The FTSE 100 is buzzing right now. August has been the best month for the index since April 2021. I expect this good run to continue as recovery from the pandemic continues. Just like certain sectors benefitted from the lockdown, I expect certain areas to see sustained growth as trade patterns normalise. These are the three UK shares I’d like to buy for my portfolio to capitalise on a potential jump in prices.
As foot traffic to stores increases, I expect a correction in buying patterns. In the past year, e-commerce has reigned supreme, showing massive growth in volume. But, with vaccinations administered on a global scale, people will feel more comfortable venturing out to malls and local marketplaces. I think sports and fashion retailer JD Sports (LSE:JD) could benefit tremendously from this. I already see signs that the market is waking up to this judging by the 11% spike in share price in the last month.
However, even as sales normalise, it is evident to me that e-commerce will retain its growing importance. With analysts predicting a fundamental redesign in the supply chain, JD Sport has invested heavily in its online market. Its deal with Clipper Logistics is a sign of intent that definitely earns it a spot on my list of UK shares to buy.
Along with acquiring over 500 brick and mortar stores in the US, the company has also boosted its e-commerce delivery framework with Clipper reserving a minimum of 400,000 sq. feet of warehousing space for the sports retailer. Though the competition they face from Nike, Adidas, and Amazon is concerning, strong financials tell me that the business is growing.
Global alcohol giant
Another company that I think could benefit from global markets reopening is Diageo. The alcohol brand has a major foothold in Asia and Latin America. I expect a bump in alcohol sales in markets like India, Mexico, and Brazil in the coming months with the vaccine rollout slowly but surely allowing bars and restaurants to function at full capacity. Latin America and the Asia Pacific saw 30% and 14% increases in net sales of Diageo-owned brands in 2021.
The Greater China market, which has recovered effectively compared to other countries discussed above, showed a 37% increase in sales. I expect this trend to extend across the markets outside Europe and North America in 2022. Although another large Covid breakout could dampen Diageo’s sales, I think the company has a large enough market share to counter this. Diageo was on my watchlist in August and remains a UK share to buy for my long-term portfolio.
The pandemic caused a major backlog of optional medical procedures. Smith & Nephew specialises in orthopaedic surgery equipment and surgical devices. Harvard Business Review estimated a severe backlog in elective procedures amid the pandemic.
Now, hospital efforts are normalising as cases continue to drop. Research on this shows a drop in the waiting period for elective procedures since June 2021. Although S&N’s markets returns over the last year stand at an abysmal -5.6%, analysts are predicting a boost in surgical equipment sales. This, along with its large market share still makes Smith & Nephew a quality UK share to buy for my portfolio.
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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Clipper Logistics, Diageo, and Smith & Nephew. 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.