3 shares to buy for 2021

first_img Kevin Godbold | Thursday, 4th February, 2021 | More on: BDEV Simply click below to discover how you can take advantage of this. Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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. Get the full details on this £5 stock now – while your report is free. I’m considering three shares for my own portfolio right now. And if I buy them, they’ll be constituents of a wider portfolio of holdings diversified across various industries and sectors.One investing theme that interests me is housebuilding. With interest rates at record lows, there’s a tailwind driving the housing market in the UK.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…I reckon the housebuilders are shares to buyThe London-listed housebuilding companies have been trading well for years. However, most of them suffered a setback in 2020 when the pandemic arrived. And their share prices plunged along with those of many other companies last spring. But housebuilding stocks have been clawing their way back up because of recovery in their underlying businesses. I reckon there’s still time to invest in the sector.For example, I like the look of FTSE 100 constituent Barratt Developments (LSE: BDEV). Today’s half-year results report covers the six-month period to 31 December 2020 and contains some encouraging figures. For example, compared to the year before, completed homes rose by just over 9%. Revenue increased a little over 10% and there was a 1.5% advance in earnings per share.A strong cash performance backed those figures. Net cash on the balance sheet increased by just over 155% to a little under £1,107m, up from just under £434m a year earlier. And the directors reinstated shareholder dividends by declaring an interim payment worth 7.5p per share.Chief executive David Thomas said the fundamentals of the housing market are attractive and the outlook for the full year is “in line with expectations.” And City analysts predict a rebound in earnings in the current trading year of around 26% with a further advance of 10% the following year. That figure isn’t guaranteed, of course.Meanwhile, with the share price near 684p, the forward-looking earnings multiple is just above 10 for the trading year to June 2022. And the anticipated dividend yield is around 4.6%. That valuation looks undemanding, so what could go wrong with my investment? The answer to that question is… plenty! There’s always risk involved when investing in shares.Diversification to balance cyclicalityOne danger is that the inherent cyclicality of the industry could lead to volatility in the company’s earnings, dividends, and share price. It’s possible that a five-to-10-year investment could lead to a flat investment outcome. I could even lose money on my investment rather than making gains, and that outcome could occur despite apparent growth in the underlying business.So I’d diversify into other sectors and stocks too. For example, I’m keen on the strong and consistent cash flow recorded over several years by pharmaceutical giant GlaxoSmithKline and meat-focused food producer Cranswick. However, growth in earnings has been elusive for GlaxoSmithKline, dividends have been flat, and the share price has been weak.And Cranswick sports a rich-looking valuation and a low dividend yield. However, I think the firm looks well placed to raise the shareholder dividend incrementally in the years ahead. On balance, I like the defensive cash-generating qualities of these two and see them as a good contrast and diversification compared to the cyclicality of Barratt Developments. I’m tempted to buy shares in all three of these companies right now, despite the risks. FREE REPORT: Why this £5 stock could be set to surge Image source: Getty Images. center_img 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. Enter Your Email Address 3 shares to buy for 2021 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. See all posts by Kevin Godbold Our 6 ‘Best Buys Now’ Shareslast_img read more