Two companies that immediately sprang to mind were index titans Unilever (LSE: ULVR) and Diageo (LSE: DGE). Both are in the top five largest companies by market capitalisation within the FTSE 100 index.

With that in mind, here’s a closer look at why I think they’re among the best UK shares to buy for my investment ISA.

A global reach and much-loved brands

First up, I’m going to discuss Unilever. The multinational consumer goods company is a real industry giant. In fact, its many brands are household names across the world.

It wouldn’t be going too far to say that Unilever has a truly global reach, which is a quality that has enabled the company to weather the pandemic storm reasonably well over the past year.

Furthermore, exposure to hygiene products and in-home foods helped offset weaker sales growth in beauty and personal care products throughout last year. This resulted in a 1.9% increase in full-year underlying sales.

However, there are tangible risks ahead for the company to navigate. For instance, as long as lockdown restrictions remain in place, sluggish sales growth in the sectors that rely on the economy opening up will hold back the group’s potential.

Furthermore, it’s possible that the rising presence of smaller brands and cheaper own-brand options could threaten growth over the long term, potentially weakening the loyalty of Unilever’s consumer base.

Nevertheless, I’m confident that the sheer size and reach of Unilever will be enough to ensure the group can reaffirm its position as a market leader.

Not to mention the growth prospects arising from the company’s business rejuvenation, which will include the sale of the tea business in developed markets.

Thus, for the time being, my focus is on whether or not Unilever can achieve an attractive level of growth over the long term.

What’s more, since I believe the potential benefits outweigh the risks, I’m confident Unilever is one of the best FTSE 100 shares I could add to my Investment ISA today.

Emerging markets exposure

The second company I’d buy inside a Stocks and Shares ISA is multinational alcoholic beverages business Diageo.

After a rough period throughout the pandemic, I’m confident that the rising prospects of relaxed lockdown restrictions and the reopening of the economy at home spell good news for the group.

After all, the likely boom of the hospitality business will certainly benefit Diageo’s share price.

However, it won’t be plain sailing. The group carries a substantial amount of debt, which poses a tangible risk if future lockdowns remain a possibility. Furthermore, performance in developed markets has been lacklustre in recent years.

That said, increased exposure to the growing middle classes within emerging markets could prove to be a catalyst for further growth if developed markets become less lucrative.

Ultimately, with big brand names such as Gordon’s, Guinness and Johnnie Walker, I think Diageo is well-positioned to stage a strong post-pandemic recovery.

In my eyes, it ranks alongside Unilever as one of the best FTSE 100 shares I could buy today.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

In most cases, this required searching for companies that were well-positioned to navigate – and even profit from – widespread lockdown restrictions. Think Ocado, ASOS and Bohoo.

For the most part, these turned out to be e-commerce and tech stocks. After all, they were able to capitalise on the sky-rocketing use of online retail.

Nevertheless, lockdown restrictions will ease over the coming months and the vaccination rollout is well under way. With that in mind, I’ve been tracking what the top fund managers doing to position themselves for the post-Covid re-opening. I’m hoping to pick up some ideas for my own portfolio.

Increased appeal of post-pandemic recovery plays

With the government-imposed lockdown restrictions being relaxed, attention has shifted away from volatile tech stocks and towards lucrative cyclical recovery plays.

In a recent podcast, manager of the Invesco Perpetual UK Smaller Companies (LSE: IPU) investment trust, Jonathan Brown, outlined how he was increasing his exposure to cyclical shares in light of vaccine developments.

Brown has been purchasing pub shares Mitchells & Butlers and Fuller Smith & Turner, as well as snapping up The Gym Group.

Even with the share price rebounds of many cyclical stocks, it’s clear that fund managers think there’s plenty of value still out there.

However, there are many tangible risks ahead for cyclical stocks, including the potential for future lockdowns. Furthermore, a dent in the supply of vaccines would certainly prolong and disrupt the process of opening up.

Don’t rule out the lockdown winners

Therefore, in spite of the increased appeal of post-pandemic recovery plays, it would be unwise for me to rule out last year’s star performers.

For example, AXA Investment manager, George Luckcraft, highlights that despite the rollout of the vaccination programme, the working from home trend looks set to continue throughout 2021.

Many high-profile companies have already announced that working from home is here to stay. What’s more, the concept appears to have greatly increased in popularity among workers over the period of the pandemic.

As such, Luckcraft is hedging his bets that households will continue the spend more money on home improvements.

This presents an opportunity for DIY and home furnishing companies, many of which Luckcraft believes remain undervalued.

As a result, the AXA Framlington Monthly Income fund continues to throw its weight behind retailers such as DFS Furniture. In addition, companies such as ScS and Topps Tiles are also holdings within the fund.

However, household finances have taken a big hit from the pandemic. So I think there’s every possibility that home improvements might not be a priority as the economy opens up.

Staying in it for the long term

Either way, fund managers standing by their long-term buy-and-hold strategies remain well-positioned to have another successful year.

After all, ignoring short-term volatility is key if I plan to realise a serious return in the long run.

With that in mind, I’m keeping my eye on a mixture of both cyclical plays and last year’s winners in order to determine the best UK shares to buy for my portfolio.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS, boohoo group, Fuller Smith & Turner, Ocado Group, and The Gym Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

When it comes to identifying the best shares to buy and hold for the long term, there are a few things I need to consider.

Do I want to target to growth stocks? Do I want to invest for income? Or do I want to implement a value investing strategy?

You may be asking why such questions are even necessary, but it’s often been the case that different periods in the market yield varying degrees of success for value and growth stocks.

For example, growth investing has long been thought to be a superior strategy to value investing. Will it stay that way forever?

The appeal of UK value stocks

Well, nobody can answer that question for sure. Nevertheless, last week, a Financial Times article outlined why UK value stocks could be the trade of the decade.

After the outbreak of Covid-19 and Brexit uncertainly, the article points out that many British stocks are compelling. That’s even after the rebound.

What is more, as many of their US counterparts led a strong bounce back, UK shares were seemingly left behind.

While concerns such as Covid-19 and Brexit remain tangible risks even today, my focus is on the long-term outlook. A combination of the mass rollout of vaccination programmes and post-Brexit trade deals leads me to believe that in the long run, UK equities should remain an appealing proposition.  

With valuations comparably lower relative to other developed world markets, UK value stocks could present a lucrative opportunity for me to realise some serious gains over the coming decades.

What should I be looking out for?

Deciding to implement a value investing strategy is the easy part. Next, I need to determine which UK stocks satisfy the criteria and represent worthwhile investments.

In most cases, this means looking out for companies whose share prices represent a bargain.

That’s not to say that I should be buying shares simply because the company’s valuation has fallen. After all, a company may be in serious trouble and in danger of going bust.

Rather, I need to be on the hunt for companies whose shares appear to be trading below their intrinsic value.

With that in mind, I pay close attention to key metrics such as the price-to-earnings ratio (P/E), debt-to-equity ratio (D/E), and the price-to-book ratio (P/B).

Studying each of these measurements should enable me to paint a clear picture of whether the market appears to have undervalued a certain stock.

One UK stock on my watchlist

In my eyes, one British company that satisfies this criteria is Aviva. 

The multinational insurance company trades on a forward P/E ratio of around 7 and boasts an attractive dividend yield of 6.8%.

Making significant headway in its strategic restructuring, the company beat last year’s market expectations in what was a successful 2020. As such, the company appears well-positioned to carry this momentum forward throughout 2021.

That said, as my colleague Edward Sheldon points out, Aviva lacks a clear competitive advantage, which could inhibit its ability to outperform its competitors over the long term.

On the whole, however, Aviva shares appear undervalued in my eyes, explaining why they’re firmly on my watchlist of UK value stocks to buy.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Having delivered a stellar return in recent years, the popular investment trust, which is managed by Baillie Gifford, has been a disappointment in recent weeks for its poor performance.

Throw into the mix the announced retirement of one of its star fund managers and things could begin to look even more gloomy.

With that in mind, how worried should I be in regard to the future outlook for SMT?

Explaining the sell-off

Baillie Gifford’s flagship investment trust has been a much loved vehicle for capital growth for many years. Investors seeking global exposure to some of the world’s best companies have long flocked to it.

Some of the trust’s top holdings include global titans such as Amazon, Tencent and Alibaba. Not to mention exciting growth stocks like Tesla and NIO.

Following an outstanding performance throughout 2020, punters continued to pile in until a dramatic drop in price occurred last month.

Partially accounting for the fall was a widespread sell-off in volatile tech stocks, particularly high-growth US ones.

This has come about as a result of a few factors. One includes the increased appeal of cyclical recovery plays in light of the mass rollout of Covid-19 vaccination programmes.

Another concerns worries over increased inflation prospects, which also appear to be impacting the bond markets.

Either way, it’s important to note that even with the 20% fall in price, SMT’s valuation is still double what it was a year ago.

Moreover, with the trust committed to a long-term buy-and-hold philosophy, I’m not particularly concerned by recent lacklustre performance.

The impact of Anderson’s departure

That said, the departure of James Anderson is a bitter pill to swallow. Anderson has become synonymous with the success of SMT over recent years after an impressive 21 years managing the trust.

His phenomenal record of identifying the companies of the future has consistently delivered lucrative returns to investors.

Whenever a top fund manager decides to move on, I consider several potential long-term implications. Will the trust be able to sustain such a strong performance in light of its manager’s departure? And are there any obvious alternatives comparable in nature that may now present a better opportunity?

Regardless, when it comes to SMT, I’m not sure I have much cause for concern. Tom Slater, who has been involved with managing the trust since 2015, will take over running SMT after Anderson’s departure.

Having been immersed in the trust’s investment strategy for a while now, Slater is well-positioned to take up the mantle.

My final verdict

Nevertheless, Slater has gigantic shoes to fill and there are certainly tangible risks ahead. For example, with Anderson deciding to leave after delivering 106% share price growth in a year plagued by a global pandemic, expectations will be high regarding the trust’s continued phenomenal performance.

Furthermore, bullish market exuberance in relation to tech stocks can’t go on forever. That presents yet another potential risk for a trust that so heavily relies on lucrative-but-risky investments.

All things considered, I’m confident that with a robust long-term strategy and continued solid management, SMT still represents a worthwhile buy for my portfolio.

In fact, I’d look at the recent sell-off as an opportunity to load up on the shares at a discounted price.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Oil supermajor BP (LSE: BP.) was the most frequently bought UK stock on the popular investment platform.

It’s not too difficult to see why either. During the month of February, the BP share price performed strongly.

Nevertheless, nobody should be investing in a company simply because its shares have climbed. With that in mind, I’m going to take a closer look at whether BP shares could be among the best for me to buy now.

A bullish oil and gas industry

The first thing to note is that it’s not just BP that has been profiting handsomely over recent weeks. The oil and gas sector as a whole has enjoyed bullish upwards momentum.

Undoubtedly, this has been helped by the strong recovery of oil prices, which have returned to pre-pandemic levels.

More importantly, however, recent gains have been sustained by OPEC’s decision to hold their combined output unchanged following talks last week.

Most analysts had expected the world’s major crude producers to coordinate an increase in output. That’s especially given the strong recovery in prices and an oil market that appears to be stabilising.

Nevertheless, the group decided not to flood the market with new oil, sending prices to a 14-month high.

The implications for BP

While the world’s oil consumers probably think differently, high prices come as great news for BP. The industry titan needs an oil price of $42 per barrel to break-even. As of the time of writing, the Brent crude price is around $69.

This means that BP can begin to pay down its debt and start to strengthen its finances. Additionally, the oil supermajor is seeking to further slash its operating costs to target a $35 per barrel break-even price.

However, rising oil prices alone won’t be the silver bullet for BP’s recovery. With debt currently amounting to a whopping £63bn and full-year revenues down 35% year-on-year, there are tangible risks ahead.

To me, it looks as if a combination of sustained higher oil prices and lower operating costs will be required to ensure future success. That’s by no means a straightforward task, with one half of the plan remaining completely out of BP’s control.

Furthermore, diversification towards renewables will be an immensely costly process. It’s one that will rely on prolonged higher oil prices to fund investment, which is by no means guaranteed.

All in all, BP’s prospects hinge on the unpredictable and often volatile nature of oil prices, which could make the coming months and years tricky for the group.

My final verdict

For now, however, the world continues to run on oil and gas, giving BP ample time to diversify towards a potentially lucrative renewables focus.

Moreover, it remains comfortably above its oil price target for now. This means the group can begin paying off its debt and continue implementing its long-term renewables strategy.

As such, I’m confident BP shares may not be the very best buys out there, but I see them as among the best for me to buy today.

While success depends largely on the price of oil, I think the company’s impressively low operating costs and positive renewables strategy could prove to be catalysts for future growth.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Nevertheless, while buying a FTSE 100 index tracker for my portfolio may not give me explosive growth, I’m confident that seeking out the index’s high-quality individual companies to invest in is a wise long-term investment strategy for me.

As such, I’m going to discuss two FTSE 100 shares that I think are among the best I can buy now and hold for 20 years.

A long-term play with even more upside potential

My first pick is Ocado (LSE: OCDO). It has witnessed blistering share price growth over previous years. In many ways it has been the success story of the pandemic. The online grocery retailer is successfully leading the way in an industry that looks set to dominate in the future.

Ocado’s high-tech warehouses are decked out with state-of-the-art robotic systems. These robots help to process a vast number of orders each week. Furthermore, with the pandemic turbocharging the shift towards online shopping, I think Ocado is well positioned. 

This reflects in the company’s recent financial performance. Earlier in the month, Ocado reported a 32.7% increase in group revenue, adding to the already outstanding performance of the company over the last few years.

However, it’s certainly not all plain sailing. My principal concern is the cost of expansion. Capital expenditure has rocketed as the group pours significant sums of money into funding its Customer Fulfilment Centres globally. Similarly, in November last year, the company acquired two robotics companies for a hefty price tag.

Both of these investments come with substantial costs and it’ll take years to discover whether or not they’re worthwhile. Furthermore, the cost of investment caused the group to post an overall loss before tax of £44m in 2020.

Nevertheless, I remain confident that it’s exactly this kind of investment that will power Ocado’s growth moving forward. In fact, I’m actually encouraged to see such heavy investment, particularly as it should continue increasing operational capacity and revenues. Therefore, I’d buy and hold for the long term. I expect strong share price growth could deliver me favourable returns over the next 20 years.

A future-proof business?

I have security software company Avast (LSE: AVST) firmly on my watchlist too. Operating with two segments, Avast offers consumer products and products for small and medium businesses.

With the pandemic adding to society’s reliance on technology, finding ways to protect personal and business data online is of paramount importance. This is where Avast steps in, offering cybersecurity protection through a range of solutions.

Earnings have increased at an impressive rate and the company maintains an impressive roughly-50% free cash flow margin.

However, as my colleague Royston Wild pointed out, hackers are becoming increasingly sophisticated and state-sponsored attacks are on the up. As such, a single high-profile failure of Avast’s cybersecurity framework could deal a fatal blow to sales and consequently, the company’s valuation.

All eyes will remain on whether or not Avast can continue to successfully navigate the dynamic nature of the cybersecurity industry.

Even so, with analysts at Berenberg outlining how Avast “offers a rare combination of growth and value”, I see the benefits outweighing the risks. I’d buy for my portfolio and hold for as long as possible.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Avast Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Just look at the likes of ASOS, Naked Wines and ITM Power. All three have experienced monumental share price growth over the last few years. With that in mind, I’m going to discuss two AIM-listed shares that I think are among the best I could buy for my long-term investment portfolio in 2021.

Operating in an industry with a bright future

First up on my watchlist is video game services company Keywords Studios (LSE: KWS). Operating in one of the few industries to have benefited from widespread lockdown restrictions, the company has profited from the increase in demand for gaming content.

Last month, Keywords outlined how it expects a 14.2% increase in full-year revenues. Furthermore, underlying profit before tax looks set to rise 34.5% year-on-year. Both figures are slightly ahead of previous guidance, demonstrating a stellar business performance.

That said, the company’s shares come with a significant price tag. A forward P/E ratio of around 63 means it will need to deliver exceptional earnings growth. That’s if it’s to deliver a respectable return to investors. To me, that represents an extremely difficult task and certainly constitutes a tangible risk looking into the future.

Furthermore, Keywords services are substantially labour-intensive, meaning margins will remain a concern. If weaker margins happened to feed through to weaker cash flows, the company’s finances could come under significant pressure.

However, with the recent launch of next generation games consoles (PlayStation 5 and Xbox X series) expected to boost demand over the coming years, I think Keywords looks set to continue its momentum moving forward.

Not to mention the group’s savvy acquisitions strategy, which has been a major driver of growth in previous years. If the company can continue hoovering up businesses at reasonable valuations, I’m confident it should significantly add to its ability to meet new content demand over the coming years.

Making the most of the demand for digital privacy

The innovative AIM-listed Kape Technologies (LSE: KAPE) is well placed to meet the rising threat of cyber attacks. The digital security software provider focuses on protecting consumers and their personal data through a subscription-based platform.

Kape has a solid record of revenues and earnings growth over the previous few years and operates a strong business model that has the potential to capitalise on a mammoth market for digital privacy. To illustrate, full-year revenue in 2020 is expected to be up a staggering 85% year-on-year.

However, despite my optimism, there are several risks to watch out for over the coming years. Perhaps most significantly, the group’s subscription-based business model will rely on strong customer retention rates. Not to mention the ability to increase the customer base.

To do this, the group must ensure its service provision remains of exceptionally high quality. That’s particular the case as it seeks to expand operations further. Nevertheless, Kape appears to be successfully consolidating its place in the consumer privacy and security market.

Ultimately, with the company stating it’s now well-positioned to become a “go-to multi-product consumer cybersecurity vendor”, I’m excited to see what the future holds.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Keywords Studios. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

2021 promises to be an interesting year for the stock market. Could a vaccine-fuelled economic recovery be a catalyst for a rally in share prices? Or could another major sell-off be lurking just around the corner? The truth is that nobody really knows.

Nevertheless, with a swift coronavirus vaccine rollout underway and the Bank of England forecasting a rebound for the economy, there’s reason to be optimistic.

With this in mind, I’m considering several shares to buy for my investment portfolio. Today, I’d like to discuss two of them.

Profiting from the potential for pent-up demand

First up on my watchlist is the UK’s largest online car sales platform, Auto Trader (LSE: AUTO). With low business costs, the company is usually able to generate shed loads of cash. But that’s conditional on strong sales growth. And it’s important to note that lockdown restrictions pose a serious challenge to companies like Auto Trader.

As the UK entered its third national lockdown, Auto Trader was again forced to waive its fees. Evidently, this will have a tangible negative impact on revenues. Thus, if lockdown restrictions remain in place for a while longer, the company could lose a significant amount of money.

Furthermore, the prospect of navigating potential Brexit uncertainty poses a further risk for the UK car market. If used car transactions suffer as a result, Auto Trader would certainly feel the pressure.

However, with the possibility of a strong economic recovery starting in 2021, I’m optimistic the online car dealership has a bright future. 

What’s more, the analysts at Hargreaves Lansdown point out that underlying demand appears to be strong. With new car registrations at a 30-year low, I think there could be significant pent-up demand waiting to be released once restrictions are lifted.

Ultimately, a combination of a healthy balance sheet, ample liquidity and a dominant market position explain why I’ll be keeping a close eye on Auto Trader in the weeks and months to come.

Making the most of a strong economic recovery

One sector that’s likely to welcome a robust economic recovery is the housebuilding industry. As such, one housebuilder on my watchlist is Barratt Developments (LSE: BDEV).

As one of the largest property development companies in the UK, Barratt seems to have emerged from the crisis in good shape so far, contrary to most expectations.

Earlier in the month, the housebuilder reported a 10% rise in revenue in the first half, with the increase fuelled by a record 9,077 completions and a slight rise in average selling prices. As a result, Barratt plans to pay 7.5p interim dividend.

That said, the end of the stamp duty holiday and Help to Buy scheme is fast approaching. So I fear that demand could level off, posing a significant risk to the fortunes of housebuilders in the months and years to come.

Furthermore, rising interest rates would be a damaging blow to Barratt, but I’m not certain we’ll see that any time soon given the Bank of England’s efforts to stimulate growth in the wake of the coronavirus pandemic.

All things considered, the UK property market appears to be in good shape. As a result, I’ll be keeping Barratt Developments firmly on my radar. In my view, a forward price-to-earnings ratio of 17.5 is justified given my optimism for the year ahead.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Auto Trader. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The year ahead promises to be an interesting one for the stock market. While many analysts remain concerned about an imminent sell-off, others are far more optimistic. Some even believe we could be in for a strong stock market rally.

Either way, I’ll be keeping my eye on a handful of shares throughout 2021 to determine whether they represent worthwhile investments. Today, I’ll discuss two that I think are among the best to buy for my portfolio in coming year.

An exciting UK tech stock

Multinational IT infrastructure services company Computacenter (LSE: CCC) has expanded rapidly over the previous five years. Earnings growth has been outstanding, which is an indicator of a growth stock with solid potential.

Such growth has been reflected in its meteoric share price rise, which now stands around 195% higher than it was in 2016. That figure represents an annualised return of around 39%, well outperforming the FTSE 250 index.

Last year’s lockdown restrictions caused a boom in business for the IT firm, which saw revenues and profits rise substantially. In fact, in a recently released trading statement, the company reported an 8% increase in group revenue.

That said, it won’t be straightforward for the company to carry this momentum moving forward. Furthermore, the shares are on the expensive side, with a price-to-earnings ratio (P/E) of around 26.

However, the company’s essential IT services are in demand by businesses across the globe. What’s more, Computacenter has capitalised on this by completing recent acquisitions in the US and France.

With that in mind, I rate Computacenter shares a buy for my portfolio. To me, the company’s growth potential amply justifies the hefty price tag.

Making the most of market volatility

The second UK share I’m considering is CMC Markets (LSE: CMCX). I think the provider of online and mobile trading services has performed exceptionally over recent years  and could profit handsomely from a stock market rally in 2021.

Like Computacenter, CMC has witnessed its valuation skyrocket, rising by 231% in just two years. Despite this, the company’s shares trade on a forward P/E ratio of 13, which indicates an element of value in my eyes.

Last year, the company posted record first-half results as the Covid-19 pandemic boosted activity. What’s more, this strong trading performance shows no sign of letting up anytime soon. Last week, the online trading platform highlighted that full-year net operating income is set reach the upper end of market forecasts thanks to a continued strong performance.

However, CMC’s continued success will rely on attracting and retaining a high level of both retail and institutional clients, which could prove to be unachievable.

Nevertheless, CEO Peter Cruddas has stated that the company has a healthy range of projects in the pipeline, which could provide a catalyst for further growth in 2021 and beyond. As such, regardless of whether the stock market rallies this year, I’m confident CMC shares could provide a neat return. With that in mind, I’d buy and hold for the long term.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Among those particularly hard hit are the airlines. With passenger numbers down by around 90% at present, I’d be forgiven for seeing them as poor investment targets.

Nevertheless, I think many travel stocks – particularly the airlines – look very cheap right now. As such, I think they could be among the strongest gainers throughout 2021. Here’s why.

A vastly improving outlook for the airline industry

After months of doom and gloom from the pandemic, we finally have some good news on the cards. Namely, the international rollout of several Covid-19 vaccines. Unsurprisingly, the idea of a return to air travel has become a real prospect for 2021 and beyond.

Think of the pent-up demand for foreign travel and holidays, which has been brewing over the last nine months or so. Once it’s safe to do so, I expect a mass return to summer holidays, winter getaways and weekend retreats.

While there are plenty of obstacles to navigate along the way, it’s hard to deny the presence of a vastly improving outlook for the airline industry. However, a return to pre-Covid passenger numbers won’t come overnight. In fact, analysts warn it could take years and this will remain a challenge for travel-linked stocks.

Nonetheless, a steady increase in passenger numbers throughout 2021 and beyond is encouraging news for airlines and their finances.

What about the easyJet, IAG and TUI share prices?

Speaking of which, the toll on airline revenues is evidenced by the sharp fall in the share prices of companies such as easyJet, International Airlines Consolidated Group and TUI. The three companies have shaved around 40%, 36% and 31% off their respective valuations since the beginning of 2020.

Although since then, their share prices have been rising, all three remain a significant way from their pre-Covid valuations. This means there could be plenty of room for growth over the coming years. That said, it will be largely dependent on a swift recovery for air travel.

From November through to early December, I think we got an early glimpse of what an improving outlook for the airline industry could look like in terms of rising valuations. The easyJet, IAG and TUI share prices each rallied by around 80%, nearly doubling in the space of one month.

A potentially lucrative investment opportunity?

However, I think that rally was a little premature. After all, we haven’t yet witnessed a mass return of air passenger travel and there appears to be some way to go before the majority of the population is vaccinated. With that in mind, I wouldn’t rule out a potential pullback over the coming weeks and months.

In spite of this, I remain confident that the three share prices stand a strong chance of doubling in 2021 thanks to an improved outlook for the industry and the smooth rollout of the Covid-19 vaccination programme. I’d buy today and hold for the long term.

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Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.