The FTSE 100 index is up by 8% year-to-date. This is a slight correction from earlier in August when that figure was at 18%.
Nonetheless, after such a strong performance throughout the year, most UK stocks are fairly valued at this point.
That said, some stocks would still be considered relatively undervalued at current prices.
For someone with just GBP 5000 to invest, it would make sense to spread it evenly among these seven top UK shares.
Top UK Shares To Buy Now With £5000
Burberry (BRBY) is one of the best rebound stocks as the world returns to normalcy. Despite gaining by about 50% over the past year, this stock still has the potential to gain even more going forward.
Despite the disruptions of 2020, and early 2021, this company recorded revenue growth, an indicator that the underlying demand for luxury fashion is strong.
Now that most of its stores are re-opening, revenues are likely to surge going into the future.
Burberry’s potential is also enhanced by an upsurge of young people willing to spend on luxury items.
In July, the company announced that it had hit revenues of GBP 479 million in just 13 weeks. This was an upsurge of 86% compared to a similar period a year ago.
The company attributed this to an increase in the number of young shoppers spending on its luxury products.
It also attributed this to the use of top celebrities such as Marcus Rashford, singer FKA Twiggs, and even social media influencer Kendall Jenner in advertising.
With the UK economy on a rebound, these factors will have a significant impact on the value of this stock going into the future.
Besides the broader market factors, Burberry’s internal fundamentals are pretty strong too.
The company has a current ratio of 2.82. This means it can cater to its short-term liabilities without a strain on its resources.
Considering that the Bank of England has said it could raise interest rates in 2022, investing in companies with the resources to repay debts without putting a strain on their operations is vital.
Burberry is also in a strong cash flow position. With an operating cash flow of GBP 591.4 million and leveraged free cash flows of GBP 427.3 million, this company has the resources to keep operating without interruptions to its operations.
These are factors that could contribute to its growth in the short to medium term.
The home improvement materials supplier, Kingfisher (KGF), is the second growth stock worth investing.
That’s because the UK real estate market has been strong for the past year and is likely to get even stronger going forward.
In past months, UK real estate was driven by government subsidies that have attracted many people to the home buying market.
Now that the economy is going back to normal, consumer confidence is likely to accelerate growth in this market.
This places Kingfisher in a good position because the demand for home improvement products will also rocket in the foreseeable future.
Kingfisher’s prospects are also bolstered by the fact that insiders are buying the stock. Insider buying is usually an indicator that those most in the know about a company are confident about its prospects.
Over the past year, company insiders have been quite aggressive in their purchases. The most notable one is the purchase by Independent Chairman Andrew Cosslett. Cosslett bought GBP 338K worth of the stock.
There were no insider sellers of this stock in the past year, which is an excellent pointer to the confidence of those who have the most knowledge about its operations.
Kingfisher’s books look pretty solid, too, and boost confidence in this stock in the short to medium term.
For instance, its current ratio of 1.24 means it is under no strain to meet its current liabilities in the short term. That’s a good sign because they would not affect its operations even if interest rates were to increase.
The company also has an operating cash flow of GBP 1.65 billion and leveraged free cash flow of GBP 1.2 billion.
Cash flow is one of the most important metrics to gauge a company’s health. In essence, Kingfisher’s strong cash flows, coupled with strong market potential, are a good enough reason to bet on this company.
Kingfisher’s price action points to a stock that is at a good entry point too. After a correction over the last couple of weeks, the selling momentum seems to have eased up at around the 100-day moving average.
This is a good signal given that market factors point to potentially higher revenues in the coming quarters.
Flutter (FLTR) makes it to the list of growth UK shares to buy now because sports betting is big business and tends to be pretty insulated from economic fluctuations.
This is quite evident in the performance of Flutter over the past year when it has emerged as one of the best-performing stocks in the LSE.
Going forward, this stock has the potential to give investors even higher gains. That’s because the European football season is currently underway.
This means revenues for companies that offer online sports betting services are set to go up.
Besides the European football season, Flutter has a lot going for it at the moment. For instance, the company has been reaping big from its investment in FanDuel. FanDuel is a US fantasy sports betting company and has recorded exponential growth over the last couple of years.
Its performance is so good that the decision by Flutter to buy a majority stake is lauded as one of the best deals by an LSE company in recent times.
Besides this deal, Flutter has seen its share of the US betting market grow exponentially. As of 2021, the company has a 45% share of the US sportsbook market. This equates to around 2.2 million customers.
The most interesting part is that more than 75% of these customers started using Flutter’s services in the past year. It’s an indicator of how exponentially fast Flutter is growing in the US gambling market.
It’s a factor that will play into the company’s revenues, and stock price going into the future.
Still, on the US market, the company is set to benefit immensely from a move by US states to repeal a ban on sports betting.
The ban was put in place ten years ago, but now that it is out of the way, betting companies that have a sizeable portion of this market are set to reap big.
Flutter’s strong growth prospects in the US and other core markets have boosted the company’s books.
The company’s cash flows are pretty good and stand at GBP 1.11 billion. This means it is well-capitalized to handle its operations without funding problems.
The company’s current ratio stands at 0.83. While this is pretty low, it is likely to improve now that revenues are on a growth path.
A combination of being in a growth market, market dominance, and strong market fundamentals make Flutter a top UK stock to invest today when the total capital is GBP 5000.
With the commodities market booming for over a year, Glencore (GLEN) is one of the companies that have benefited immensely from this boom. This has been reflected in its stock price, which has rallied by over 100% in the past year.
Given that the world economy is now close to a full reopening, the market for metals and other commodities will only grow. This spells good tidings for Glencore in terms of revenue growth.
However, it is not just the positive prospects for the materials market that gives this company good tidings for the future. Glencore is also making investments that are guaranteed to positively impact its revenues in short to medium term.
For instance, it recently bought a stake in Britishvolt, a British battery company that plans to build a Gigafactory in the UK.
Besides this investment, Glencore will also be the supplier of materials to the Gigafactory. Glencore is expected to supply 30% of the total cobalt that the Gigafactory will need between 2024 and 2030.
Glencore already supplies Cobalt to top automobile companies such as Tesla and BMW. With the market for electric vehicles set to grow going into the future, Glencore’s revenues are also set to grow.
Its stake in BritishVolt is also likely to record exponential growth, given that the UK is in the process of phasing out diesel and petro cars by 2030.
These are structural factors that make Glencore a good buy at current prices.
Glencore’s books look pretty good too and add to its intrinsic value as a UK growth stock to buy now.
The company has a current ratio of 1.08, which means it has the current assets to cover all its current liabilities at its current state.
This is important for two reasons. First, the Bank of England has made it very clear that it was considering raising interest rates at some point in 2022. This could hurt overleveraged companies that do not have the resources to meet their most urgent obligations.
Secondly, the materials market is highly volatile. As such, any player in the market that is not liquid enough, and has debts can quickly find itself unable to meet its obligations. Glencore does not have this problem.
The company also has strong cash flows which mean even if materials prices fluctuate in the short term, it is unlikely to feel the impact.
Strong books and a good investment in a growth industry make Glencore a top UK stock to invest in today.
Johnson Matthey (JMAT) makes it to this list for the potential it offers going into the future. For starters, with the world economy on a rebound, the market for specialty chemicals is only set to grow.
However, besides betting on a rebound in the broader economy, Johnson Matthey has made some smart investments recently.
Earlier in the year, the company announced that it would spend around GBP 600 million on battery materials and hydrogen technology within this financial year.
It added that the idea behind this investment was to meet the growing demand for Electric Vehicles in the European market.
This is not the first investment that Johnson Matthey is making in the electric car market. A while back, it entered into a deal to develop a cathode materials plant in Finland. It also secured a deal to supply cobalt and nickel to this plant for many years to come.
These deals are huge from an investor standpoint. That’s because the EV market is on a growth trajectory, and there is a government incentive to support the industry.
For instance, many developed countries are expected to get rid of the internal combustion engine by the 2030s. With such growth potential for electric vehicles, companies like Johnson Matthey that have a fundamental role in the EV value chain are expected to record value growth.
Besides investing in a high-growth market, Johnson Matthey’s books make it a worthwhile growth stock too.
The company has a current ratio of 1.36, which means it has more than enough resources to cover its short-term liabilities in case they come due.
This guarantees the company stability no matter the direction interest rates take in the future. A healthy current ratio also means that Johnson Matthey has the room to borrow comfortably if investment opportunities come up.
On top of that, Johnson Matthey has strong cash flows of GBP 769 million. With its positive and high cash flows, Johnson Matthey can comfortably carry out its operations without resulting in extraneous borrowing.
It’s a stock that can give good returns long-term on a GBP 714 investment made today.
The UK real estate market has been booming for the last year fueled by government subsidies. This has hugely boosted the shares of Persimmon (PSN) over the past year.
With the UK economy on a rebound post-pandemic, the demand for real estate is likely to soar.
Interest rates are pretty low too, and though they could go back in 2022, they are unlikely to rise to a level where they could hamper economic activity.
This places homebuilders like Persimmon in a unique position to deliver value to investors.
Persimmon’s internal factors are pretty good too. The company has a current ratio of 4.71 which means it can comfortably handle its current liabilities multiple times over.
It also has strong cash flows of GBP 1.26 billion. This means it is well-capitalized to smoothly carry out its operations.
A growing market coupled with strong company fundamentals makes this company a good investment for someone looking to spread GBP 5000 evenly amongst top UK shares.
E-commerce is booming, and this has seen an upsurge in the demand for Segro’s (SGRO) warehousing services.
A few months back, the company announced that it had sold its Italian warehouses to capitalize on other more lucrative aspects of its business in Italy.
With e-commerce adoption accelerated by the pandemic, demand is only likely to grow long-term.
This means Segro’s growth prospects are quite high going forward. It has already been one of the top performers in the LSE and it’s gaining momentum.
That’s why it makes for a worthy inclusion in a portfolio of seven UK shares built with GBP 5000.
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