I think some of the best shares to buy now are UK-focused domestic stocks. Indeed, following the publication of the government’s plan to unlock the economy after the pandemic, I think the outlook for UK shares has dramatically improved.
That said, I don’t think it will be plain sailing for these companies from now on. While some sections of the economy have fared well throughout the pandemic, others have not. I intend to avoid businesses in the sectors that have struggled, as these corporations might find it difficult to recover.
There are other risks UK companies face as well. The threat of a no-deal Brexit has been removed, but there are still trade headwinds to manage. These challenges may persist for some time.
Nevertheless, despite these risks, I believe the companies outlined below are some of the best shares to buy now, which is why I would buy them for my portfolio.
UK stocks to buy for growth
This government has already committed to spending £100bn on infrastructure projects over the next few years. But after the pandemic, this figure could rise.
The initial spending and potential for more could be great news for steel producer Severfield (LSE: SFR).
With a market capitalisation of just £220m, this small firm might not be suitable for all investors. The steel industry is also highly unpredictable. Most of the UK’s steel producers have collapsed. Severfield has survived until this point, but there’s no guarantee the company will continue to remain solvent. High iron or and labour costs are two risks to the firm’s business model.
Still, I’m comfortable investing in small enterprises, which is why I would buy this stock for my portfolio today.
During the past few years, the company has been recovering from the financial crisis when profits and revenues plunged. Since then, earnings have recovered. Sales are up around 75% in the past five years.
Past performance should never be used as a guide to future potential. However, with a massive infrastructure spending plan on the cards, I reckon Severfield’s growth can continue. As well as government spending, the firm may also benefit from the rising demand for structural steel from the private sector.
Best shares to buy now
I think this firm is an overlooked tech champion. It helps its clients, which are mostly smaller retailers, take non-cash payments. Its software also allows clients to offer services such as mobile top-ups and pay energy bills.
PayPoint is focused on increasing its presence in these critical markets. It has completed two acquisitions in the past month to enhance its digital payments capability and take it into new sectors. I think these deals will help the firm build a foothold in the UK’s growing digital economy.
There are some risks to this strategy. PayPoint may end up overpaying for deals, which could lead to costly write-offs. It also faces other challenges, such as data protection and client retention. If management skips on client services and data protection, there could be a significant backlash.
However, I would buy the stock for my portfolio today, considering its potential.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended PayPoint. 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.