Market appetite for UK shares has remained flattish in recent weeks. Take the FTSE 100 as an example of this. Sure, Britain’s blue-chip index touched 15-month peaks around 7,130 points during early May. But it’s settled lower as fears over possible monetary tightening by central banks amid soaring inflation have risen.
It’s possible that UK share markets could fall again given the fragile state of investor confidence. But I for one won’t stop buying British stocks for my Stocks and Shares ISA. There are still many Footsie shares I think will thrive in the near term and beyond.
Cheap as chips
I believe that BAE Systems (LSE: BA) is a blue-chip share that looks too cheap to miss. Not only does the UK defence share trade on a forward price-to-earnings (P/E) ratio of just 12 times. The business carries a market-beating 4.8% dividend yield as well.
Investing in companies that build defence systems isn’t without risk, of course. For BAE Systems, the ever-present threat that trade with Saudi Arabia will be banned is one that would put a huge hole in its revenues column. Still, the fact that demand for weapons is constant means that companies like this FTSE 100 firm have strong earnings visibility.
Not even the biggest economic shock for decades has been enough to derail global arms spending. Data from the Stockholm International Peace Research Institute showed 2020 defence expenditure rose 2.6% to just below $2trn. And Deloitte expects the total to rise 2.8% in 2021 despite the ongoing Covid-19 crisis and its huge economic cost. BAE Systems, with its diverse suite of market-leading systems and products, remains well placed to exploit this growth.
Another FTSE 100 cracker
I also think WPP (LSE: WPP) could be a very wise buy this June on news surrounding an advertising market recovery. The amount businesses spend on marketing is usually one of the fastest things to rebound when economic recoveries kick in. The pace at which the advertising agencies are bouncing back this time around continues to confound market commentators too.
Trading figures from some of WPP’s major rivals continue to reveal the solid momentum ad agencies are enjoying. France’s Publicis Groupe, for example, last month reported organic growth of 2.8% in the first quarter, beating expectations. And Interpublic Group also kept its recent run of forecast beats going in April with organic sales growth of 1.9% in quarter one.
There’s no guarantee that FTSE 100-quoted WPP will thrive as advertising spending bounces back. Competition is intense among the agencies and the number of companies bringing their marketing activities in-house is rising too. Still, I think WPP has the clout to remain a big player in this rebounding market. And I also like the steps it’s taking to accelerate its role in the rapidly-expanding digital advertising segment.
