When it comes to buying stocks, most people tend to go with the crowd. They go with the big stocks that are an obvious choice for everyone else. However, this is not the best strategy for someone who wants superior returns.
Anyone who wants superior returns must be willing to go beyond the obvious. Sometimes this means investing in stocks that carry a higher degree of risk, but with high upside potential.
Using this rationale, here are three UK stocks that have the potential for higher than average market returns.
UK Stocks Are On A Rebound
UK equities are currently on a rebound. This follows growing optimism that the worst of the COVID-19 pandemic may have passed.
The implication is that a lot of companies that were hitherto undervalued are now relatively fairly valued.
Nonetheless, there are some good companies whose stocks are still trading way below their fair market valuations.
To make the most of investable capital, it is best to buy such stocks, and then watch them increase in value, as the whole market bounces back.
3 UK Shares To Buy Now At Massive Discounts
One UK stock that is highly undervalued at current prices is Aston Martin. While the stock markets have been in a rally, Aston Martin has been directionless for months.
The company was one of the biggest pandemic losers due to a decline in sales of luxury cars. In fact, it recorded a massive loss in the first half of 2021.
However, this is changing. With vaccination levels in the UK, Europe, and the US now at over 50%, most activities are returning back to normal.
This means Aston Martin’s sales of luxury vehicles are likely to gain traction again. The company is also doing pretty well in the SUV market.
Last year, the company released a new line of SUVs, and in the first half of 2021, sold over 1500 of these vehicles.
The impact of these SUVs was so high that their sales accounted for over 50% of the cars that it sold in this period.
It’s an indicator that SUVs are gaining market traction, and that’s a big deal towards the long-term value appreciation of this stock.
The impact of the new line of SUVs is best captured in the sentiments of its executive Chairman, Lawrence Stroll.
He stated that they had helped the company deepen its financial resilience. This means the company will be better placed to navigate through crisis situations going into the future.
With the fundamentals pointing to growth, this stock’s technicals are looking pretty good too.
Aston Martin has been trading sideways for months, which is a perfect time to accumulate when volumes are low.
Key indicators point to rising bullish momentum too. Aston Martin has gained strongly and pushed through the 50, 100, and 200-day moving averages in the past few weeks.
This has opened the way for more upside momentum in the short term, with the potential to test prices above GBP 2200.
There aren’t many news sites hyping this stock, so it is still flying under the radar despite its improving fundamentals.
The second UK share that is highly undervalued at current prices is NatWest. This company may have a turbulent past, but its fundamentals have been getting better with time.
From a look at its books, the company is in pretty good standing at the moment. One of the best pointers to this company’s improving fundamentals is its revenue growth.
NatWest currently has a quarterly revenue growth rate of 429.80%. This is a healthy growth rate for any organization.
It also has a healthy gross profit margin of 19.37%. NatWest is a dividend payer too, and has a forward annual dividend yield of 2.78%.
Besides its strong books, financial sector stocks are expected to keep growing going into the foreseeable future.
Interest rates are still low, and with the economy reopening again, banks are likely to see an increase in demand for their products.
With the fundamentals looking good, this stock’s technical indicators look pretty good too.
It has been trading in a bullish channel above the 50-day moving average for months now.
In July it dipped and pushed through the 50, 100, and 200-day moving average support levels.
However, this dip was quickly bought up, an indicator that bulls are still firmly in control. Buying momentum shot up after this dip and has stayed high all through.
With the company’s fundamentals solid, and the financial markets all set for growth, this is one stock that could deliver superior results in the short to medium term.
Another UK stock that is undervalued at Massive Discounts is Imperial. Tobacco regulations may be getting tougher, but this does not mean Tobacco usage is going away anytime soon.
This means Imperial is likely to make healthy revenues going into the future. Besides this, the company’s books look quite good.
For starters, Imperial is a dividend-paying stock and recently announced that it was increasing the amount it was paying out in dividends.
The company announced that it was comfortable enough with its earnings to give investors a higher dividend payout.
From an investor standpoint, this balances out the higher risk that comes with holding the stock.
However, the most bullish news for this stock is that an insider recently bought the stock. One of its director’s Robert Kunze-Concewitz, recently acquired 25% more of the stock.
This is the second time in the year that one of the company’s directors is making a massive purchase of the stock.
Normally, insider purchases point to confidence in a stock’s future. That’s because company insiders usually have a better understanding of a company than any analyst out there.
Based on the confidence that insiders have in the stock, it is massively undervalued at current prices. The upside could be huge now that the FTSE 100 is on a growth trajectory. The economic disruptions of COVID-19 are easing up too.
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