I think there’s a range of UK shares on the market right now that could be attractive additions to my investment portfolio.
These potential investments range from recovery plays to defensive stocks and growth investments. However, despite their different qualities, they all have one thing in common. I think all of the companies listed below look cheap, compared to their growth potential.
As such, here are five UK shares I’d buy for my portfolio today.
Shares to buy now
The first stock on my list is the supermarket retailer Sainsbury’s. The recent emergence of an offer for the company’s closest competitor, Morrisons, illustrates to me just how much value other investors see in the sector.
As well as this undervaluation, I think the company should also grow in line with the economy as we advance. The stock also offers a dividend yield of 3.9%, at the time of writing. Unfortunately, this payout isn’t guaranteed. Higher costs could eat into the group’s profit margins, which may restrict its dividend payout.
Another company I’d buy for my portfolio of UK shares is AstraZeneca. I think healthcare is one of the best sectors to be invested in for the long run.
Astra is one of the largest pharmaceutical companies in the UK. It already has a strong portfolio of existing products and is investing billions in developing new treatments. I think these initiatives should help underpin growth for years.
That said, while I’m encouraged by the group’s product pipeline, I’m also aware this is an incredibly competitive sector. This competition is one of the key challenges the company faces right now.
One recovery play I’d also buy is the catering group Compass. As the world’s largest catering company specialising in large events, the firm’s sales collapsed last year. It could take years for the business to recover to 2019 levels of activity. In the meantime, another wave of coronavirus or economic slowdown could destabilise the recovery.
Still, consumers will always need to eat and drink. That suggests to me there’ll always be a market for this enterprise. Therefore, while it could take some years for Compass to recover, I’d buy the company for my portfolio of UK shares today as a recovery investment.
UK shares with growth potential
One company that’s performed reasonably well throughout the pandemic is fashion and lifestyle retail giant Next. In the run-up to 2020, the group had spent years investing in its online infrastructure. This paid off last year.
The business was able to use its online operation to remain open for most of the pandemic and, as a result, it’s been able to outperform its peers. I think this competitive advantage should also work in the firm’s favour in the years ahead. That’s why I’d buy the stock for my portfolio of UK shares right now. However, the retail industry is incredibly competitive. Therefore, I’m not going to take Next’s current strengths for granted.
Finally, I’d buy Coca-Cola bottler Coca-Cola HBC. As one of the largest bottler’s of Coke in the world, the company has a unique business model, although it’s also exposed to a unique risk. If it loses the contract, sales and profits would plunge.
Nevertheless, I’d buy the company as a defensive growth stock today.
