3 UK shares that might gain from the Chancellor’s Budget

These UK shares could get a short-term boost from the Chancellor’s Budget this week, but Andy Ross thinks they also have fantastic long-term potential.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

On Wednesday, Chancellor of the Exchequer Rishi Sunak will deliver his Budget and Spending Review. Some UK shares will directly benefit, others (of course) won’t. I expect these three stocks to be winners from the Budget and longer term as I see them as great companies. 

Levelling Up

Anybody who watches the news knows that levelling up is critical to this government’s vision. Morgan Sindall (LSE: MGNS) is a UK share that ought to benefit. It’s involved in construction, infrastructure and housing, so is well placed to help deliver the levelling up agenda. 

For a construction company, Morgan Sindall has good returns on capital employed, indicating that it’s a high-quality company and makes me more confident it’s a good investment. Revenue has also been growing consistently year-on-year, which is an encouraging sign of its resilience and good management.

Should you invest £1,000 in ITM Power right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if ITM Power made the list?

See the 6 stocks

Margins are understandably low because there’s little pricing power when it comes to infrastructure. Any mispricing of contracts can lead to the company losing money, so it’s a tricky industry. 

But on a P/E of 11.5, the shares aren’t expensive and the business seems robust. There could well be a boost from the Budget in the short term and I may therefore buy this stock.

More homes

A major priority for the government is housing. This is why Persimmon (LSE: PSN) could receive a boost this week and do well longer term.

The housebuilder has a lot of cash on the balance sheet, which will enable it to pay a growing dividend and invest in its land bank. It also would be a cushion against any unexpected downturn in the market. Sector-leading margins should also limit any share price fall, at least relative to other housebuilders,  in a market downturn.

To me, the big attraction with these shares (beyond government support for housebuilding) is the dividend yield. Persimmon shares currently yield an eye-watering 9%. Usually so high a yield would be a red flag. But I think this is an exception because Persimmon has so much cash and actually cut the dividend during the pandemic.

It’s worth noting though that housebuilding is cyclical. Persimmon has burnt through a few CEOs in recent years and has been known for poor workmanship. But I feel the benefits outweigh the risks. 

It has been a great income share for quite a while and I’m tempted to add some shares to my investment portfolio.

COP26

While there are some doubts about how successful COP26 will be, there’s no doubt climate change is an important issue. For the UK and other countries, like Japan, hydrogen increasingly is being seen as part of the answer. That should benefit ITM Power (LSE: ITM).

At its simplest, ITM Power is an energy storage and clean fuel group. Its fortunes though will be very tied to hydrogen and the adoption of that technology.

Now could be a good time to invest as the group has just raised £250m and the share price has been falling through much of this year. The shares are now better value than they were.

It’s undoubtedly still quite speculative given that it’s loss-making and hydrogen still isn’t widely used in energy. If I buy the shares, they’ll be only a small part of my overall portfolio as I feel they could be volatile in the short term.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Andy Ross owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Here’s the Tesco share price forecast for the next 12 months!

Tesco's valuation has dropped to multi-year lows after recent share price weakness. Is now the time to consider buying the…

Read more »

Illustration of flames over a black background
Investing Articles

Just released: March’s higher-risk, high-reward stock recommendation [PREMIUM PICKS]

Fire ideas will tend to be more adventurous and are designed for investors who can stomach a bit more volatility.

Read more »

Investing Articles

I asked ChatGPT for the best FTSE 100 investment trust to buy… here’s what it said

There aren't many FTSE 100-listed investment trusts and according to ChatGPT there’s only one winner. Dr James Fox explores.

Read more »

Investing Articles

How much should investors put in an ISA to achieve the average UK wage in passive income?

Millions of Britons use the Stocks and Shares ISA as a vehicle to build wealth, but a successful investor can…

Read more »

Investing Articles

2 cheap FTSE dividend stocks to consider buying for an ISA

The deadline for using up the Stocks and Shares ISA allowance is almost upon us. Paul Summers has spotted two…

Read more »

Investing Articles

£20k in a Stocks and Shares ISA? Here’s how an investor could target £1,342 in passive income each month

Christopher Ruane explains how a long-term approach to investing a Stocks and Shares ISA could generate a four-figure monthly income.

Read more »

Shot of an young Indian businesswoman sitting alone in the office at night and using a digital tablet
Investing Articles

Millions are missing out on ISA account benefits! Here’s what I’m doing now

Swathes of people are missing the chance to supercharge their returns with a Stocks and Shares or Lifetime ISA account.…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

Here’s my plan to survive and thrive in a stock market correction

A falling stock market can be an opportunity, but investors need a plan. Stephen Wright shares his strategy for taking…

Read more »