The economy’s a mess. Here’s how I’m investing in UK shares now

first_imgThe economy’s a mess. Here’s how I’m investing in UK shares now Obviously, the economy is a mess. In the UK, we’re in the third lockdown within the last year. Not only has the past year taken a toll on human life, it has also been a big setback for business. This of course, has implications for UK shares because investors are reacting to macro news. Dismal economic scenarioSo when dismal news on the economy coincides with weakness in the FTSE 100 index over the past two weeks, it’s hardly a surprise. British households are holding back their expenditure, the proportion of workers on furlough has risen to the highest point since July, and public debt is ballooning, reports Reuters.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The future’s also somewhat uncertain. Economists expect the UK economy to contract in the first quarter. The International Monetary Fund has also slashed its forecasts for the UK for 2021 by a whole 1.4 percentage points. Reasons for cheerBut while these are big challenges to contend with, I think there are a number of positives to consider too. Despite a growth forecast cut for 2021, the UK is still expected to grow by 4.5%. By 2022, growth is expected to rise to 5%. I think this in itself is a good place to start. Additionally, we could soon start seeing proof of activity picking up as the lockdown comes to an end with vaccinations well underway. Many FTSE 100 companies are globalised, which means that even higher growth elsewhere is good news for these UK shares and the index.Choosing a UK share to buy  With this as the context, I’m most inclined to buy FTSE 100 shares that meet two criteria:Their share price should have potential to rise further. A lot of shares’ prices have run up in the stock market rally that started in November, even though they are financially weak. My sense is that their return to financial health, as the economy normalises, is already baked into the current share price.Their future should look relatively secure. While there is vulnerability in the current environment, there are some companies doing relatively well. Diageo’s one to watchOne such stock for me is the FTSE 100 alcohol producer Diageo (LSE: DGE). It just reported organic net sales growth for the half-year ending 31 December 2020, though its reported sales are down. Nevertheless, organic sales numbers are important, because the increase happened despite the lockdowns and closure of pubs and restaurants. The company has also increased its dividend payout. Moreover, it has an eye towards the long-term future. The drinks industry, like others industries such as retail, tobacco, automotive, and oil, is seeing big changes in trends as demand for non-alcoholic drinks rises.  There are some risks to buying the stock, however. Its share price has run up quite a bit since November, and its earnings ratio is 49 times. I can think of safer stocks with lower ratios, like Unilever, with a ratio of 17 times.Still, it’s below the all-time-highs seen in 2019. And if things keep getting better, which is more likely than not, I think DGE should be a winner.  I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. “This Stock Could Be Like Buying Amazon in 1997” Our 6 ‘Best Buys Now’ Shares Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Simply click below to discover how you can take advantage of this.center_img Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo. 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. Image source: Getty Images Manika Premsingh | Sunday, 31st January, 2021 | More on: DGE Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Manika Premsingh I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.last_img

Leave a Reply

Your email address will not be published. Required fields are marked *