As governments plot their way out of lockdown, I’m looking at the best shares to buy for when we are finally set free. It could be an incredible moment, once we are released from our homes and embark on a once-in-a-lifetime spree.
Of course it may not happen that way. We may get yet another Covid wave, and further restrictions, but right now I’m in an optimistic mood. I think these are some of the best shares to buy when the economy finally does off.
I would start with a value stock, a top FTSE 100 company that has underperformed but looks cheap and ready to recover when markets get their mojo back. FTSE 100 insurer Aviva grabs me, trading at just 7.2 times earnings. While its share price laboured before the pandemic, I think it’s a bargain at today’s valuation, especially since the dividend is returning.
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There is life post lockdown
I would also consider asset manager Legal & General Group, which could benefit if markets recover strongly. L&G isn’t as cheap as it was, as its share price has climbed 30% in six months. However, it still trades at 13.2 times earnings and yields 6.31%. Both Aviva and L&G have shown their resilience and should hold firm even if the recovery is delayed.
I think FTSE 100 miners will also benefit when demand recovers post lockdown. Companies such as BHP Group and Rio Tinto are among the best shares to buy in this sector. My worry is that the recovery is already priced in, as these two shares have soared by 93% and 71% respectively over 12 months. BHP now trades at 16.97 times earnings and yields 4.26%. Rio Tinto is valued at 10.51 times earnings and yields a whopping 5.98%. Rio would be my pick of my two, for that reason.
I think the luxury fashion company Burberry Group merits its place among the best shares to buy for a post-lockdown world too. People are sick of being stuck at home wearing the same drab clothes, and if they start spending and travelling, sales should surge. Especially since its key Asian markets appear to be recovering first.
Among the best shares to buy
I am not alone in admiring Burberry, and I have to pay a luxury price of 25 times earnings to share in its future growth prospects. Also, there’s not much dividend.
Some are piling into stricken sectors such as travel, leisure and entertainment. I think the potential downside is too great if the lockdown isn’t lifted fast enough. Instead, I reckon overlooked asset manager M&G is one of the best shares to buy. It has struggled since hiving off from Prudential, with underwhelming investment performance. However, it is also dirt cheap trading at less than five times earnings, while yielding 8%.
I would buy now and wait for management to turn things around. A buoyant post-lockdown stock market would help, and that is why I would include M&G on my list of the best shares to buy right now, despite the risk of an ongoing sluggish performance.
