With the end of the first half next week, I reviewed my equity holdings. I have a shortlist of UK stocks to buy now for my portfolio. Here are my three favorites.
UK stocks to buy now in banking
the Lloyds (LSE: LLOY) the share price rose. It recently hit a ceiling close to 50p before falling back a bit. Still, it is up 48% from last year.
Is the recent reversal a sign that these UK stocks are overvalued? Or is it a buying opportunity?
I see it as a chance to complete my participation in Lloyds. The company benefits from owning some of the best known banking brands in the UK market. He relaunched his dividend. He plans to increase dividends in the future.
This was also true a few months ago. So why should I buy now specifically?
I am becoming more optimistic about the prospects for the UK economy. The reopening revealed the economic power of millions of consumers eager to spend. Even shock absorbers for some companies – like overseas travel restrictions – could work in Lloyds’ favor, I think. Customers will have more money to spend in the UK economy. A vibrant real estate market is good news for Lloyds as the nation’s leading mortgage lender.
It also highlights a risk at Lloyds. Heavy exposure to the UK property market risks increasing defaults and squeezing profits as the UK economy enters another difficult period.
UK Stocks to Buy Now: S4 Capital
Digital advertising network S4 Capital (LSE: SFOR) has also had a good run over the past year. Up 134%, it comfortably outperforms Lloyds.
It is now just 7% below its all-time high. So why would I still think of S4 Capital as a buy now UK stock for my portfolio?
In short, I see solid growth prospects here. The company generally maintains an optimistic tone – but given its performance, I think the optimism is justified. Both reported revenue and gross margin increased by around a third in the first quarter. By adding the impact of acquisitions, total growth is even stronger. Both reported revenue and gross profit increased 71% from the previous year.
The company expects more of the same, increasing the forecast for revenue and gross profit growth for the year from 25% to 30%. But there could be risks in growing too fast. The rapid integration of many acquisitions can lead to costly staff turnover and less satisfied customers who spend less.
Yield Choice: Imperial Marks
While S4 is at the forefront of digital technology, Imperial marks makes its money in a mature industry. The company owns tobacco brands such as Lambert and butler and Golden Virginia.
Declining tobacco consumption in many markets may reduce income in the future. But the reason I still consider Imperial among the UK stocks to buy now for my portfolio is its 8.7% return. The company generates substantial cash flow which helps support the dividend, for now at least. But he cut his dividend last year, and payout is never guaranteed.
My 3 Favorite UK Stocks to Buy post has now appeared first on The Motley Fool UK.
Christopher Ruane owns shares in Imperial Brands, Lloyds Banking Group and S4 Capital. The Motley Fool UK recommended Imperial Brands and Lloyds Banking Group. The opinions expressed on the companies mentioned in this article are those of the author 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 wide range of ideas makes we are better investors.
Motley Fool United Kingdom 2021