Investors are often advised to invest in stocks for the long term to reap the benefits of compounded growth. The power of compounding is an important concept one needs to understand to appreciate the benefits of long-term investing. So if you have got £5000, these are the 3 UK stocks to buy and hold for the long term.
The growth of a company comes not only with scale but with efficiency in operations. And this is a gradual process. Strategies chosen by the management make or break the path for growth, and as investors, you must study a company’s business model before investing. It is also essential to have a macro perspective and keep in mind various factors such as government policy, interest rates, stakeholder claims (including debt and equity holders), among others.
With these considerations in mind, our picks are AstraZeneca, Barclays, and Glencore. These three firms have the propensity to grow and generate massive returns in the future.
UK Shares To Buy and Hold for the Long Term:
AstraZeneca does not need its coronavirus vaccine candidate to report healthy growth. Despite all the pressure the pandemic placed on commercial drug launches during the first nine months of 2020, sales of new medicines drove total product sales over 8% higher year over year.
Over the past year, AstraZeneca generated around $1.9 billion in free cash flow. This is essentially a profit the company can distribute to shareholders as a dividend, pay debts, or spend on acquiring new sources of revenue. During the first nine months of 2020, AstraZeneca reported core earnings that rose 13% year over year, but the company's dividend has been frozen for years at a level that currently yields 2.8%.
Adding rare-disease drug sales from Alexion Pharmaceuticals to AstraZeneca's quickly growing oncology segment will create a pharma stock positioned to deliver gains regardless of what happens to the broader economy.
Continued success for all of AstraZeneca's growth drivers might lead to market-crushing gains, but investors who buy the stock now do not need to get lucky to realize a healthy return. That makes AstraZeneca PLC a great stock to buy now and hold for the long run.
Barclays is a British universal bank anchored in the two financial centers of the world, London and New York. Barclays offers a range of ready-made investments. While some are aimed at investors primarily seeking to earn a regular income from their investments, others are for people looking for capital growth.
Barclays earlier partnered with asset management experts BlackRock, a leading passive portfolio management enterprise. BlackRock has been appointed to implement Barclay's asset allocations for growth investments. Passive investments aim to match the performance of an index they are tracking, unlike an active approach in which a fund manager actively aims to beat it. As a result, passive investments usually have much lower fees.
Barclays Ready-made Investments for income give investors exposure to a wide range of leading specialist third-party fund managers, including fund managers from around the world whose services are usually available only to institutional, rather than individual, investors. The firm's in-house fund manager research team is responsible for selecting some "of the world’s best investment firms," which they consider to be suited to implementing the asset allocation. According to Barclays' website, it is an effective combination of its investment philosophy and know-how, with industry-leading management expertise.
Ready-made Investments aim to give investors a diversified portfolio that spreads their investments across different types of assets and other geographies. A thoughtfully designed, diversified portfolio is usually the best way to achieve long-term goals. It increases the potential for returns to include bonds and equities from both developed and emerging economies while delivering the benefits of diversification to reduce the overall risk of investing.
Barclays PLC recently overtook Credit Suisse Group AG in investment banking revenue. The London-based bank vaulted past its Zurich-based counterpart to be one of the largest investment banks outside the US in the second quarter of this year with $1.26 billion of investment banking revenue, representing a 4.1% market share, according to Dealogic. For this and many more reasons, buying Barclays PLC stock will pay off in the future with massive returns.
Glencore PLC functions as a diversified natural resource company. It operates in three groups: Metals and Minerals, Energy Products, and Agricultural Products. The Metals and Minerals segment is involved in mining, smelting, refining, and warehousing copper, nickel, zinc/lead, alloys, alumina/aluminium, and iron ore.
Investors need to consider factors such as sound fundamentals, positive earnings estimate revisions, etc., that power the momentum in any stock are in place. Glencore PLC (GLNCY) is on an uptrend backed by strength in its fundamentals and trading in the upper portion of its 52-week high-low range, which is usually an indicator of bullishness. There are many vital reasons why this stock is a solid choice for investing. A substantial price increase over a period of 12 weeks reflects investors' continued willingness to pay more for the potential upside in a stock. GLNCY is quite a good fit in this regard, gaining over 9% over this period.
Experts predict that Glencore's growth is not stopping anytime soon and is poised to produce significant returns in the long haul. So if you are looking for stock options with potential in them, Glencore PLC is a strong candidate.
The stock market can be very volatile. But if investors dedicate enough time to research and learn about the stocks that they plan to buy, they can stand to gain immense returns in the long term. So if you have got £5000, these are the 3 UK stocks to buy and hold for the long term.
That said, investors have to carefully evaluate their risk appetite before making any significant financial commitments. Start by seeking financial expertise and studying the past performance of the stocks before buying them.
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