UK share markets could well be in for more wild turbulence in 2021. It’s hoped that the global economy will recover strongly from the Covid-19 crisis and that corporate profits will boom. Any delays to the mass rollout of a coronavirus vaccine could put paid to these hopes, however.
UK share investors also need to consider the possibility of Brexit-related chaos from 1 January. Things could be particularly bad if the UK falls out of the European trading bloc on a no-deal basis, too. Other things for share pickers to consider include the possibility of fresh trade wars between major economies.
Share pickers need to be extremely careful in the current climate, then. The profits outlooks for many UK shares remain quite fragile and corporate balance sheets remain under immense pressure following the Covid-19 outbreak last winter. But it doesn’t mean that investors like myself need to stop buying shares entirely.
3 top UK shares to retire on
Indeed, there are plenty of UK shares that should deliver enormous shareholder returns whatever happens to the global economy in 2021. Here are five top-quality companies I’m thinking of buying for my own Stocks and Shares ISA today. I think they could help me retire rich.
#1: Softcat
Regardless of the macroeconomic environment one thing is for certain: in a post-Covid-19 world, demand for flexible working solutions is set to boom. And this will benefit providers of specialised IT services like cloud computing systems and cyber security. I’d buy shares in multi-services provider Softcat to ride this train. A report from Researchandmarkets.com suggests that the cloud computing industry will grow at an annualised rate of 17.5% over the next five years and be worth $832bn by 2025. Expect profits to rocket at this particular UK share this decade, then.
#2: Hargreaves Lansdown
Investment services giant Hargreaves Lansdown has a long record of annual earnings growth behind it. This is in large part because Brits have become happier to invest their hard-earned cash in stocks in recent years. The explosion in the number of people using Stocks and Shares ISAs over the past decade is perfect evidence of this. And crucially for this FTSE 100 firm, Bank of England interest rates are likely to remain at rock-bottom levels for years to come. This means people will keep searching for better returns than traditionally popular cash accounts offer.
#3: Big Yellow Group
Self-storage is one of the fastest-growing areas of the commercial real estate sector. And there are plenty of reasons to expect the market to keep growing despite the uncertain economic environment. A strong housing market should support self-storage providers, for example, as should a buoyant e-commerce market which is causing online retailers to scramble for extra space. I’d buy Big Yellow Group stock to ride this trend. This UK share has more than 100 sites spanning the length and breadth of the country. And it has exceptional cash generation to aid its development pipeline and keep growing its location base.