The best UK shares to buy now are not necessarily the cheapest. Indeed, while there are plenty of cheap socks on the market, some of these businesses are struggling to survive.
As such, it may be best to target high-growth businesses with strong balance sheets. Even though these businesses might be more expensive than other UK shares to buy, they have the potential to produce better returns over the long term.
With that in mind, here are some of the stocks that are on my watchlist.
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My best UK shares to buy now
Many UK-listed companies have cut their dividends this year. However, some firms have been able to stick with their payouts due to their strong balance sheets and defensive operations.
These companies include insurance groups Admiral and Direct Line. The latter has recently announced that it will be paying a special dividend to investors after a bumper first half.
As car insurance is a legal requirement in the UK, these businesses have some highly defensive qualities. Their size is also a competitive advantage. They can offer policies at a lower cost than competitors. These advantages indicate that these two insurers could be some of the best UK shares to buy now.
Another company that is on my watchlist is Diageo. The pandemic has hit this company’s sales, but looking past the near term headwinds facing the business, it’s long-term outlook is bright.
It’s highly likely consumers will still be drinking Guinness and Smirnoff 10 or 20 years from now. These are two of Diageo’s flagship brands. That suggests that the firm is a great business to buy and hold in a portfolio.
Financial companies like Barclays could also be some of the most attractive UK shares to buy now. These companies have fallen out of favour with investors this year.
Nevertheless, Barclays remains one of the largest banks in the UK. Consumers will always need banking services, which implies that the firm can churn out large profits for decades to come.
As such, now may be a great time to buy a share of this beaten-down stock for the long haul while it offers a margin of safety.
The bottom line
The best UK shares today are companies that have a strong competitive advantage, such as those listed above. This advantage should help these businesses navigate the coronavirus storm.
They may then be able to take advantage of the UK economic recovery when it starts to gain traction. Their size and scale may also allow these businesses to capture market share. That would help these businesses grown back bigger and stronger.
As such, now could be the perfect time to buy a basket of these companies while they trade at post-crash levels.
