I think these are two of the best UK shares to buy in a recession

first_imgI think these are two of the best UK shares to buy in a recession If you like AIM-listed shares then you might like to read about… 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. Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge! Image source: Getty Images Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before! Official data released this Wednesday show that the UK has fallen into the deepest recession on record. Investors will likely be wondering what are the best UK shares to buy in a recession. Defensive stocks typically perform relatively well in a recession. However, I think some of the best UK shares to buy in a recession are the ones that might actually outperform when the economy sours.UK recessionA significant decline in economic activity that lasts more than a few months defines a recession. UK GDP contracted by 2.2% in the first quarter of 2020 and by a monumental 20.4% in the second. For reference, the worst quarterly decline during the great financial crisis was 2.1%. There are signs of a sharp recovery in the awaited third-quarter results, but this is from a relatively low base.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…It will not be a surprise that the coronavirus pandemic has hurt UK businesses. What may be surprising is that UK businesses have been struggling for quite some time. Research from Red Flag Alert indicates that there have been seven consecutive quarters of increasing financial distress among UK businesses, as of the second quarter of this year. Some 527,000 businesses are in financial distress, up 33,000 since the start of 2020. The real estate sector is particularly badly hit, seeing a 19% rise in cases of significant financial distress.With the recession, the pandemic still not under the control, and Brexit on the horizon, things could continue to get worse. Since stock prices reflect the performance of the underlying business, plenty of share prices could fall.Recession picksWhen the economy is in poor shape, corporate restructuring and insolvency proceedings are in demand. Companies in the the business of corporate restructuring and insolvency, like FRP Advisory Group (LSE: FRP) and Begbies Traynor (LSE: BEG) might actually do well in a recession. FRP expects to report a 16.4% rise in revenue for 2020 along with bumper profits. Begbies grew its revenue by 17% in 2020 and adjusted pre-tax profits rose by 31%. Both companies are reporting increasing caseloads. This is in spite of financial support for businesses from the UK government and the central bank. Financial difficulties are expected to increase as these supports are withdrawn, leading to more restructuring and insolvency work for FRP and Begbies.Be warned, however, both of these stocks are AIM-listed. They have small market capitalizations and their share prices could be volatile because the shares are illiquid. Something else to consider is that both these businesses get paid for work done with struggling or bust businesses. Payment can take months to collect, and of course, there is a risk that some fees may not be recovered. Both FRP and Begbies do reflect recovery risk in their financial statements, but assumptions can always be wrong.But even accounting for the risks, FRP and Begbies do look like some of the best UK shares to buy in a recession to help diversify and protect a portfolio. Both have solid business models that benefit from times of economic uncertainty. If I was choosing just one stock it would be FRP. Begbies has a property division that accounts for about 30% of sales and the real estate sector, as stated earlier, is really struggling. The high-calibre small-cap stock flying under the City’s radar Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Shares James J. McCombie | Saturday, 15th August, 2020 | More on: BEG FRP 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. Enter Your Email Address James J. McCombie has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesco. 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. See all posts by James J. McCombielast_img read more

"I think these are two of the best UK shares to buy in a recession"