When it comes to searching for UK shares to buy now, there’s a clear theme playing out in the markets. Many investors are buying the shares of businesses that have been depressed by the coronavirus pandemic.
And the prospect of economic recovery seems real now vaccines are rolling out to suppress the disease. But here in the UK, some analysts have been arguing the UK stock market has fallen behind others because of years of uncertainty regarding Brexit.
A potential double boost for shares
So, the twin prospects of recovery from the pandemic and fading concerns regarding Britain’s new independence could boost investor confidence in the coming years. And with that in mind, I’ve been shopping for shares that look set to benefit from those factors.
In the FTSE 250, I reckon communications services company WPP has strong business recovery prospects. City analysts following the firm have pencilled in a robust double-digit percentage snap-back in earnings for 2021. And with the share price near 814p, the forward-looking dividend yield is just below 4%.
Sticking with the mid-cap index, I’m keen to pick up a few shares in 4imprint. The company sells promotional products for businesses and organizations in the US, Canada, Ireland and the UK.
The growth story had been solid for several years before earnings took a hit from the pandemic. But City analysts reckon earnings will rebound as much as 200% and more this year. So, I think the firm has a good chance of getting growth back on track in the years ahead.
Meanwhile, the banking sector is known for its early moves both into and out of recessions. And we’ve seen good progress from London-listed bank stocks since last autumn. I’m inclined to add at least one bank to my portfolio now and it might as well be the favourite of many investors, Lloyds. Analysts expect a triple-digit bounce in earnings this year.
Holding on for years
Back in the FTSE 250, public services provider Serco appeals to me. Demand for the firm’s capabilities could increase as the UK and the other countries rebuild their economies after the pandemic.
Finally, I’d choose a house-building company such as Redrow. Analysts expect a big surge in earnings in the trading year to June 2021 followed by high-single-digit percentage growth the year after. But the forward-looking earnings multiple looks modest. With the share price near 531p, it’s close to eight.
My guess is that good news regarding the general economy and advances in the fight against Covid-19 will help bolster sentiment towards these five stocks. Of course, they aren’t the only shares worth buying right now, but I reckon each one is worthy of careful analysis.
I’d aim to buy and hold shares in companies like these while their underlying businesses improve. And that could mean a holding period of several years.