The aftermath of a stock market crash provides an ideal buying opportunity for investors. With many share prices still depressed as a result of the sell-off, there’s an opportunity to go on a bargain hunt. What’s more, numerous companies are trading below their average historic valuations, offering a wide margin of safety for those investing today. With that in mind, here’s my verdict on the best UK shares to buy now.
A second stock market crash
Before going any further, it’s important to note that a wider safety margin doesn’t exclude the possibility of a second market crash. In fact, another major sell-off could be lurking just around the corner. Risks such as a second wave of Covid-19 infections and rising tensions between the US and China are reminders that in the short term, the stock market looks set to be plagued by volatility.
Furthermore, many analysts are worried about inflated asset prices amid such bleak economic conditions, especially in the US. With the NASDAQ 100 recently reaching a new all-time high in the middle of a global pandemic, it’s no wonder some are questioning the viability of the recent bull run.
However, regardless of a second market crash, I’d stick to investing in the best UK shares available on the market. Buying high-quality companies and holding them for the long term is a tried and tested way of building capital. After all, nobody can successfully time the market repeatedly. In addition, holding for the long term allows you to ride out the temporary market downswings and fuels the process of compound returns.
The best UK shares to buy now
When on the lookout for top shares to invest in, it’s vital to keep your chosen strategy in mind. For example, if you’re investing for income, you’ll want to direct your focus towards well-established businesses with healthy cash flows. Such companies often generate a sizeable and sustainable dividend. I’m thinking of firms such as GlaxoSmithKline, Imperial Brands Group, and National Grid. Each boasts a bulky yield and has plenty of cash to cover pay-outs for the foreseeable future.
If your aim is to accumulate as much capital as possible via a growth investing strategy, you’ll want to look out for companies that are growing their earnings and expanding operations rapidly. Take companies such as Just Eat and Ocado as examples. Moreover, targeting up-and-coming small-cap stocks is an ideal way to invest for maximum growth. After all, these are likely to be the businesses with the most growth potential. Think of Boohoo and Games Workshop, for instance. Both have successfully grown their earnings over recent years and, in my view, have plenty left in the tank.
Ultimately, focusing your attention on the best UK shares could prove to be your path to financial freedom. Through a combination of share price appreciation and dividend payments, your prospects of building serious capital greatly increase.