2 UK shares to buy today in a Stocks & Shares ISA

The world is a very different place compared with this day one year ago. Covid-19 was spreading rapidly throughout Europe, but the alarm was relatively low in the UK.

Fast-forward to today, and after several lockdowns and the UK economy shrinking a record 9.9% during 2020, many might think that opportunity in the stock market is limited.

I still see a lot of value in buying UK shares in a Stocks and Shares ISA, though. A Stocks and Shares ISA allows me to invest my money in the stock market, rather than having it sit as cash in my bank account.

UK citizens have an allowance of £20,000 for the tax year in which they can receive tax breaks. While there is more risk involved than in a Cash ISA, Stocks and Shares ISAs can be a good way to get started in the stock market.

But what UK shares would I add to my ISA today? While the FTSE 100 is down in the last 12 months, I think these three companies could represent a buying opportunity.

Bargain hunting

One UK share which seems to have benefited from the impact of the pandemic is B&M European Value Retail (LSE:BME). The discount store owner announced a special dividend payout of £200m in January, working out at 20p a share.

That payout was in response to revenue growth of 22.5% in the group’s third quarter. The general retailer’s sales have surged since Covid-19 hit, as its shops remained open as an essential goods supplier. 

B&M has also seen sales increase as most of its stores operate in retail parks as opposed to town centres, which have been adversely affected.

That said, the shares have already risen 48% over the last year and the risk is that they are close to their peak. B&M is also at risk from rising inflation as its margins can be hurt by distribution costs. 

I’d still buy B&M, however, as its outlook remains strong. I think budget retail is only like to improve as the financial fallout of Covid-19 continues. 

Spirited recovery

Beer and spirits maker Diageo (LSE:DGE) is another UK share I’d add to my Stocks and Shares ISA at the moment.

While ongoing restrictions on the hospitality sector have had a major impact on sales of beer, Diageo’s spirit sales have gone up in key markets due to good off-trade performance.

My feeling is that pubs and restaurants will start to creep open in the months ahead as the vaccine rollout gathers pace. I think this will ultimately return the Guinness owner to its pre-Covid-19 price of around 3,200p.

There is a risk that further mutations of the virus could lead to further closures in 2020 and beyond. That could hurt the Diageo shares depending on the severity of the restrictions. 

For now I see enough upside from the current 3,035p price to add Diageo to my Stocks and Shares ISA.