The London markets have always been a great place to hunt for value. They are even more attractive now that US markets are at all-time high valuations. Great shares to buy today could be from the small-, mid- or large-cap universe, but they must be either cheap today by historical standards, or have some compelling reason why they look good to buy right now. Here we take you through 4 UK shares that look like they could be great additions to a portfolio right now.
4 British Shares To Buy Now
1. Watches of Switzerland Group
First up, luxury watch retailer Watches of Switzerland Group are up around 20% over the past few months. This has put the stock’s price up near its highest previous peak. However, there are good reasons to think it still has further to run. Firstly, the fundamentals look incredible right now, and there are signs they could even keep improving from here. The groups first-quarter trading update to 1st of August 2021 stated that revenue doubled to £297.5 million compared to the first quarter of last year. If this wasn’t enough, it should also be pointed out that this represents an increase in revenues of 45.8% on the same period two years ago.
As such, the group have clearly been the beneficiary of the general resilience of luxury spending over the pandemic. This is part of a well-known paradox of consumer behaviour – when times are tough consumers do cut back on everyday purchases, but they bizarrely tend to maintain their level of spending on luxuries at the same time! This could be because it is precisely the occasional luxury purchases that keep people happy and optimistic when there are lots of problems to be faced. Watches of Switzerland Group have a long-standing reputation for quality, and it seems unlikely the demand for luxury watches will disappear anytime soon.
2. Thomson Reuters
Since the acquisition of Reuters by Thompson back in 2008, the media and publishing giant has gone from strength to strength. Probably the best-known news agency in the world, Reuters traces its roots back to 1850s London. This is evidence of the pedigree and prestige that still attracts investors to the company. Now headquarted in Canada, Thompson Reuters is a titan in the world of data and technology. It isn’t that Thompson Reuters looks like a good share to buy right now on the grounds that it is cheap – it isn’t cheap right now, and hasn’t been cheap for a while. It’s simply that the business model Thomson Reuters has is incredibly resilient and likely to keep generating good cashflow far into the future. In short, whatever the price, this stock is worth buying and holding.
As well as the core news and financial data businesses, Thompson Reuters also have a wide array of high-quality products for tax and legal professionals. The provision of real-time news and data to the finance industry continues to remain extremely profitable, but the diversification of how the business generates revenue is very strong here too. Finally, the firm also publishes legal and tax textbooks which will be used by new students this term and later in their careers. There is not much to dislike about Thompson Reuters, a high-quality company with a long-standing reputation known to professionals in numerous sectors all around the world. This stock is well worth considering adding to your portfolio.
3. InterContinental Hotels Group
Tourism is back with a bang, and stocks that offer services in this sector have seen a marked uptick over the summer months. However, there are several reasons why InterContinental Hotels Group stand out from the crowd.
Firstly, the UK hotel chain is an outright industry leader with 17 brands under its umbrella. Ranging from luxury offerings like InterContinental to more affordable options like Holiday Inn, the group are well prepared for whatever direction the travel and tourism market heads in from here. Analysts expect the company to expand its room share by 3% over the next decade, and this is well above the estimated 1.8% supply increase anticipated for the U.S. industry. InterContinental Hotels Group seem to be hungry to expand in a market where the pandemic has allowed price increases far in excess of inflation to be levied on consumers.
Secondly, InterContinental Hotels Group is a leader in outsourced properties. This is a more advanced method of obtaining space, and it essentially means their costs can be much lower than their competitors. In fact, a full 99% of its hotels are outsourced or franchised right now.
Finally, we have already talked about the resilience of the luxury sector in general. Therefore, it should be clear why we think the announcement by InterContinental Hotels Group to launch a new luxury brand is a good sign. The group has returned -2.90% so far this year, and -0.80% annually over the past three years, but analysts now believe it is set to return to pre-Covid levels by 2023. This slow recovery is understandable given the ‘once in a lifetime’ nature of the pandemic, but it is the long term potential to grow over the next decade that is starting to bring investors back to hotel stocks.
Last but not least, quarries and mining group SigmaRoc. Investors may be a little cautious of mining stocks, who are famously volatile and have not always lived up to the promises they’ve made. However, SigmaRoc looks like a very exciting prospect right now based on some now projects in their pipeline.
They have recently announced that they are entered a "strategic collaboration" Marshalls PLC to develop ultra-low carbon products for the concrete building materials sector. Needless to say, the requirements of ‘greening’ the constitution sector are enormous. Companies who can lead in this area with new products and manufacturing processes will harvest great rewards. Shares in SigmaRoc were trading up 3.5% following this announcement, as analysts waited for more details before giving their final verdict.
Seeking to position themselves at the heart of an emerging environmental sub-sector within the constitution industry, SigmaRoc further announced plans to develop new technology for an "environmentally conscious" marketplace with Marshalls, a FTSE listed manufacturer of products for the construction and landscaping markets. If this project is successful, both SigmaRoc and Marshalls should expect to see healthy revenue growth in the years ahead.
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