The outlook for the global economy remains less than obvious as we enter 2021. Worsening Covid-19 infection rates threaten to disrupt the effectiveness of a vaccine rollout and, as a consequence, the economic rebound. The profits picture for many hundreds of UK shares remains as clear as mud.
That’s not to say I won’t be investing in my own Stocks and Shares ISA in the months ahead though. The London Stock Exchange is packed with shares that remain on course to deliver delicious long-term returns. Here are a few I reckon are too good to miss following share price weakness.
UK share #1: Big Yellow Group
Self-storage play Big Yellow Group’s share price has dropped by mid-single-digit percentages this year. It’s a mild dip compared with the eye-watering declines other UK shares have endured. And it’s a drop that still leaves the business dealing on a meaty forward P/E ratio of 26 times.
But it’s a reversal that fails to reflect just how strong trading has remained at Big Yellow in Covid-19 times. Not even a pandemic, nor the worst economic crash for 300 years on these shores, could stop like-for-like revenues from continuing to rise (up 2.4% in the six months to September). And supportive factors like a huge buy-to-let market and the growth of online shopping mean demand for its storage pods should keep soaring over the long term.
UK share #2: Avon Rubber
Body armour builder Avon Rubber has had a much stronger 2020 by comparison. In fact its share price doubled in value during the first 11 months of the year before strong profit taking and a troublesome trading update last week sent it plummeting. This UK share’s now up just 50% from January 1.
I’d use this weakness as a fresh buying opportunity. The mask maker’s dizzying forward earnings multiple has now been chopped down to a much-more palatable 24 times. And this reading’s quite reasonable, in my opinion, given Avon Rubber’s mighty profits outlook. Grand View Research reckons the company will grow at a compound rate of 5.5% through to 2025. It’ll be worth a colossal $3bn at the end of the period, it reckons.
UK share #3: Prudential
Like that of Big Yellow, Prudential’s share price is down by mid-single-digits since 1 January. The FTSE 100 life insurer has regained acres of ground in recent months, but at current prices it still looks too cheap to miss. Today, this UK share trades on a P/E ratio of just 9 times for 2021.
It’s a reading that fails to reflect its immense profits opportunities in Asia. Soaring product demand in these emerging regions have turbocharged Prudential’s bottom line over the past decade. Covid-19 disruption is likely to have whacked the brakes on such impressive profits growth.
But growing wealth levels and rising populations mean The Pru’s long-term investment case remains in tact. One final thing. The Footsie firm’s decision to hive off its Jackson division in the US will allow it to double-down on Asia and exploit these huge markets to the maximum.
The post Top UK shares for 2021! 3 hot dip buys I think could help me get rich and retire early appeared first on The Motley Fool UK.
Royston Wild owns shares of Prudential. The Motley Fool UK has recommended Avon Rubber and Prudential. 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