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2 UK shares to buy in a Stocks and Shares ISA: I like these companies’ prospects

Kirsteen Mackay
·3-min read
Private investor buying UK shares at home
Private investor buying UK shares at home

Two UK shares I’d like to buy in 2021 are THG (LSE:THG) and PZ Cussons. That’s because I think both companies are set for a bright future. THG is a progressive business, and I think it has all the makings of a future tech star. Its technology powers many successful companies. As the pandemic has accelerated demand for e-commerce, THG could be in the right place at the right time.

A UK share I’d like to buy in 2021

Under its THG Ingenuity division, it delivers an e-commerce package to big name customers. It leads them from product creation to delivery, covering every step in between. This part of the business could become a real money-spinner as it brings in recurring income and builds long-term contracts with customers all over the globe. THG has also recently partnered with Splitit to improve its payment systems and give additional options to its client base.

It also builds cult brands from the ground up. It owns Europe’s number one online beauty retailer lookfantastic and currently sells a selection of hot brands, some of its own making, such as Myprotein. Owning such brands gives it wider margins, which is an important edge in such a competitive marketplace. It’s also known to rely on social media influencers to promote and move products, which is a scalable business model that companies are desperate for a piece of.

Growing with acquisitions

THG has been making impressive acquisitions and may well continue to do so as the economic climate is favourable for those companies looking to snap up bargain growth prospects. It only publicly listed in September, but its latest trading statement was upbeat and it has a £7bn market cap. It showed strong growth and predicts further revenue improvement this year of between 30% and 35%.

But a couple of worries I have regarding this stock are the current economic climate and the fact it sells prime brands. If the pandemic drags on, consumers might not have spare cash to spend and sales could fall. So far that doesn’t look to be the case. While unemployment rates are up, sales of luxury items continue to grow. According to Statista, revenue in the luxury goods market, which includes cosmetics, is projected to reach £250m this year with an annual growth of 4.8% to 2025.

And if THG Ingenuity’s clients struggle and pause marketing spend, then it could see a decline in business. But once vaccines rollouts ramp up further, I’m hopeful the economy will bounce back quickly, and I think THG stands to benefit.

Strong and steady

FTSE 250 firm PZ Cussons is another UK stock I’d like to buy for my Stocks and Shares ISA in 2021 because it’s a strong company with products that are staples on supermarket shelves. The pandemic brought excellent sales to its Carex hand wash, and its half-year results show a good performance. Nigeria is its largest single market, but it’s been a poor performer in recent years. The company is now streamlining its presence there. It’s incurred costs in this process, but is hopeful these will pay off in the future.

For the six months ended November 30, revenue rose 10% to £312.9m and adjusted operating profit increased 14.8% with growth in all geographical regions. It offers investors a 2.8% dividend yield. I’d like to buy and hold shares in this UK stock.

The post 2 UK shares to buy in a Stocks and Shares ISA: I like these companies’ prospects appeared first on The Motley Fool UK.

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Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has recommended PZ Cussons. 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.

Motley Fool UK 2021