Now may not seem like a good time to buy UK shares. Indeed, the combination of the coronavirus crisis and Brexit makes for a highly uncertain outlook for stocks.
However, research shows that buying shares at depressed levels generates the best returns in the long run. And that’s the strategy I’m using in the current crisis.
As such, here are the five UK shares I’d buy today to take advantage of depressed prices.
UK shares to buy
The first company on my list is B&Q owner Kingfisher. Before coronavirus, this business was struggling for direction, but since March, the stock has surged higher 0n the back of explosive sales growth.
Consumers who have been confined to their homes have been spending money on home improvement, helping drive B&Q’s sales higher. The current mini housing boom has helped sustain this trend. As the country continues to battle Covid-19 with further restriction on movements, I think this trend could carry on, which suggests the outlook for Kingfisher’s stock is bright.
I’d also considered buying gold and silver miner Fresnillo for a portfolio. This is one of the few UK shares that offer direct exposure to the precious metals market. Value of both gold and silver has jumped this year due to rising demand for the safe-haven assets.
Analysts are expecting this performance to have a significant impact on Fresnillo’s bottom line. That’s why this company is one of the top stocks on my list to buy for an uncertain environment.
Provider of IT services Computacenter is having a blow-out 2020. Analysts are expecting the company’s bottom line to grow by around 10% this year, which could, they believe, help support a dividend payout of 45p per share. That suggests the stock’s dividend yield is going to hit 2%.
I don’t think this growth is a one-off. Over the past five years, the group’s earnings per share have grown at a compound annual rate of 15%. As the world becomes increasingly reliant on the technology sector, I reckon Computacenter’s bottom line will continue to expand.
2020 has been incredibly challenging for retailers. However, footwear-focused JD Sports has been able to capitalise on its niche market position to weather the storm.
Over the past few years, this business has gone from strength to strength as it has focused on doing what it does best, selling footwear. As long as the company sticks to this tried and tested growth strategy, I’m optimistic that it can continue to produce large total returns for investors.
Finally, I don’t think any list of UK shares to buy today would be complete without including financial services group CMC Markets. This trading specialist has seen revenues jump in 2020, thanks to the highly volatile market conditions.
Therefore, I think this business could offer a hedge against further market turbulence. More volatility could lead to more trading, which would be great for CMC’s bottom line. I think investors may even see a special dividend from the City firm as its cash balance continues to balloon.
The post How should I invest £5k? The 5 UK shares I’d buy today appeared first on The Motley Fool UK.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Fresnillo. 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