If I had £3k to invest today, I’d buy a portfolio of the pandemic’s winners. While some companies have seen a significant decline in revenues and profits due to the pandemic, others have prospered. And I believe these are the best UK shares to buy right now.
Changing world
The world has changed significantly over the past 12 months, especially for retailers. Before the pandemic, e-commerce sales accounted for around 18-20% of total UK retail sales. However, according to the latest figures, online sales now account for 36% of the market.
This might not last in the near term. When the pandemic ends, consumers will likely return to brick-and-mortar stores, although I believe it’s unlikely consumers will ever go back to old shopping habits. As such, I firmly believe the percentage of online sales will continue to increase over the long run.
As such, I think some of the best UK shares to buy right now are e-commerce champions. Companies like Boohoo (LSE: BOO) and AO World (LSE: AO), who leaders in their respective fields. They’ve both reported substantial increases in business during the pandemic.
The best UK shares to buy
According to AO’s latest trading update, in the three months to 31 December, revenue in the UK soared 67% to £457m while in Germany it was up 77% to €73m. Unfortunately, the company’s bottom line has taken a hit due to increased costs, but these are related to expansion. Management is highly confident current trends are here to stay and is investing accordingly to increase capacity.
One of the big changes in the retail world over the past 12 months is consumers willingness to buy items online. Before the pandemic, many people believed that buying large electrical goods online before seeing them was a waste of time. Those barriers have now been broken down.
I think this will be a significant tailwind for AO in the years ahead. Consumer habits have changed, and the company is stepping up to the challenge to meet rising demand. That’s why I’m confident this is one of the best UK shares to buy right now for the next few years.
Consumer habits
Fast-fashion retailer Boohoo has also benefited from a similar shift in consumer shopping habits. The company was well-prepared for the pandemic. It already had the infrastructure in place to shift large amounts of clothes quickly. This helped the organisation meet increased demand.
What’s more, the fact that Boohoo was able to continue operating when many of its brick-and-mortar competitors had to shut up shop gave the group a huge competitive advantage.
With cash pouring in, Boohoo acquired some of its smaller competitors, which couldn’t survive the pandemic. There are also rumours that the business is in the running to buy parts of Philip Green’s collapsed Arcadia group, which includes its star brand Topshop.
Those are the reasons why I believe Boohoo is one of the best UK shares to buy now. The company is well-prepared for the new normal and should be able to use its competitive advantages to drive growth in the long term.