10 UK shares I’d buy now to capitalise on the stock market recovery

I think these UK shares offer a chance to capitalise on a likely stock market recovery over the long run after the 2020 market crash.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Buying UK shares today could be a sound means of capitalising on a likely long-term stock market recovery. After all, the FTSE 100 and FTSE 250 have always made successful comebacks from their worst declines in the past. As such, a similar outcome is likely after this year’s share price declines.

Therefore, an investor with a long-term view can benefit from purchasing high-quality companies at low prices today. Holding them for the long run can produce attractive returns.

With that in mind, here are 10 UK stocks that I think offer sound recovery potential after the 2020 stock market crash.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

UK shares set to benefit from a stock market recovery

Among UK shares hit the hardest in the 2020 stock market crash are banks such as Barclays, HSBC and Natwest (formerly RBS). They are experiencing difficult operating conditions as a result of weak economic growth prospects and a low interest rate environment.

However, their share price falls since the start of the year suggest that they now offer wide margins of safety. Therefore, they may have scope to deliver share price appreciation as the economic outlook improves. Moreover, their balance sheets have strengthened in recent years, while they are making strategy changes to shift resources towards business lines that are less sensitive to interest rate changes.

Commodity opportunities in a stock market recovery

Other UK shares that have experienced difficult operating conditions this year are commodity-related businesses such as BP, Shell and BHP. Demand for commodities is closely related to the prospects for the world economy. As such, all three stocks could face a tough 2021, depending on how the economic situation develops.

However, their solid balance sheets relative to sector peers indicate that they could overcome near-term challenges to benefit from likely economic growth. Moreover, their current share prices appear to be attractive based on the quality of their asset bases and strategies. They may outperform other UK shares in a long-term stock market recovery.

FTSE 100 retail opportunities

Other UK shares that could benefit the most from a stock market recovery include retailers. Although some retail stocks may find it hard to adapt to a changing operating landscape, the likes of FTSE 100 stocks Next, Tesco, Sainsbury’s and Morrisons appear to be successfully adjusting to an increasingly online world.

All four stocks have invested heavily in expanding their online presence since the start of this year. This may provide them with dominant market positions versus rivals, which may strengthen their financial prospects in the long run. They also have deep pockets through which to further shift resources from in-store offers to digital opportunities. After a mixed year for their share prices, they could offer capital appreciation opportunities relative to other UK shares in a likely long-term stock market recovery.

Investing in AI: 3 Stocks with Huge Potential!

🤖 Are you fascinated by the potential of AI? 🤖

Imagine investing in cutting-edge technology just once, then watching as it evolves and grows, transforming industries and potentially even yielding substantial returns.

If the idea of being part of the AI revolution excites you, along with the prospect of significant potential gains on your initial investment…

Then you won’t want to miss this special report inside Motley Fool Share Advisor – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And today, we’re giving you exclusive access to ONE of these top AI stock picks, absolutely free!

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of Barclays, BHP Group, BP, HSBC Holdings, Morrisons, NatWest Group, Royal Dutch Shell B, and Tesco. The Motley Fool UK owns shares of Next. The Motley Fool UK has recommended Barclays, HSBC Holdings, and Tesco. 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.

More on Investing Articles

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

2 shares to consider as a new US deal could revive the UK stock market

Our writer investigates two major FTSE 100 shares that could enjoy a boost following a US tariff shift and possible…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

This FTSE 250 growth trust just loaded up on these 2 top S&P 500 stocks

Our writer noticed that this FTSE 250 investment trust has just scooped up a couple of quality US growth stocks.…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

This world-class FTSE 100 company’s expecting up to 10% growth in 2025

This is one of the most profitable companies in the FTSE 100 index. And right now, it’s firing on all…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10k invested in Phoenix shares 10 years ago would have generated passive income of…  

Shares in this FTSE 100 insurance giant have done poorly over the last decade. Harvey Jones wonders if super-sized passive…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

This brilliant FTSE income share just paid me £458 for doing absolutely nothing – I love it!

Harvey Jones is sending some love to high-yielding FTSE 100 dividend income share M&G today in return for it sending…

Read more »

Black woman using smartphone at home, watching stock charts.
Investing Articles

Should I buy Palantir (PLTR) stock for my ISA in 2025?

Palantir stock's flying in 2025, having risen almost 60% already. Should Edward Sheldon take the plunge and buy the growth…

Read more »

Workers at Whiting refinery, US
Investing Articles

Drowning in debt amid falling oil prices, can the BP share price recover?

By far the worst-performing of the oil majors, Andrew Mackie assesses just what it will take to kick life back…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

As Cash ISA changes approach, is now the time to buy UK shares for long-term wealth?

Changes to the Individual Savings Account (ISA) could present an unexpected opportunity to try to get richer with UK shares.

Read more »