Following the publication of the UK’s roadmap out of lockdown, I’ve been looking for the best UK shares to buy. With that in mind, here are 10 UK shares I’d add to my portfolio today.
Stock market recovery
I don’t think it’s sensible to have too much exposure to one sector or industry coming out of the pandemic. We don’t know what the future holds. Every company and sector has fared differently over the past 12 months. I think that’s likely to continue as we exit lockdown over the next six months.
As such, I believe diversification is essential with UK shares. Diversification should never be overlooked, but I think it’s imperative today.
In the financial sector, I’d buy IG Group, St. James’s Place and Barclays. All of these UK shares should benefit from a recovery in economic activity in the UK. If consumers have more money to trade and invest, that would be great news for IG and St. James’s. At the same time, increased business activity and demand for loans would be good news for Barclays.
Unfortunately, these companies are also exposed to plenty of risks. If the economy continues to languish, Barclays may suffer further loan losses, while increased regulation and rising costs could be bad news for the two investment firms.
UK shares to buy today
In the travel sector, I would buy National Express and IAG. Both of these UK shares are recovery plays. National Express may see increasing demand for its public transport options as part of the country’s transition towards a greener future. IAG could benefit from the return of international travel later this year.
But it’s unlikely to be easy for these businesses over the next few months. A third wave of coronavirus may force the government to push back re-opening plans. That would hurt the outlook for both firms.
In the resource sector, I’d buy BHP, Rio Tinto and Evraz. These three firms are all major suppliers to the steel industry. BHP and Rio supply the raw iron ore, while Evraz turns the commodity into steel. As policymakers have unveiled massive stimulus plans as part of recovery efforts, the price of iron ore has jumped over the past 12 months.
I think the same could happen with the price of steel. That’s why I’d buy these commodity companies. That said, what goes up can always come down. As such, there’s always going to be a risk the price of iron ore could collapse, which would wipe out profits at all three organisations.
Finally, I’d buy Premier Foods and Reach for a portfolio of UK shares. I think these are some of the best shares to buy today as they’re recovery plays. Both companies have struggled with high levels of debt and falling earnings in the past. However, they’re now starting to move past these issues. This suggests they could see a boost from the UK economic recovery.
Of course, they have their risks. There’s no guarantee the recovery could continue. Reach is struggling with falling newspaper distribution, and Premier faces increasing competition from health food brands. These challenges may stall their recoveries.
Markets around the world are reeling from the coronavirus pandemic…
And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.
Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…
You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.
That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Barclays. 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.