Since the beginning of December, the price of Bitcoin has doubled. This performance has resulted in a wave of new interest in the cryptocurrency with the number of online searches for ‘how to buy Bitcoin’ jumping.
Some analysts believe this could be just the start of the crypto asset’s growth. Price targets of as much as $146k have been touted on Wall Street. That suggests the price of Bitcoin could rise a further 300% from current levels.
While this potential return might seem highly attractive, I’m not convinced. I’d rather own UK shares instead. But this doesn’t mean sacrificing returns. Indeed, there are at least five shares I believe have the potential to double or even triple investors’ money in the near term.
Better than Bitcoin
Many UK shares are currently trading at discounted valuations. Nowhere is this more apparent than in the travel and tourism sector.
Companies such as IAG, easyJet, and Carnival are all trading at significant discounts to their 2019 valuations. Clearly, these UK shares are facing some severe headwinds. The pandemic has bought their businesses to a complete halt.
Nevertheless, green shoots are slowly beginning to appear. What’s more, all of these firms have strengthened their balance sheets over the past year. This time last year, there were some real concerns that these companies wouldn’t make it through the pandemic. Now we know they can.
Both IAG and easyJet have raised billions by leasing planes and increasing borrowing. Meanwhile, Carnival has been able to strengthen its financial position by selling shares and issuing bonds. As the firm entered the crisis with a relatively healthy balance sheet, investors have been happy to provide the extra cash.
As vaccinations help the world return to normal, I think these businesses will be able to start the recovery process in 2021. As earnings recover, their stock prices could follow suit, and the UK shares may outperform Bitcoin as this happens.
UK shares to buy
Two other companies I’d buy to double my money are BT and Natwest. These UK shares have suffered from depressed investor sentiment over the past year. However, on an underlying fundamental basis, both businesses have been pushing ahead over the past year.
As such, I think the disconnect between what the market thinks these companies are worth to what they’re actually worth has grown significantly. To put it another way, I reckon these stocks now offer a wide margin of safety for investors, which suggests to me they could produce large total returns for shareholders in the years ahead.
Unlike Bitcoin, both businesses produce tangible products and services, which should remain in demand no matter what the future holds for the UK economy. BT, in particular, provides a vital service for millions of customers around the country.
Indeed, without the group’s telecoms infrastructure, customers would find it difficult to trade Bitcoin in the first place. That’s why I’d buy these two UK shares for income and capital growth over Bitcoin any day.
The post Forget Bitcoin! I’d pick these 5 UK shares to double my money in 2021 appeared first on The Motley Fool UK.
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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