After a decline in March 2020, UK shares have bounced back remarkably in the months since the first onset of the Covid-19 pandemic. Since that initial dip many companies have gained as part of a stock market recovery.
Primary UK stock index, the FTSE 100, has gained more than 30% since its low of 4,993p on 23 March last year, as optimism around vaccination programmes drives the latest stock market rally.
While there may be a correction ahead in the index in response to the recovery, I think there are still some great value UK shares which I would add to my portfolio.
Bag a bargain
Discount retailer B&M European Value Retail (LSE:BME) has been one of the stocks that has gained handsomely throughout the pandemic. The group was boosted by being classified as a retailer of essential goods, as well as the fact that many of its stores are located in retail parks as opposed to the high street.
The company reported better performance than had been expected for its fiscal third quarter. This led B&M to narrow its guidance for full-year earnings to the higher end of £540m–£570m.
That was in addition to announcing a special dividend payout of £200m in January.
While I am bullish on the shares amid the current stock market recovery, the shares are already up 60% in the last 12 months and could potentially be past their peak.
The share price has dipped this week, potentially in response to the UK government’s plan to reopen many parts of the economy, including high street retailers which have been forced to close. The group can also be open to rising inflation as its margins can be narrowed by distribution costs.
Despite those risks, I’d still add B&M shares to my portfolio today.
Another FTSE 100 which could benefit in the long term following this stock market recovery is Covid-19 vaccine manufacturer AstraZeneca (LSE:AZN).
The pharmaceutical giant’s share price has disappointed over the last year, despite the company leading the way in the production of the vaccine.
While the FTSE 100 has gained 7% in the last six months, AstraZeneca shares have declined almost 17%.
The last year has shown just how important the healthcare market is to the global economy, and I see AstraZeneca as being a key part of that market for many years. While there is a plan to reopen the economy as the vaccine rollout starts to take effect, regular boosters are likely to be needed for years afterwards.
While the company is selling the vaccine at cost price, I think its other products will be able to grow profits in years to come. Some of its cancer treatments have the potential to become $1trn businesses and I see an increased focus on health and wellbeing on a global scale in the years to come.
On the downside, the pharma giant’s ongoing row with the EU over vaccine supply has not been a good look for the company.
The share price has also not been helped by the rise in value of sterling, as AstraZeneca reports its results in dollars. The company’s dividend payouts have also not grown in a number of years.
However, I’d still add AstraZeneca to my ‘buy’ list at the moment, as the shares appear undervalued to me at the current price of 6,935p.
Covid-19 is ripping the investment world in two…
Some companies have seen exploding cash-flows, soaring valuations and record results…
…Others are scrimping and suffering.
Entire industries look to be going extinct.
Such world-changing events may only happen once in a lifetime.
And it seems there’s no middle ground.
Financially, you’ll want to learn how to get positioned on the winning side.
That’s why our expert analysts have put together this special report.
If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains...
conorcoyle 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.