hours. As IG Group has commented: “With commodities on the rise, we have yet another reminder of the potential rise in inflation that many believe could bring an earlier end to the current loose monetary policy environment.”
Stock investors like me need to remain vigilant. The economic recovery could be bumpy in many, if not all, parts of the globe. And this could have huge implications for corporate earnings. But I don’t think there’s any need to pull up the drawbridge and stop investing entirely.
There are still many UK shares I think will deliver big profits over the next couple of years, whatever happens. Here are a couple I’d buy for my own Stocks and Shares ISA in March.
A UK tech share on my wishlist
I think grabbing a slice of the cybersecurity space is a good idea today as online attacks soar. A report from software giant VMware last June illustrated how the problem has worsened in recent years. A whopping 90% of security professionals it surveyed said they had seen an increase in the volume of attacks in the prior 12 months. As a consequence, 96% of those quizzed said they planned to increase budgets to fight such threats.
Cyber attacks have grown significantly in both number and sophistication as the public health emergency has progressed. And this bodes well for UK shares like NCC Group (LSE: NCC). This particular IT services provider helps businesses identify weaknesses in their systems. And it hunts and fights threats when they come along.
City analysts expect earnings at NCC to edge 4% higher this fiscal year (to May 2021). This leaves the company trading on a forward price-to-earnings (P/E) ratio of 33 times. High multiples aren’t rare when it comes to UK tech shares. But I’m aware that elevated valuations can lead to sharp share price drops if trading conditions begin to worsen.
A top FTSE 100 stock
I would also happily buy UK financial services share Hargreaves Lansdown (LSE: HL) in my ISA right now. I expect activity on its trading platforms to remain robust as low Bank of England interest rates force Britons to search for better returns elsewhere. A report by Moneyfacts shows how rates on Cash ISAs for instance have plummeted to fresh record lows recently.
It’s probable that Hargreaves Lansdown might suffer if the UK economic recovery clicks along at an impressive pace. This might cause the Bank of England to raise its base rate quicker than currently expected and cause individuals to flock back to traditional lower-risk savings products. I still think the FTSE 100 share is an attractive stock to buy today though. City brokers reckon annual earnings here will rise 2% this financial year (to June 2021). This leaves it trading on a forward P/E ratio of 26 times.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown and NCC. 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.