I think the best UK shares to buy now are recovery plays. And that’s where I’d invest £5k of my money today.
There are plenty of options available. Many companies have suffered severe revenue and profit declines over the past 12 months. I think most of these businesses will not only be able to return to pre-Covid sales levels, but they could also grow past these levels.
As such, here’s a selection of the stocks I’d buy right now.
UK shares to buy now for the recovery
As highlighted above, my investment strategy is based on buying companies that could report strong growth from a low base over the next few years.
This strategy isn’t going to be suitable for everyone. Some companies may never recover to pre-Covid levels of sales and profits. Some business may even struggle to survive as the economy re-opens. Nothing is ever guaranteed in the world of investing.
That said, I think some of the best shares to buy now for the recovery are hospitality businesses, such as J D Wetherspoon and Hollywood Bowl.
Judging by the scenes we’ve seen over the past two or three weeks, UK consumers have been happy to start spending again at hospitality venues as they’ve reopened. I think that suggests the outlook for these two businesses is bright. That’s why I’d buy both stocks for my £5k portfolio.
However, another lockdown could set their recoveries back months so, once again, these are high-risk investments.
Building the recovery
I’d also buy shares in Galliford Try and Kier for my recovery portfolio. Both of these organisations have struggled with significant headwinds recently, and they both have weak balance sheets.
These aren’t the sorts of companies I’d usually look to add to my portfolio. However, I think these are some of the best UK shares to buy now as recovery plays.
The construction sector has proven to be incredibly resilient over the past 12 months. Over the next few years, public and private spending on construction is set to increase, which could help these companies pull themselves up from their past troubles.
This is the primary reason why I’d add these two companies to my portfolio today. Investing in recovery plays such as Galliford Try and Kier can produce high returns, although it’s not guaranteed.
In fact, both of these companies are incredibly high-risk investments. If the UK economy were to slump into another recession, both groups could run into serious financial problems. Higher costs could also be a significant headwind to growth.
Considering these challenges, I’d still buy both companies for my £5k portfolio as I still think these are some of the best UK shares to buy now. However, I’d limit my exposure to make sure I wouldn’t be badly affected if something did go wrong.