The outlook for the global economy remains fraught with danger as the Covid-19 crisis rolls on. But does this mean I’ll stop buying UK shares in my Stocks and Shares ISA? Not a chance.
Here’s a British stock, and a soon-to-be-listed US share, that are on my buying radar today.
#1: All aboard!
There’s a variety of ways investors can ride the electric vehicle (EV) revolution. One is to buy shares in Arrival, whose IPO is slated for the coming weeks.
This business has its operations in rural Oxfordshire but it’s about to begin trading on the NASDAQ with a value of $5.4bn. It has racked up $1.2bn worth of orders for its buses and its light commercial vehicles. The first of these are due to roll off the production line in late 2021.
Data from Allied Market Research suggests that Arrival is about to enter a hugely-lucrative market. It reckons the electric bus market will be worth a whopping $31.5bn by 2027. This is up from $18bn in 2019.
There are obviously risks associated with investing in Arrival at the time of its IPO. Stock prices can be extremely volatile in the few months following listing. And the true value of a UK or US share might not be fully apparent until the market excitement dies down. Said company might not actually be worth as much as you thought when you first bought in.
There’s also the fact that getting all the information you need to make a sound investment decision isn’t always available pre-IPO. Only once Arrival goes public will the nuts and bolts of its operations be fully open for the public to pore over. And often only after a prolonged period do any warning signs often begin to emerge. Not that I’m suggesting that some hidden nasties will come out of Arrival down the road, of course.
#2: A cheap UK food share
Now Devro’s (LSE: DVO) operations might not be as exciting as those of Arrival. This UK share is a giant in the field of making sausage casings. But its humble operations don’t make it any less of an attractive share, in my opinion.
Rising wealth levels in emerging markets provide excellent long-term profits opportunities for Devro. It’s boosting the amount that people in these far-flung regions spend on more-expensive meat-based food products. The business already has sales offices and manufacturing plants in China. And further expansion in developing regions can be expected later down the line.
The rising popularity of plant-based diets on ethical and environmental grounds provides some risk to Devro’s long-term profits outlook. There’s no guarantee that demand for pork products specifically will rocket in the years ahead either. Right now beef and poultry are the fastest-growing meat segments in Asia, for instance.
But City analysts reckon the UK share will enjoy 8% annual earnings growth in 2021. This leaves it trading on a low price-to-earnings (P/E) ratio of just 12 times. With the business also boasting a 5.4% dividend yield, I reckon it’s a very-attractive stock.