The Bitcoin price rise over recent months may have made the virtual currency seem like a more attractive option than buying UK shares to some investors. After all, it has outperformed most FTSE 100 and FTSE 250 stocks due to its 170% surge since the start of the year.
However, the outlook for Bitcoin continues to be very risky. While stocks also face challenges, their track record suggests they offer less risk than the virtual currency, as well as long-term growth potential.
As such, these five shares could be worth buying in 2021. Over time, they could double an investor’s initial outlay.
Recovery potential relative to other UK shares
While UK shares such as Rolls-Royce and Glencore have made strong gains in recent weeks, they continue to trade considerably below their five-years highs. As such, there may be scope for share price recoveries as the world economic outlook improves.
Glencore’s recent updates have shown it’s adapting its business model to a global green recovery by pivoting to low-carbon assets. This could create a more sustainable business with stronger profit growth in the long run. Its diverse range of assets and the diversification brought by its marketing business may mean it has a relatively strong market position.
Meanwhile, Rolls-Royce could outperform other UK shares in the coming years. Air travel is likely to gradually return to pre-coronavirus levels. Meanwhile, a forecast rise in global defence spending could create opportunities for the business. Its plans to reduce costs and improve liquidity could help it to overcome short-term risks. Not to mention from a likely long-term stock market recovery too.
Solid market positions to outperform Bitcoin
Other UK shares that could outperform Bitcoin in the long run include Morrisons, Unilever and AstraZeneca. The three companies have strong market positions that may enable them to grow profitability at a relatively fast pace. For example, Unilever has a loyal customer base, AstraZeneca has a solid pipeline and Morrisons is expanding its digital presence.
They also have solid financial positions that reduce their short-term risks. Meanwhile, their plans to invest in established growth areas could lead to rising profitability in the long run.
A diverse portfolio of FTSE 100 and FTSE 250 stocks is likely to have less risk than Bitcoin. The virtual currency faces threats such as limited infrastructure and regulatory challenges that could cause investor sentiment to weaken.
Meanwhile, the FTSE 100 and FTSE 250 have produced annualised total returns of around 8% in the past 20 years. A similar rate of growth from UK shares would lead to a doubling of an initial investment over a period of nine years.
The likes of Glencore and Rolls-Royce are still trading at low prices, and Unilever, AstraZeneca and Morrisons have clear competitive advantages. So I think an investor could outperform the market and double their money over a short timeframe in the coming years.