The coronavirus crisis has plunged the UK economy into its worst recession on record. It’s also caused tremendous chaos among UK shares.
However, this could be an excellent opportunity for long-term investors. Studies show the best time to buy stocks is when they’re trading at low levels. Figures show acquiring shares at low levels can generate high total returns for investors over the long run.
As such, now could be a good time to snap up a diversified basket of UK shares as the economy begins its recovery process. With that in mind, here are five stocks that may generate impressive returns for investors in the second half of the year.
UK shares to buy in September
To help economies recover from the coronavirus crisis, governments are planning large infrastructure projects. This should benefit UK shares like BHP and Rio Tinto.
Two of the largest mining groups in the world, these businesses have the lowest production costs in the industry. This means if the prices of essential commodities, such as iron ore and copper, increase dramatically due to rising demand, the firms may see rising profits.
As both companies have historically returned a significant proportion of excess profits to investors with dividends, shareholders could see substantial total returns in this best-case scenario.
On the same theme, another business that may see rising demand in the near term is construction group Morgan Sindall. The organisation is one of the largest providers of social infrastructure in the UK, which includes affordable housing and regeneration.
It had an order book of £8bn at the end of June, up 5% year-on-year. While the pandemic did cause the company’s earnings to decline by nearly 60% in the first half, management is planning to return all payments received by the group under the government’s coronavirus job retention scheme. This suggests the business is optimistic about the future.
Consumer products company PZ Cussons is a high-quality defensive business that could be a great addition to any portfolio of UK shares. The owner of personal care brands such as Carex has seen the demand for its products rise recently. As the world continues to focus on hygiene to try and keep the pandemic under control, this may continue.
With a dividend yield of 4% on offer as well, this stock could provide investors with a mix of capital growth and income going forward.
Finally, homebuilder Berkeley could see rising profits in the second half of 2020. The recent stamp duty cut has created a mini property boom, and homebuilders look set to benefit. What’s more, low-interest rates, the Help to Buy scheme, and lack of new homes suggest this trend may continue for many years.
Therefore, Berkeley may see rising sales and income for some time to come. The company has returned the majority of its excess profit to investors in the past. So, shareholders could see significant total returns if income expands.
The post £5k to invest? 5 UK shares I’d buy in September appeared first on The Motley Fool UK.
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Rupert Hargreaves owns no share 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 2020