2 of the best stocks to buy now with £1,000

These could be some of the best stocks to buy now based on their growth and income prospects for 2021 and beyond, says this Fool.

| 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.

If I had £1,000 to invest, I think the best stocks to buy now would be companies that may benefit from the economic recovery over the next 12 months.

As the global vaccine rollout gains traction, the outlook for companies most affected by the coronavirus pandemic is improving.

Unfortunately, it’s unlikely to be plain sailing for these businesses as we advance. The vaccination programme is having an impact on coronavirus infections, but there’s no guarantee the economy will bounce back quickly. It could take years for spending in sectors such as tourism to recover to 2019 levels. 

Still, I’m comfortable with this level of uncertainty. That’s why I would invest £1,000 today in Carnival (LSE: CCL) and easyJet (LSE: EZJ).

The best stocks to buy now 

There’s one main reason why I’ve picked these companies in particular. They’re both leaders in their respective industries. 

easyJet is one of the most successful low-cost airlines globally and dominates the European air travel market. Its brand is highly recognisable and, unlike peer and main competitor Ryanair, it has a solid record in customer service.

Meanwhile, Carnival is the world’s largest cruise ship operator. This gives the company economies of scale. Its size has also helped the enterprise raise finance from investors over the past 12 months to keep the lights on. 

I believe these advantages will help both companies recover quickly when the time comes.  Consumers know their brands, and they could be the first organisations holidaymakers visit when booking their post-pandemic trips.

Carnival has already said its bookings for the first half of 2022 have already surpassed 2019 levels. This is an incredibly positive development, and I believe it indicates the potential here. That’s another reason why these equities feature on my list of the best stocks to buy now. 

That said, despite these companies’ advantages, it has been touch-and-go for both over the past year. The next 12 months will be crucial for both Carnival and easyJet. It remains unclear at this stage if they’ll be able to survive if global travel restrictions last into 2022.

This is the most significant risk facing these two operations. While both companies may see a rapid recovery if the travel market opens later this year and next and consumers spend freely, they may struggle to survive if restrictions last longer than expected. 

Limiting risk

As it stands, both could generate lucrative returns for investors as the economy reopens. That’s why I believe they’re the best stocks to buy now. However, these are high-risk, high-reward opportunities. As such, they aren’t going to be suitable for every investor.

However, I’d limit my investment in these shares because of the level of uncertainty surrounding their outlooks. I don’t want to risk too much of my portfolio on companies that, in the case of Carnival at least, don’t have any revenue at this point.

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.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

Investing Articles

Up 26%, can the BT share price really push higher still?

The BT share price has surged on several catalysts in 2024, but there’s evidence to suggest that the stock could…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

What are the best dividend shares to buy right now?

As shares in B&M European Value Retail have fallen, the dividend yield has reached a 10-year high. Should investors be…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »

Investing Articles

The latest growth forecasts suggest the Glencore share price will hit 555p!

Harvey Jones has been disappointed by the performance of the Glencore share price since he bought the commodity stock last…

Read more »

Dividend Shares

A closer look at the 11% dividend yield forecast for Phoenix Group shares

Phoenix Group shares have one of the highest dividend yields in the FTSE 100 index today. Could this be a…

Read more »

Investing Articles

If I’d put £25,000 into the FTSE 350 at the start of 2024, here’s how much I’d have today!

Many FTSE shares have rebounded this year as interest rates look set to keep heading lower and market appetite for…

Read more »

Investing Articles

Up 40%, but experts forecast the easyJet share price could soon hit 664p! Time to buy?

The easyJet share price has been flying lately and stock analysts are predicting more fun to come. But there's only…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Worried about tax raids? Here’s how I’m targeting a £44,526 passive income with shares

Investing in a Self-Invested Personal Pension (SIPP) or Individual Savings Account (ISA) can supercharge one's passive income, says Royston Wild.

Read more »