I’ve been looking for UK shares to buy today in retail and construction. I think these sectors should see the best growth over the next few months and years as we emerge from the pandemic.
With that in mind, here are three stocks I’d buy for my portfolio today to play this theme.
UK shares to buy today
I’d buy Restaurant Group (LSE: RTN), which operates casual dining restaurants throughout the UK. Its flagship brand was Frankie & Benny’s, but Wagamama replaced this when the group acquired the latter in 2018.
With many of its restaurants closed over the past 12 months, its sales have been decimated. They slumped around 60% in 2020. However, as the UK economy reopens, I think this stock could be a great recovery play. Analysts expect the group to return to profit in 2022. However, these are just projections at this stage, and the firm isn’t guaranteed to match the forecasts.
Still, I think this is one of the best UK shares to buy today for its recovery potential. The main risk facing the enterprise is the prospect of another lockdown due to a third coronavirus wave. It also has a lot of debt, and this could restrict recovery in the years ahead. Even after taking these risks into account, I’d buy the stock for my portfolio.
The group’s losses totalled a staggering £360m in 2020, and analysts are forecasting losses of £44m for 2021. But profit could return in 2022, according to forecasts.
Based on the scenes we’ve seen of packed pub gardens over the past week, I think these forecasts could be too conservative.
That said, Marston’s recovery is far from guaranteed. It’s exposed to the same risks as Restaurant Group. Another coronavirus wave could force the government to shut restaurants and bars again. This would send the business back to square one. And after generating a loss of £360m in 2020, there’s no guarantee the company could survive another lockdown.
Even after taking this risk into account, I’d still buy the stock for my portfolio of recovery shares today.
I believe one of the best UK shares to buy today in the engineering sector is Renew Holdings (LSE: RNWH). The engineering and specialist building contractor expects only a modest decline in earnings next year. Over the next two years, analysts forecast an explosive return to growth with net income rising to an estimated £38m by 2022. The firm earned £22m in 2019.
These are just projections at this stage, but I believe they show Renew’s potential to capitalise on the economic recovery. To help complement growth, Renew recently acquired water-focused engineering business J Browne Group Holdings for £29.5m.
The main risk facing the business is the prospect of another economic slump. Engineering is a highly cyclical sector and a sudden economic downturn could inflict hefty losses on Renew. A poor acquisition may also have a similar negative impact on the business.
Despite these challenges, I’d buy the engineering company for my portfolio of UK recovery stocks.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Marstons. 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.