2021 could be an excellent year for UK shares, in my opinion. The economic slump of 2020 could reverse if the Covid-19 pandemic is brought under control. Several pharmaceutical giants have announced vaccines and deployment should start this week.
The roll-out of vaccines over the coming months could help release the country from lockdowns and social-distancing restrictions. I’m expecting an economic recovery to follow as the UK public get back to shopping, eating out, and socialising with friends and family.
UK shares in the spotlight
I think several UK shares that are related to the UK consumer could double in 2021. Marks & Spencer (LSE: MKS) is one on my watchlist that I’d consider for my Stocks and Shares ISA. Its share price is down by over 30% so far this year. M&S was a former star of the high street, but it has struggled in recent years in the battle against online shopping and a rapidly changing retail environment.
Competitors such as Boohoo and ASOS have grabbed market share in clothing. Online-only business models enable them to operate with lower costs versus the higher rents and rates payable by traditional high street clothing retailers.
Nonetheless, M&S is undergoing a business transformation. Already several years in so far, I think 2021 will be the year for M&S to recover.
M&S is undergoing a digital transformation. Its food business holds a strong brand and consistently performs well. Now available through Ocado, so far it seems to be doing well online. It’s also aiming to sell 40% of its clothing online within the next three years. I reckon that’s a step in the right direction.
Chairman Archie Norman is well respected and led prior transformations at Asda and ITV. M&S has a strong management team and I reckon they will lead a successful transformation at this popular high street retailer.
A growing retailer
UK shares in the consumer discretionary sector are currently in a sweet spot, in my opinion. Another British well-known retailer that I’d consider is B&M European Value Retail (LSE: BME). 84% of its revenue comes from the variety retailer B&M and the remainder comes from Babou in France and Heron Foods.
I like founder-led, entrepreneurially run companies in structurally growing sectors. I’d say that B&M fits these characteristics perfectly. I like that it’s also cash generative and revenues are improving.
During the lockdown, B&M was classed as an essential retailer and was permitted to stay open. In this period, it even attracted new customers, and trading was consistently described as “strong”. A string of positive trading updates followed throughout the year.
In its half-year report in November, chief executive Simon Arora reported that “The Group delivered a strong performance in the first half, with our business model proving well-attuned to the evolving needs of customers”.
Although both are retailers, I’d say M&S could be described as a potential recovery stock and B&M as a low-volatility growth stock. Regardless, I consider both M&S and B&M to be UK shares that could double in 2021.
