Top 7 UK Shares To Buy In December

By Trading Education Team

Last Updated November 25th 2022

15 Min Read

These UK Shares hold lots of potential in December 2022

December is here, and it’s time to look for stocks that hold potential not just for the month but for the 2022.

The UK stocks below are very attractive at current prices. Read more to find out why.

1. JD Sports

A high-end online sports and fashion retailer

JD Sports (JD) easily stands out in the list of top UK stocks to buy this December.

JD Sports has the advantage of market dominance. JD Sports is so dominant in the sports apparel and luxury items market that the UK competition authority is questioning its purchase of Footasylum back in 2019.

JD’s balance sheet points to a healthy company. One of the most important metrics of a company’s health is its ability to pay debts. On this front, JD is pretty good, with a current ratio of 1.50.

Basically, this means JD has more than enough resources to cater to all its short-term debt obligations. By extension, it means JD has the room to borrow more if the right investment opportunities arise.

Another important measure of a company’s health is its cash flows. Cash flows determine a company’s ability to comfortably run its daily operations without running out of liquidity.

Due to its high-margin products, JD has maintained a sustainably high level of cash flow.

Currently, JD has a price of around GBP 125, experts are forecasting an average price of GBP 187 or more within the month.

For such potential, JD is likely to remain a top UK stock not just in December but all through 2022.

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2. Deliveroo

An online grocery delivery company

Deliveroo (ROO) comes a close second on hot UK stocks to buy this December. Deliveroo’s potential has a lot to do with the coronavirus pandemic, which caused an increase in the demand for online food delivery services like ROO.

Aside from the increase in demand for online food delivery services in the UK, Deliveroo is also expanding into other lucrative markets.

Deliveroo announced that it was expanding into the French market. The expansion is through a partnership with Picard Groupe SAS for express deliveries all across France. Deliveroo has been quite aggressive in its French expansion, and the deal with Picard is the third in France.

Deliveroo is also continually innovating to push upmarket share and revenues. One of its latest innovative drives is Hop, a rapid grocery delivery service. Hop will rely on dark stores and push Deliveroo’s drive into new, high-value markets such as Italy and Hong Kong in Asia.

Hop is still in the trial phase, but Deliveroo says that the results are encouraging so far. Thanks to the trial's success, Deliveroo intends to push up the number of partnerships and expand on the model. According to the CEO, Will Shu, the Hop innovation has so far cut delivery times to just 11 minutes.

A combination of the increase in demand, expansion into new markets, and new innovative ways to serve customers better make ROO a pretty hot UK stock to buy this December.

If the GBP 80 support holds for the next few weeks, ROO could go into a full-blown bullish reversal, with a potentially impressive ROI in the short to medium term.

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3. Flutter Entertainment

An online gambling company

Flutter Entertainment (FLTR) may have tumbled recently, but it easily stands out as a top UK stock to buy today.

For starters, with COVID-19 still spreading fear and a new variant now in circulation, more people are likely to enjoy the back-to-back EPL games at home. This spells good tidings for online gambling companies, and Flutter stands to reap big.

Flutter’s earnings took a hit recently after a streak of favourable results for gamblers, but that’s just a short-term fluke. The chances of games turning out consistently in favour of gamblers are pretty low.

Besides the increase of sports gambling in the UK, Flutter faces equally good fortunes in the US. A while back, Flutter bought a controlling stake in US fantasy sports company FanDuel.

FanDuel has since grown to become one of the largest fantasy sports players in the US. FanDuel could see an upsurge of users all through December and push up Flutter’s revenues.

Flutter has been making investments that are likely to drive up revenues in the short to medium term. One of the big investments that Flutter has made is the purchase of Tombola, an online Bingo platform for £402 million.

Based on Tombola’s core data, it is a positive addition to Flutter’s bottom line. Tombola has an average of 400k users a month, and in the last financial year, it recorded earnings of £38.2 million from revenues of £164 million.

Flutter’s books also paint the picture of a company that is standing on solid ground. In 2021, Flutter Entertainment PLC revenues increased 37% to £6.03B. Flutter is in a strong cash flow position, too, a factor that gives it the ability to handle all its gambling operations with ease.

Based on technical indicators, Flutter’s monthly chart confirms its potential as a top UK share to buy this December. Flutter has been in a selloff for the past two months. Temporary factors largely triggered this, though, namely news of games being in favour of gamblers and the Omicron COVID-19 variant that has shaken the entire market.

However, both of these issues have already been factored into the price, hence the drop in selling volumes over the last few days. Going by the mantra of buy low and sell high, Flutter is in a buy zone, especially when you factor in the recent purchase of Tombola.

A reversal from its current price of GBP 11,860 could see Flutter give investors an impressive ROI, not just this month but for many months to come.

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4. Tesco

One of the UK’s largest retailers

With all the holiday shopping happening at the moment, Tesco (TSCO) comes off an obvious stock pick this December.

The food retailer and wholesaler with a strong online presence is likely to boost, now that online shopping has become the norm.

Besides, fears of the Coronavirus could help boost online sales for companies like Tesco. That’s because there are new shoppers who traditionally don’t do online shopping but are being driven into it by prevailing circumstances.

Tesco has also been making moves that could see it preserve its dominance in the UK food and grocery market. Back in December, Tesco entered into a partnership with Gorillas. Through the deal, Tesco customers can receive their deliveries in under 10-minutes.

At the time, Tesco CEO for the UK and Ireland, Jason Tarry said that Tesco aims to be the most convenient choice for customers, by helping them shop at any time, and from anywhere.

Considering the strong competition that new online grocery stores are putting on traditional retailers, partnering with Gorillas is a strong competitive move by Tesco. It’s a move that guarantees Tesco investors value growth, not just in December, but also going into 2022 and beyond.

Tesco’s books are strong too, and paint the picture of a company that is standing on a solid foundation. One of the most important fundamental metrics in retail is cash flows.

Without proper cash flows management, a retailer’s operations can easily ground to a halt. On this front, Tesco is pretty well covered, with positive operating cash flows of £1.1 billion.

Aside from the positive confluence of a strong balance sheet, growing sales, and the holiday season, Tesco’s charts paint the picture of a stock that is in a buy zone.

Tesco has been gaining upside momentum since June, and December could see even better performance for TSCO shares.

A push through GBP 260 is possible within the month. In fact, based on its charts at the moment, it is not just a top UK share to buy, but a pretty safe one to hold all through December as well.

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Check Out: 3 No-Brainer UK Stocks To Buy Right Now

5. Electrocomponents

A globally-renowned electronics components firm

Next on the list of top UK shares to buy in December is Electrocomponents (ECM) (now RS Group plc). Like the other stocks in this list, Electrocomponents has the fundamentals to see it rally, but it also has the added advantage of positive sentiment.

The hype around ECM has a lot to do with its entry into the FTSE 100. Thanks to its recent price rally, ECM has managed to replace two heavyweight stocks from the FTSE 100. The stocks it has replaced are Darktrace and Johnson Matthey.

In terms of fundamentals, Electrocomponents is a pretty solid stock. For starters, the company operates in a high-growth market, one that is projected to grow at an accelerated rate in the coming years.

According to Electrocomponents’s management projections, the company’s potential market is worth about $400 billion. That’s a huge market, and Electrocomponents believes growth is outpacing GDP.

Electrocomponents management also believes that it has a fighting chance in its core market because there is no single dominant player. Per the management, the top 50 companies only account for 30% of the total market. On its part, Electrocomponents accounts for about 1% of the total global market, and 5% of the domestic (UK) market.

Despite its relatively small share of the market, Electrocomponents has the edge over many other industry players. That’s because it has a wider distribution network than a majority of the industry players. It has a network of 12 distribution centers that serve customers across 80 countries.

Another fundamental aspect to Electrocomponents that makes it a worthy UK share to buy, is competent and forward-thinking top management. Back in 2008, the company was in shambles following the global financial crisis. However, under the strong leadership of CEO Lindsley, the company has bounced back, and the stock has grown by more than 300% since 2015. Lindsley has turned the company around with a strategic focus on empowering customers to buy and maintain their products.

With such management in place, Electrocomponents will likely remain a strong performer not just this December but through 2022 and beyond.

The key level to watch at the moment is December’s high of GBP 1250. If ECM pushes through this price level, it could reach GBP 1320 over the next months.

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6. Darktrace

A cyber-tech company

Darktrace (DARK) may have lost its position in the FTSE 100, but that doesn’t mean that its fundamentals are weaker. Stocks in the FTSE 100 are evaluated every 3-months, and due to market fluctuations, getting in and out of the FTSE 100 is quite normal.

One of the fundamental factors likely to push Darktrace all through December is the growing awareness about the need for internet security.

Since 2020, the number of major organizations, including government institutions, which have been hacked has shot up significantly. The most recent major company to get attacked is Tesco, an attack that left its website off for a while.

With a massive increase in such attacks, the demand for the services of companies like Darktrace will only grow. The growing demand for the services of Darktrace is evident in the company’s recent improvement in revenues and profits.

For context on how important DarkTrace’s services are, the company recently released data showing that its experts had found a 30% surge in ransomware attacks worldwide between 2018 and 2020. DarkTrace also found that this surge was largely confined to the holiday season.

Darktrace has the tech to deal with this problem, which is part of its core fundamental value. Darktrace leverages the capabilities of self-learning AI to come up with tailor-made solutions for every organization that it helps secure.

With Darktrace’s ability to deal with the emerging cybersecurity threats thanks to the power of AI, the company’s revenues are likely to grow long term, and so will its value. Darktrace said it expected full-year revenue of at least $417 million, up 48% year-on-year.

Darktrace shares surged after the UK cybersecurity company announced it’s in early discussions with private equity firm Thoma Bravo LP about a possible takeover. The price made a huge jump from closing at GBP 414 on 15th August to GBP 515 on 16th August.

With these fundamentals in its favour, the chances of a bounce-back are quite high. The risk-reward potential is high at DARK’s current price level, making it a top UK share to pick up this December.

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7. Diageo

A global alcoholic beverages company

With the COVID-19 still circulating, Diageo (DGE) is likely to experience a boost in revenues as more people spend time at home with family and friends.

Diageo already issued positive revenue guidance, for the next 3-years. This shows that as the UK, and world economy opens up more, Diageo could see an increase in sales, and by extension, its intrinsic value.

The best part is that most of the brands it sells are among the most known, not just in the UK, but globally. They include brands like Johnnie Walker, Bailey’s, and of course Guinness.

Diageo’s monthly chart is a positive indicator of why this stock is a hot pick in December. For starters, Diageo has been trending up all through 2021, and that momentum does not seem to be easing up. This has a lot to do with the lockdowns that started in 2020, forcing people to stock up on alcoholic beverages in anticipation of a prolonged stay indoors.

Diageo could soon be trading at GBP 4249 or more, easily making it one of the top UK stocks to buy in December and potentially all through 2022.