Stock market crash? I’d still buy these 3 UK shares

As whispers of a potential stock market crash get louder, I take a look at three UK shares that I wouldn’t hesitate to buy in a down market.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The FTSE 100 index has seen its worst week since mid-August. The FTSE 100 and FTSE 250 are down 1.3% and 1.4% respectively. It looks to me like the UK share market recovery we saw in early August is slowing or even reversing.

My colleague Stuart Blair argued that a market fallback is likely and I agree. But rather than see it as a sign to pull my investments, I think it presents a good buying opportunity. This is because businesses are bouncing back well despite the looming threat of another Covid spike. I see rapid vaccination efforts driving up consumer confidence, which would likely boost consumer spending in the near future.

Also, the UK market is subject to increased merger and acquisition activity, which I see as a sign of confidence from international investors in UK businesses. In fact, this year marks the most takeover activity since 2007.

At the moment, market lows signal to me that it’s time to add some tested UK shares to my portfolio and these are my top three picks for September.

Stable UK dividend shares

I am always looking to boost my passive income portfolio. Both Legal & General (LSE: LGEN) and British American Tobacco look like bargain picks for me at the moment given their dividend yields of 6.4% and 8%, respectively.

Insurer Legal & General has been on my watchlist for some time now. With its share price down 1.7% in the last six months, it looks like a perfect time to add it to my portfolio. Its operating profits went up 14% in the first half (H1) of 2021 to £1.07bn. The insurance wing of the company reported a 52% increase in profits to £134m.

The insurance sector is highly contested in the UK with Aviva and RSA Insurance Group also performing well this year. But LGEN’s strong financials and dividend policy makes it a top UK share for my portfolio at the moment.

British American Tobacco is another dividend stock that looks cut-price to me right now. Its share price is down 3.3% in 2021 and the price-to-earnings (P/E) ratio of 9.8x points to a slightly undervalued UK share.

Combined with the mammoth 8% dividend yield, I think this stock is a great option for my portfolio. Its history of increasing dividends every year is also impressive. Although the large debt pile and dropping tobacco sales are concerning, it remains a passive income pick for my portfolio.

Defence pick

The UK’s defence industry is in the news right now over growing interest from international bidders. BAE Systems is not directly involved in any deals at the moment but could profit from the potential Meggitt and Ultra Electronics deals.

BAE Systems is a consistent performer that offers a steady 4.6% dividend yield and a history of growth in the market. Its share price has risen 12.5% in 2021 and it posted a strong showing in H1 2021. Pre-tax profits were up 27% at £1.02bn and its order book stood at £35.5bn.

Governmental restrictions in the sector could hamper its cross-border trade, which is a concern. But, I think this UK share could be resilient in the event of a market crash. I will happily buy BAE shares in the event of market crash.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco. 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »