Top UK shares for 2021! I think these cheap growth stocks could double my money

These two UK shares are expected to enjoy a profits explosion in 2021. Here’s why Royston Wild would buy them in his Stocks and Shares ISA today.

| More on:

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.

Make no mistake: the stock market crash of early 2020 presents the most attractive investing opportunity for years. It’s allowed long-term investors like me to buy quality UK shares at bargain-basement prices. And there remain plenty of top stocks that continue to trade far too cheaply following earlier share price collapses.

The Covid-19 crisis has created huge problems for many UK shares. But for many companies, these troubles are likely to be fleeting. Remember that the FTSE 100 doubled in value in the decade following the 2008/09 banking crisis as corporate profits rebounded. I expect stock prices to explode again this time around, meaning that those who invest today could stand to make a fortune.

The two growth stocks I describe below should record spectacular earnings recoveries in 2021. I’d buy them for my Stocks and Shares ISA today and hold them for years:

Screen of price moves in the FTSE 100

#1: A formidable foodie

2020 has proved a disaster for food-to-go specialists like Greencore Group (LSE: GNC). Sales of edible goods like these slumped this year as the pandemic forced people to stay at home. This particular UK share saw adjusted pre-tax profits slumping more than 80% in the fiscal year to September 2020. And it was forced into a fresh share placing last month to help it weather the storm.

This year’s problems, though significant, are likely to prove a temporary speed bump in Greencore’s growth story. The food-to-go segment was rocketing prior to Covid-19 restrictions and, according to IGD, growing twice as fast as the broader UK food and grocery retail market. FTSE 250-quoted Greencore can look forward to demand for its goods ripping higher again as people return to the outside world, I feel.

It’s why City analysts reckon Greencore’s annual earnings will rocket 149% in fiscal 2021. This reading leaves the share trading on a price-to-earnings growth (PEG) reading of 0.1, making it a brilliant pick for value-hungry growth investors like me.

#2: Another top UK share for 2021+

Student accommodation providers have also suffered significantly from Covid-19 as university attendance has been hit. Take Unite Group (LSE: UTG). The FTSE 250 company’s last update showed that only 88% of its bed spaces had been let for the 2020/21 academic year versus 98% a year earlier.

On a brighter note, though, it has seen check-in numbers improve in recent weeks. It’s hoped that this represents the first step in a return to normality and could prompt a significant earnings recovery in 2021. City analysts reckon Unite’s bottom line will bounce 50% next year. And this leaves it trading on a PEG ratio of 0.6.

Don’t think that Unite’s just a top pick for strong profits growth in 2021, though. This particular accommodation market is rocketing and, according to RWinvest, there are around 2.3m students in the UK. This compares with 1.5m two decades ago. And the business is expanding aggressively to capitalise on this lucrative market (last month it exchanged contracts to acquire an 800-bed development site in Paddington, London with targeted delivery for the 2023/24 academic year).

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencore. 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

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »