The best UK shares to buy now are likely to differ depending on an investor’s own situation. For example, passive income investors are likely to place much greater value on dividend shares than an investor who’s focused on building a nest egg over the next couple of decades.
However, a number of stocks could be more likely to deliver high capital returns in the coming years than others. With that in mind, here are four shares that could realistically produce 100% returns in the long run from what appear to be low prices at the present time.
Unpopular companies may be among the best UK shares to buy now
Even if an investor avoids seeking to unearth the best UK shares to buy now and instead aims to track the index, they could double their initial investment. For example, the FTSE 100 has produced annualised total returns of around 8% since inception. This means that over a nine-year period an investment in a diverse range of large-cap shares is likely to have doubled in value in the past.
However, a strategy of buying unpopular shares while they trade at low prices could increase the chances of making 100% returns. Therefore, companies such as BP and Barclays could currently prove to be very attractive. Both are struggling with tough operating conditions caused by coronavirus. But they also have sound strategies that could lead to growing profitability in the coming years.
For example, BP’s plan to shift resources to low-carbon assets could make it one of the best UK shares to buy now. It may lead to growing profitability, which could mean its 5.5% dividend yield undervalues the business.
Similarly, Barclays has improved its financial efficiency through cost reduction. That saw its cost/income ratio declined by three percentage points to 59% in the most recent quarter. Its price-to-earnings (P/E) ratio of 11 may undervalue the bank’s prospects.
Identifying sectors with recovery potential
Some of the best UK shares to buy now may also be companies such as Taylor Wimpey and British Land. They have suffered from significant disruption within their industries. What’s more, they may report disappointing performances this year due to lockdown measures.
However, with British Land trading at a 30% discount to its net asset value right now, it appears to offer a wide margin of safety. Its financial position also suggests it can adapt to changing trends within the commercial property sector.
Taylor Wimpey’s P/E ratio of 11 indicates that investors may have factored in many of the risks facing the housing industry. Low interest rates and the reopening of the economy may strengthen its financial performance over the coming years. This may lead to market outperformance and a greater likelihood of a doubling in its share price.Â