The current stock market rally has helped lift the value of many UK shares. And I think this could be just the start of a much longer run higher for equities.
With that in mind, I’m on the lookout for companies that have to potential to produce large returns for investors in the years ahead. In my opinion, there’s one sector in particular that’s stuffed full of these businesses.
Investing in the stock market rally
One sector that’s benefitted more than most from the pandemic is technology. In the space of a few months, the tech sector has seen the sort of growth that previously would have taken several years.
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There are only a handful of UK shares available to play this theme. One is Electrocomponents (LSE: ECM). This business is a global omnichannel partner for industrial customers and suppliers who design, build or maintain industrial equipment and facilities. It offers a range of tech solutions to help clients improve the customer experience, productivity and efficiency.
Business has been on the up this year, and the company is using the extra profits to expand. It has recently announced two new acquisitions for a total of £160m. These should help complement growth in the years ahead.
Electrocomponents has a strong track record of profits growth through acquisitions and organic expansion. Net profit has grown at an annual rate of 25% for the past six years.
Based on its past success, I reckon this growth can continue. That’s why I suspect the stock could be a great purchase in the current stock market rally. Electrocomponents seems to me to be one of the few UK shares that can capitalise effectively on the global tech boom.
A tech leader
Another UK tech stock I’d buy to profit from the stock market rally is Avast (LSE: AVST). Technology is becoming more and more advanced. Unfortunately, criminals are becoming more advanced as well. Some 65,000 attempts to hack small- to medium-sized businesses (SMBs) occur in the UK every day.
This is where Avast comes into play. The company provides anti-virus software. As the world becomes more reliant on technology, this technology is going to become ever more critical.
Therefore, I think the company is likely to see strong earnings growth for years to come. As one of the world’s best-known security software providers, Avast already has a strong brand which consumers trust. That should work in the firm’s favour to drive growth.
Indeed, thanks to its current position in the market, analysts are already forecasting a near 50% leap in earnings this year. As companies and consumers have been forced to move online in the pandemic, they have rushed to secure their systems with a brand they know well.
I think this is a sign of things to come, which is why I reckon Avast is one of the best UK shares to buy right now and hold forever.
