Investing £3k, or any other amount, in UK shares via a Stocks and Shares ISA could be a profitable move over the long run.
The stock market has a long track record of growth. And, while risks are likely to be omnipresent, purchasing a diverse range of stocks on a long-term basis can lead to outperformance of other mainstream assets such as cash and bonds.
With that in mind, here are three shares that could offer improving performances and rising valuations in the coming years.
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Growth opportunities relative to other UK shares
Many UK shares are facing uncertain operating conditions due to the ongoing disruption caused by coronavirus. However, a shift in consumer shopping habits catalysed by the pandemic could benefit companies such as Tritax Big Box. It owns large warehouses across the UK that are commonly used by e-commerce business for storage purposes.
Its recent updates have shown strong demand for its properties. With a limited supply and the prospect of rising demand as retail and other industries increasingly move online, the stock could offer good value for money while it has a dividend yield of almost 4%.
Clearly, Tritax Big Box and all UK shares could experience difficulties in an economic downturn. For example, its tenants may struggle to pay rent should their incomes fall. However, this risk could be factored in to the company’s share price.
FTSE 100 recovery prospects
Other UK shares are experiencing tough operating conditions. Alcoholic drinks giant Diageo, for one, has been hit by the closure of hospitality venues and air travel. This situation may persist for many months. That means it could cause the company to experience a further downward pressure on its sales figures.
However, its most recent investor update showed it’s making progress in reducing costs to offset lower-than-expected sales. It’s also experienced a strong performance in North America. Meanwhile, it seems to have a balance sheet capable of sustaining its operations through a period of economic weakness and into a potential recovery in the coming years.
Long-term turnaround potential
Other UK shares such as easyJet could experience ongoing challenges resulting from the pandemic for many months, or even years. The company’s fleet has been largely grounded in recent months, which is putting its financial position under severe pressure.
In response, the business has slashed costs and accessed large sums of liquidity to improve its capacity to overcome a difficult financial period. Its most recent update was disappointing, but in line with expectations. Further weak financial performance could be ahead as a result of coronavirus disruption, the length of which isn’t possible to accurately estimate.
However, it has a solid financial position compared to other UK shares. It also has a strong market position in the European short-haul segment. That combination could mean easyJet has turnaround potential over the long run.
