The FTSE 100 has rallied in recent months, but a number of UK shares could deliver impressive returns in a new bull market.
With the index having recorded an 8% annual total return since its inception in 1984, investors could realistically double their money over a nine-year period.
However, through buying high-quality companies such as those discussed below, it may be possible to outperform the market and obtain 100% returns in a likely stock market rally.
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Improving market conditions for FTSE 100 stocks
FTSE 100 stocks such as Diageo and Burberry could beat the investment performances of other UK shares over the long run. Both companies have suffered major disruption this year. Lockdown measures have caused demand for their products to fall, which could continue over the short run.
However, they both have competitive advantages over their peers. For example, they’ve high levels of customer loyalty that may mean they can ride out short-term challenges and deliver long-term profit growth.
Moreover, Burberry’s focus on sustainability and digital growth may further improve its market position. Similarly, Diageo’s recent acquisitions may strengthen its capacity to generate high sales growth in the coming years.
Retail opportunities among UK shares
FTSE 100 retailers Next and Sainsbury’s may also deliver higher returns than other UK shares. Even though consumer confidence is weak, their performances this year have shown the resilience of their business models.
Looking ahead, both companies are investing in digital growth opportunities. For Next, this means a wide platform that incorporates third-party sellers to create a destination for UK consumers.
Meanwhile, Sainsbury’s is expanding the availability of its delivery slots as an increasing number of shoppers are likely to stick with home deliveries or click and collect options post-coronavirus. This may set both companies up for strong growth as the world increasingly heads online.
A chance to benefit from a new bull market
FTSE 100 stocks such as WPP have suffered to a larger extent than many UK shares in the 2020 stock market crash. The main reason for this is its dependence on the world economy’s outlook for its growth.
However, it could be among those businesses that stand to benefit the most from a likely global stock market recovery. Rising global GDP growth may mean it can generate higher returns. Meanwhile, its focus on reducing debt and pivoting to becoming a technology specialist may provide it with a stronger growth opportunity in the long run.
As with all FTSE 100 stocks, UK shares such as WPP may experience further difficulties in the short run due to a weak economic outlook. However, their strategies, market positions and likely recoveries in a new bull market may enable an investor to double their money in the coming years after what has been a tough 2020.
