The recent stock market rally has pushed many FTSE 100 shares to higher price levels.
The stock market rally pushed FTSE 100 share prices to higher levels than they have been over the past year. However, several companies are trading at levels where you can conveniently enter the market and make a profit despite this rally.
These FTSE 100 stocks can benefit in the long run from a market recovery, which looks likely to happen thanks to the global economic situation slowly improving. There are ample signs that the world economy is improving, with markets showing signs of recovery and even rallying in some cases.
2020 was a rough year for individuals invested in shares of FTSE 100. The COVID-19 pandemic and the uncertainty surrounding Brexit gripped the markets for much of 2020. However, with multiple vaccines passing regulatory approvals and the end of the pandemic looming on the horizon, markets are bouncing back. With a Brexit deal also agreed, businesses are finding their way out of a crisis that took some adept handling.
How are these two scenarios going to impact the markets?
- Brexit - There is less uncertainty around Brexit now that a deal has been agreed upon and the transition is complete. What remains to be seen is how the British and European markets adapt to a post-Brexit market.
- COVID-19 - The end of the pandemic is in sight, with multiple vaccines having received regulatory approval and more vaccines in the final phase of trials.
Of course, the improving market situation is bound to lead to debates about which shares are the best to buy in the UK stock market in the current market environment. There are several shares that investors can invest in and benefit from, but too many cooks spoil the broth, too many options will end up confusing investors. It is essential to narrow down your options to two or three shares to invest in.
Clearly, deciding which are the best UK shares to buy now is likely to confuse investors. However, the following three shares that we believe can benefit significantly in the current market environment. The improving situation will positively impact the profitability of these shares in the coming few years.
The Top 3 Best FTSE 100 Shares to Buy Now:
1. Lloyds Bank
1. Lloyds bank - UK focused bank may benefit from a stock market rally
Shares of companies operating in the UK are in line to benefit from a stock market rally, especially in the long-term. Lloyds Bank is a prime example, as it generates most of its revenue from the UK. Banks in the UK suffered losses in 2020, but they have rebounded and recovered losses. There are quite a few factors that favour Lloyds both in the short-term and the long-term.
The improvement in the UK's economic outlook will see the demand for the bank's products and services increase. The freeze on dividends has also been lifted by the Bank of England, meaning Lloyds can resume paying dividends. Dividends were cancelled in the UK as a response to the COVID-19 pandemic.
Lloyds has a competitive advantage over its rivals, thanks to its focus on digital services and a better financial position than its peers. Given these factors, it could outperform other FTSE 100 banks.
2. BHP - Relying on the global economic recovery
As an investor, this is the perfect time for you to look at companies that rely on the global economy. BHP is one such example, and it could probably be the best shares to buy for the long term stock market rally.
BHP has performed resiliently on the financial front, with a low cost-base translating into high profitability. The demand for commodities is also increasing as the world economy stages a gradual recovery.
BHP's financial position allows it to invest more than its peers. The company also has a broad asset range. This acts as a buffer against weaker performances in the market, reducing the risk for investors.
To conclude, as an investor, the next few months are a window of opportunity for investors to enter the market at a competitive price. Thanks to the COVID-19 pandemic, the markets saw an unprecedented downturn. However, with the end of the pandemic on the horizon, the markets are staging a recovery. There is still time for investors to enter the market and make a profit once the market rallies, only if you move fast.
Read Also: What Are The Top 7 Stock Picks for 2021?
3. Vodafone - Dividend Opportunity?
Vodafone is an interesting option for investors looking to invest in FTSE 100 stocks. Vodafone offers a wide safety margin with a dividend yield of 6%. This is indicative of the stock's ability to deliver share price growth in the lon run stock market rally.
A low-interest period can also increase the appeal of Vodafone shares and their passive income. Lately, Vodafone has switched its focus to improving customer service and customer satisfaction. It is also focusing on digital channels. Focusing on these aspects of business can help Vodafone forge a strong position which can translate into profitability in the foreseeable future.
There could be a positive response to Vodafone's strategy, and we could see Vodafone trade at a higher valuation compared to other FTSE 100 stocks.
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