It can be extremely unnerving to see the value of your shares portfolio plummet during stock market crashes. But, for most of us, it’s not something that should lead to sleepless nights.
The vast majority of investors — myself included — make their fortunes from UK shares over a number of years. Over a time horizon of 10 years or more, the sting of severe share price corrections tends to be sucked out.
That’s not to say I’m not thinking of buying UK shares on the basis of some near-term stock price gains though. I pick shares that I’m confident will be thriving a decade or more from now.
Buying on the basis of how their share prices will perform over the coming weeks or months often spells disaster. But one can marry up these two themes to give eventual returns an extra little boost.
On top of this, there are plenty of quality UK shares that have been unjustly sold off during the recent period of heightened risk aversion. The FTSE 100 for instance has dropped to its lowest since April, mirroring price action across other major global indices. This provides an opportunity for shrewd investors to nip in and grab a bargain or two.
2 top UK shares on my watchlist
Let me talk you through two top UK shares I’m thinking of buying for my Stocks and Shares ISA. I reckon they could rocket in price in the days and weeks ahead:
- Redrow’s shares look mighty cheap following recent share price weakness. It trades on a forward price-to-earnings (P/E) ratio of 13 times, a reading which doesn’t fully reflect the strength of trading that Britain’s homebuilders are still experiencing despite the poor economic outlook. There simply aren’t enough homes to go around and this is driving demand for new-builds through the roof (so to speak). In September, Redrow said its order book was up 39% year on year. Reservations (in value terms) were also up 12% in the first 11 weeks of the current fiscal year too. I’m expecting another sunny set of numbers in the UK share’s AGM statement of Monday, 9 November. And this could help its share price to rally again.
- Pets at Home is nowhere near as cheap as Redrow. In fact, its P/E ratio of 28 times for this year looks pretty hefty on paper. But I believe the pet care retailer is worth every penny. Retail stocks are a risky pick today but this UK share doesn’t have much to fear. Spending on animal care continues to go from strength to strength. And Pets at Home — which sells food, toys, medicines and everything in between, and provides vet and grooming services too — should deliver mighty shareholder returns as a result. I expect another sunny set of trading numbers when interim results come out on Wednesday, 25 November. And this could send its share price to fresh record highs.
