There’s plenty going on in the stock market at the moment. In the first quarter of the year, many companies reveal full-year results from the previous year. This gives me a more complete picture of what 2020 looked like. So at the moment, I can make up my mind on some of what I think are the best shares to buy now. I’m looking to get exposure to these shares soon so that I can hopefully benefit from performance throughout the rest of 2021.
A bright share in the finance sector
Barclays (LSE:BARC) released full-year 2020 results this morning. It made for interesting reading (if you like that kind of thing) and as a result I would c iallt one of my best shares to buy now.
Initially, seeing overall profit down 30% year-on-year might not seem a positive. Further, the retail arm of the business (which includes credit cards), actually saw profit drop by 78%. Yet I can see a lot of good news in other areas. For example, take the investment bank. It had its best year on record, with profits up 35%. It benefited massively from having to help corporates raise cash via debt and equity issuances due to the pandemic. There was also several IPOs that the bank helped to underwrite, gaining fees in the process.
I think the outlook for Barclays for 2021 is much better than last year. The bank seems to agree with me, and is resuming a small dividend and share buybacks as we speak. The diversified nature of Barclays should allow it to continue to ride out any economic uncertainty. The main risk to buying this share now, I feel, is further underperformance from the retail bank. Low interest rates could turn negative, further hurting already depressed margins.
Looking to Glencore as a top share to buy now
Glencore Xstrata (LSE:GLEN) is a commodity mining and trading company that’s just announced results. Again, on the back of this I see the share as an opportunity to buy now. After cutting the dividend last year, largely due to spiralling debt levels above $20bn, the business is resuming the dividend. This comes as results show full-year adjusted earnings before tax of $11.56bn. This is similar to 2019 profit, but given the rollercoaster of 2020, is a strong outcome.
What also impressed me is the actions taken to reduce the net debt position. As a result, net debt was cut to $15.8bn due to better cash flow management. It should continue to be reduced in 2021, allowing the business to be less constrained to debt repayment concerns. I also think 2021 could be better for the company as many banks are forecasting stronger commodity prices, particularly in oil markets. This should aid Glencore in several ways.
The main risk to my view of Glencore being a top share to buy now is an extended impact from the pandemic, possibly due to a mutant virus variant. This could see lockdowns extended, and falling demand for many commodities that are linked to the performance of the firm.
