Market appetite for UK shares remains stuck in the doldrums. The FTSE 100 and FTSE 250 actually receded over the summer as fear over Covid-19 and the global economy grew. As I type there are no obvious catalysts on the horizon that could blast UK share prices away from their 2020 lows either.
Okay, stock pickers need to be extremely careful when building shares for their portfolios. Corporate profits could remain under severe pressure in the short to medium term at least. There are plenty of UK shares whose weak balance sheets could cause them to go out of business entirely.
However, I donât believe that you and I shouldnât keep investing in something like a Stocks and Shares ISA. There are still hundreds of UK shares that should provide exceptional shareholder returns in the long run. And there are plenty of ways that investors can protect themselves from tricky near-term economic conditions.
2 top stocks for ISA investors
You can buy companies with strong competitive advantages (or “economic moats“, as Warren Buffett likes to call them). Investors can also buy UK shares with defensive operations like food producers, utilities providers, or general insurance companies. Profits for these types of companies tend to be stable whatever macroeconomic hiccups emerge. Furthermore, you can buy firms with exposure to fast-growing consumer trends that remain unaffected by Covid-19 and its severe social and economic consequences.
Here are two top shares Iâd be happy to buy for my own Stocks and Shares ISA. I think they have all the tools to make investors a fortune over the coming decade:
- Naked Wines is a top buy for a few of reasons. First, history shows us that alcohol sales actually rise, not fall, during tough economic times. This spells good news for this UK shareâs bottom line over the next couple of years. Secondly, this online-only retailer is well placed to ride the exploding popularity of e-commerce in the years ahead. Finally, Iâm excited by the terrific progress Naked Wines is making in the US (revenues there rocketed 20% in the last financial year).
- I believe that US streaming giant Netflix is another wise buy for the near term and beyond. Weak consumer spending around the world will encourage citizens to stay in and watch a movie instead of going out. So will the steady rise in Covid-19 infection rates that has emptied cinemas and prompted people to stream at home instead. And in the long term Iâm excited by the amount Netflix is spending to produce local-language content in emerging markets. As Hargreaves Lansdown notes: âthese geographies have a lot more growth potential than the mature US marketâ.
Making a fortune with UK shares
Netflix and Naked Wines are brilliant buys for British investors. But these are just a couple of top stocks packed with investment potential despite the poor economic outlook. The Motley Foolâs epic library of special reports can also help you dig out loads of UK shares that are too good to miss today. So do some research and get investing today.