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Best stocks to buy now: 2 UK shares I’d acquire

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I believe the best stocks to buy now are those businesses that may benefit from the economic recovery over the next few years. And with that in mind, here are two UK shares I’m buying, or planning to buy, for my portfolio.

UK shares

The first company on my list is the London West End landlord Shaftesbury (LSE: SHB). This investment isn’t for the faint of heart.

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Before the pandemic, the company had made a name for itself nourishing small businesses. It was proud of its record of helping small retailers establish niche offerings across its West End estate. These unique offerings attract consumers to the area, which increases the appeal for other stores.

Unfortunately, the pandemic hurt these companies more than most. Shaftesbury’s revenue collection has slumped as a result. In its latest trading update, the organisation told investors that it collected just 45% of rent due for the quarter ended 31 December.

However, despite these dire figures, I’ve been buying Shaftesbury as part of a diversified basket of UK shares. The company owns an irreplaceable portfolio of real estate throughout London’s key entertainment and shopping district. The pandemic has hurt revenue collection and demand for new leases, but I believe that, over the long term, demand will return. 

This is why I think Shaftesbury’s one of the best stocks to buy now to play the economic recovery.

Of course, the company isn’t without risk. If the pandemic continues to rumble on in 2022, the group may lose more tenants. It may also have to raise money from shareholders to prop up its balance sheet. The group has already taken this course of action once in the past 12 months. Another cash call or additional disruption to the portfolio could leave lasting effects on the business. 

Despite these challenges, I’ve been buying the stock for my portfolio today. 

Best shares to buy now

Another recovery play on my list of UK shares to buy for the next few years is Melrose (LSE: MRO)

The engineering sector tends to expand and contract in line with the global economy. Many engineering companies are poorly run and have small profit margins, which means they tend to be lousy investments.

However, I believe Melrose is one of the best-run engineering companies in the UK. It has a strong track record of buying struggling businesses, improving them, and then selling them on, returning the proceeds to investors. 

Melrose posted a steep fall in annual profit last year as the pandemic hit top and bottom lines. But its Nortek business was trading “very strongly” and management is now looking to offload this air-conditioning enterprise. Any sale would unlock additional capital, which could then be reinvested back into the company.

That said, Melrose is still exposed to multiple risks. Its GKN division has  performed poorly over the past 12 months, and management thinks it could take at least another year for the business to recover. This could drag on growth and profitability in the near term. What’s more, the company may struggle to find a buyer for Nortek, which would setback growth plans. 

Nevertheless, despite these challenges, I’d buy the stock for my portfolio of UK shares today as a recovery investment. 

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Rupert Hargreaves owns shares in Shaftesbury. Diversified basket of UK recovery sharesThe Motley Fool UK has recommended Melrose. 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.

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