Buying UK shares today could be a sound means for an investor to treble their money. After all, many stocks appear to trade at cheap prices, given their long-term prospects. As such, they may deliver market-beating performances in the coming years.
With that in mind, here are five UK stocks that appear to offer good value for money. Over time, they may be catalysed by an improving economic outlook. And that should prompt a sustained stock market recovery fuelled by stronger investor sentiment.
Generating a 200% return with UK shares
Even if an investor obtains the same return as the wider stock market from a portfolio of UK shares, they could realistically treble their money over the long run. In fact, the FTSE 100 has recorded annual total returns of around 8% since its inception in 1984.
Assuming the same rate of return on an investment today, over the next 15 years that would produce a trebling of an initial investment.
However, with stocks such as Vodafone and Lloyds currently unpopular among investors, there may be opportunities to earn a higher return than the stock market’s average. Both companies appear to have the right strategies to cope with difficult short-term operating outlooks.
Over time, they may be able to reward shareholders through rising dividends. Meanwhile, their price falls in 2020 suggest they could offer wide margins of safety.
Long-term growth potential in a stock market recovery
Other UK shares such as AstraZeneca and Next could experience above-average earnings growth. They seem to be in strong positions to capitalise on industry-wide trends that may increase demands for their products in the long run.
For example, AstraZeneca has invested in its pipeline to strengthen its exposure to cancer drugs and emerging markets. Meanwhile, Next has a growing online presence that may lead to improving sales as consumers move from shopping in stores to shopping online.
Other UK stocks such as WPP could be major beneficiaries of an improving global economic outlook. The company’s business model is closely correlated to the prospects for economic growth. Therefore, as business confidence and consumer spending improve in the coming years, it could experience stronger operating conditions that have a positive impact on its share price.
Taking a long-term view during an uncertain period
As mentioned, UK shares are unlikely to treble in value over a short time period. The stock market recovery has led to rising valuations over recent months. But the economic and political outlook remains uncertain. This could derail the progress made by the stock market in the second half of 2020.
However, by taking a long-term view and buying cheap shares in high-quality businesses, it’s possible to generate market-beating returns. And that could lead to impressive portfolio performances in the coming years.
The post 5 UK shares I’d buy for 2021 that I think could TREBLE my money! appeared first on The Motley Fool UK.
Peter Stephens owns shares of AstraZeneca, Lloyds Banking Group, Vodafone, and WPP. The Motley Fool UK owns shares of Next. The Motley Fool UK has recommended 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.
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