The Best UK Stocks To Buy
It has been a very healthy few months for the FTSE 100. The index of the UK’s 100 largest publicly listed companies has climbed consistently from Spring through Summer, gaining around 400 points from March to today. This puts the globally watched index almost back to where it was before Covid, and it looks likely to pass this level later this year.
Meanwhile, the FTSE 250 is setting the pace and has already stormed past its previous pre-Covid level. As such, the UK markets represent a suitable hunting ground for the active investor looking for value and growth. Here we take you through two UK stocks worth considering buying right now.
The Best UK Stocks To Buy
1. Savills (SVS)
Beginning with the FTSE 250, one stock that looks very attractive right now for a ton of different reasons is Savills, the global real estate services company. Savills recently revealed that their profits before tax has increased more than 8 times their original level in the past 6 months.
This extraordinary growth was driven by tax incentives to encourage people to move house despite the pandemic. Savills and other real estate service providers saw revenue of £932.6m in the 6 months to 30th of June, and this was up by just over £141.2m in comparison to the same period last year. This led to group profit before tax for the period standing at £63.8 million, swinging up from just £7.7 million in the first half of 2020. These are stellar numbers that should leave shareholders more than satisfied.
Now, obviously, the stamp duty holiday which led to so many people moving house has ended, but there are still loads of reasons Savills stocks look great right now. Firstly, Savills is a top quality company providing top quality services around the world. The company is over 160 years old and has nearly 40,000 employees working out of 600 offices in 70 countries. There simply aren’t that many global real estate services groups on this scale and with this kind of pedigree.
Secondly, despite its age Savills isn’t afraid to move with the times. As all investors know the social and economic landscape in which we operate is changing very fast these days. Companies that don’t evolve will inevitably die off! Savills has been quick to two big trends which will highly impact the next decade.
For starters, they have moved early and on a large scale into the next big trend in developed markets real estate – warehouses. E-commerce’s continued domination over the high-street necessitates every more and more warehouse space, and more and more tech is going into these places than ever before. Savills have staked out a leading position here as a service provider to companies leasing or buying warehouse space.
Finally, Savills have bolstered their green credentials by hiring a sustainable design director who is to be based in the firm’s City office. This shows their commitment to delivering net-zero buildings and architectural plans as soon as possible, and further boosts their popularity with ESG investors.
2. Hargreaves Lansdown (HL)
Our second pick is from the headline FTSE 100 index. Hargreaves Lansdown are a financial services group that mainly specializes in providing investment services to private clients in the UK. There are several reasons to consider added Hargreaves Lansdown to your portfolio.
Firstly, they are currently pretty cheap. This is because the frenzy of increased trading activity that started with the pandemic and more or less carried on throughout has now started to slow down. For firms like Hargreaves who offer a lot of brokerage services, this has meant reduced revenues right now, and this has led the share price to slide.
However, short-term investors selling out of the stock because of this are missing the point! What firms like Hargreaves and other low-cost investment platforms provide has changed the financial markets for good. A new generation of well-informed retail traders have entered the markets, and they aren’t going away just because some of the ‘meme-stock’ activity has calmed down now.
Hargreaves has actually added an astonishing 233,000 new clients over the last year, and more than 80% of these new customers are under 55. Stock market investing has been opened up to younger people who are looking for ways to grow their savings over time, and these new customers are likely to stick with their chosen platforms over time.
The whole point is that Hargreaves provide a great, relatively low-cost and very easy to access and understand platform for investing. This has lured in record numbers of new clients, and the ultra low interest rates available on traditional savings accounts mean these new clients are likely to stay active in the markets. Hargreaves deserve their success and can expect to have stable and increasing revenues over the years ahead.
Finally, it needs to be mentioned that Hargreaves do have something of a cost problem. This does need to be factored into any thorough evaluation of the company and their likely performance over the years ahead. Part of this is that they have enthusiastically adopted working from home practices, and this has meant the need to invest in some new tech to make this work.
However, long-run this should be a cost-saving measure. More serious is that Hargreaves’ margins are small and they seem to be slipping even smaller. That said, this sort of problem can be addressed by good management choices if they act soon enough, and so far there seem to be enough evidence that the board are aware of this creeping problem.
Only time will tell if they are able to full get a gripe, but no one can deny Hargreaves have done an amazing job of recruiting and retaining their massive new customer base. This should set them up well for the years ahead.
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