As a long-term investor, I don’t obsess about what’s happening now. So despite the doom and gloom we see in the news today, I look ahead to see how the UK shares I’m considering could fare in the future.
I want these businesses to not only survive, but also thrive on the other side of a possible recession. So how do I find the right shares?
Top UK shares
First, I’d consider strong brands that have been established for many years. One company with over 200 brands is drinks giant Diageo (LSE:DGE). With sales in more than 180 countries, this business is truly global.
The market opportunity is expanding, particularly in emerging markets where drinks penetration still lags western countries.
Diageo has also successfully moved consumers towards more premium options. As such, more than half of its sales are now made from these pricier products.
Although a slowing economy could affect drinks sales, I reckon it’s diversified enough to withstand any shocks. It’s a resilient business and I’m confident its brands can thrive for many years, if not decades.
With a price-to-earnings ratio of 22x, it doesn’t seem particularly expensive for this type of business either.
Gaming pays
Another UK share that I’d consider buying is fantasy miniatures maker Games Workshop (LSE:GAW). It holds intellectual property on many games and characters. That has allowed it to expand from in-person games to online versions.
Its games are said to be highly addictive to those that play. This characteristic allows the company to operate with chunky profit margins and double-digit return on capital employed.
Currency, staffing and transport cost pressures have impacted the business this year. And if these costs remain elevated, they could continue to dent profits over the coming months.
But as I look to the future, I see a strong business with high-quality attributes, a solid customer base and competent management.
I’d definitely consider buying this share for my long-term Stocks and Shares ISA.
Bumper profits and a solid pipeline
One of the few UK shares that I can see thriving throughout a recession is pharmaceuticals giant Astrazeneca (LSE:AZN). With a market capitalisation of £173bn, it’s now the largest company in the FTSE 100.
But it wasn’t always at the top of the pack. Its CEO, Pascal Soriot, has transformed the business over the past decade.
With a keen focus on research and development, it now spends more than £8bn in this area. That’s around 26% of its total sales going towards R&D, one of the highest figures among its peers.
The strategy seems to be working. Astrazeneca reported record sales of $37bn for 2021. That’s a 40% jump from the prior year. Bumper profits were driven by a string of new drugs.
In this industry there’s always the risk that a competitor develops a superior product. A drug can reach the end of its patent lifespan too, giving competitors a chance to enter the market.
Overall though, the future looks bright for this healthcare giant. It has 183 projects in its pipeline that could drive further growth. With a strong balance sheet and competent leadership, I’d be happy to buy these UK shares today.