As the UK economy slowly opens up, I’ve been looking for UK shares to buy for my portfolio. I’ve been looking for companies that may profit from the re-opening, even though it may be slower than expected following the government’s latest announcement.
UK shares to buy
The first stock on my list is iron ore mining company Rio Tinto. As the global economy starts to recover from the pandemic, spending on infrastructure is increasing. This is upping the demand for raw materials like steel which, in turn, is pushing up the prices of commodities like iron ore.
As a result, I think Rio may see a substantial increase in its profits this year. That’s why I’d buy the stock for my portfolio. However, commodity prices could slump if demand suddenly collapses. This is the most considerable risk the company faces right now.
Another company on my list of UK shares to buy is DIY retailer Norcros. According to the firm’s results for the year ended 31 March, operating profit increased 40% last year.
The strong trading performance continued after the year ended, with group revenue up 23%, compared to 2019 levels, in April and May. Based on this growth, I’d buy the stock for my portfolio today. However, if the economic recovery falters, the company’s growth could stall. So continued growth isn’t guaranteed.
Public transport operator Go-Ahead reported a slump in passenger levels last year. The good news is that passenger volumes are recovering. It reported passenger levels of between 65% to 75% of pre-crisis levels on its regional bus operations earlier this month.
As the economy continues to open, I think these figures will improve, which will positively benefit the enterprise. That’s why I’d buy the stock for my portfolio of UK shares today.
That’s not to say the company is out of the woods just yet. Another coronavirus wave could cause customers to stay at home, setting back the group’s recovery.
Outperforming
According to the Gym Group‘s latest trading update, since gyms were allowed to re-open, trading has outperformed management’s expectations.
Total membership increased from 547,000 at the end of February to 729,000 by 24 May, versus 794,000 in December 2019. These figures imply the group is on track to return to growth in the next few quarters.
As such, I buy the share right now. One challenge the firm faces is trying to expand in the highly competitive leisure sector. It needs to keep spending to stay on top of the competition. If it doesn’t, growth may grind to a halt.
The final company I’d buy from my portfolio of UK shares is Countryside Properties. The UK housing market is currently on fire, and this homebuilder is making the most of the opportunity.
Home completions increased 14% last year, helping the group report an overall increase in adjusted operating profit of 42%. I think the business can continue to capitalise on rising property demand, which suggests this growth can continue.
Key risks facing the enterprise are the potential for an interest rate increase, which could increase the cost of mortgages, pushing demand for properties lower.
