These are challenging times for UK share investors. The outbreak of Covid-19 has played havoc with corporate profits and dividends have fallen like dominoes. The threat of an extended downturn for the British economy is very real and stock pickers need to take extreme care to protect themselves.
The worst decision share investors can make though, is to stop buying stocks altogether. There are masses of top-quality UK shares that remain too cheap to miss following the 2020 stock market crash. Buying these oversold beauties today gives you and I the opportunity to get richer in the years ahead as economic conditions improve, market confidence comes flooding back and share prices rocket.
Buying UK shares after the crash
There are plenty of sound strategies UK share investors follow to protect our wealth to navigate the tough economic landscape. We can buy stocks where profits remain broadly unaffected by economic downturns (like utilities, food producers and healthcare providers). Stacking up on counter-cyclical stocks -- such as UK shares whose profits rise during tough times -- is another sound idea.
These can include discount retailers and providers of legal services. Buying UK shares with strong competitive advantages (otherwise known as 'economic moats') is another good idea. Qualities like lower cost bases, cutting-edge products and strong brand power can help profits to grow while rival companies struggle.
It's also a good idea to buy shares that trade on low price-to-earnings (P/E) multiples. This offers a wide margin of error to investors.
2 of the best
I myself have continued to buy UK shares for my own Stocks and Shares ISA despite the uncertain economic environment. So unsurprisingly I think you should, too!
Here are a couple of low-risk shares I think investors should buy today.
- Diageo has a number of tricks up its sleeve. It has significant competitive advantages thanks to products like Captain Morgan rum and Smirnoff. Goods like these are better than Diageo's competitors can offer. They also boast formidable brand power.
This FTSE 100 stock has a broad geographic footprint to protect it from tough conditions in one or two markets. Finally, Diageo can be considered a classic counter-cyclical stock: history shows us that alcohol sales always rocket during recessions.
- Publishers like Bloomsbury Publishing are also great UK shares for risk-averse investors. Reading's one of the most cost-effective ways that we can entertain ourselves and book sales remain largely unaffected by difficult economic conditions.
Indeed, book sales rose at their fastest pace on record during the first week of September, trade magazine The Bookseller said. And Bloomsbury has one big advantage over the competition: it owns the evergreen Harry Potter franchise, a cash cow that's as popular today as ever.
Get rich with The Motley Fool
These are just two exceptional UK shares available to savvy investors today. The Motley Fool's epic library of exclusive reports can help you find even more. They could help you get rich despite the difficult economic landscape.
Savvy investors like you won't want to miss out on this timely opportunity... Here's your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this 'pure-play' online business (yes, despite the pandemic!). Not only does this company enjoy a dominant market-leading position...
But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns ... in fact, in 2019 it returned a whopping GBP150m+ to shareholders in dividends and buybacks! And here's the really exciting part... While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty... in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.
That's why we think now could be the perfect time for you to start building your own stake in this exceptional business - especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.
Royston Wild owns shares of Diageo. The Motley Fool UK has recommended Bloomsbury Publishing and Diageo. 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.