UK shares are on the up, as the recent vaccine breakthrough signals a brighter 2021. History shows that stock markets always recover strongly following a crash like the one we have seen this year, and I’m hoping for a positive performance of the FTSE 100 and FTSE 250.
A good way to take advantage is to buy a spread of high-quality UK companies while their share prices are still relatively cheap. The aim should be to hold on for the long term, in order to generate dividend income and growth. This should also help overcome further short-term volatility.
Here are 10 UK shares I would look to buy right now, to get rich when the recovery comes.
First, I would target either BP or Royal Dutch Shell, because if the world starts moving again, it will also start consuming more fuel. That will drive up the oil price, and these two FTSE 100 listed oil majors will benefit. Yes, they have to fund a shift towards renewable energy, but their fossil fuel earnings aren’t going to dry up overnight.
I think the global economy could snap back pretty quickly from what is actually an artificial depression, mandated by government lockdowns. If that is the case, demand for metals and minerals will soar. I think the best way to play this trend is to buy FTSE 100 listing mining giant such as BHP Group and Rio Tinto. Like BP and Shell, these UK-listed shares both offer attractive yields.
If stock markets recover next year, that will benefit companies with direct exposure to the ups and downs of equities. That’s why I’d also look at buying investment platforms AJ Bell and Hargreaves Lansdown. Investors are sitting on a pile of cash after this year, and if they direct a chunk of that into UK shares, these two should see hefty inflows.
Incredibly, house prices are soaring in this difficult year, rising 6.5% in the year to 30 November, according to Nationwide. That is due to a range of factors including record low interest rates, pent-up demand, Chancellor Rishi Sunak’s stamp duty holiday, and government support schemes such as Help to Buy. A great way to play this is to invest in the shares of UK housebuilders, such as Barratt Developments and Berkeley Group Holdings.
Finally, I would look at the big banks. They have had a rotten decade since the financial crisis, but that put them in good stead for the pandemic, by forcing them to strengthen their balance sheets.
If the UK goes gangbusters next year I think Barclays and Lloyds Banking Group could both rally strongly. Their share prices have both jumped by more than a third in the last month alone. Yet they aren’t expensive, trading at around 10 to 11 times earnings. I’d buy these two UK banking shares today, and hope they restore their dividends sooner rather than later.
Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, and Lloyds Banking Group. 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.