Here are three UK shares near the top of my potential buy list right now.
Growing digital sales
Shoe Zone (LSE: SHOE) is a UK-based footwear retailer. The company sells via an estate of some 410 stores nationwide and its website, shoezone.com.
In January, with its full-year results report, the company posted a healthy profit after recording a loss in 2020. And a big growth area has been the 58% increase in digital trading during the period. Online sales generated revenue of £30.5m in the 12 months to 2 October 2021 — just under 26% of total revenue.
The company reckons its decision to invest in infrastructure and people before the pandemic enabled it to capture digital sales when customers buying habits changed. And I see the growth of e-sales as a positive for this business.
However, although revenue and cash flow both have a positive trajectory, earnings have been patchy. And the company isn’t paying shareholder dividends at the moment.
Nevertheless, I’m keen on the stock for its growth potential. And with the share price near 150p, the forward-looking earnings multiple is just below 14 for the trading year to October 2023. I’d describe that valuation as fair and I would aim to buy a few shares on dips and down-days to hold for the long term.
Diversified and growing sales
Harry Potter publisher Bloomsbury Publishing (LSE: BMY) produces academic, educational, fiction and non-fiction publishing for consumers, children, students, teachers, researchers and professionals.
In January’s trading update, the company said it expected revenue for the year ending 28 February to be “comfortably ahead” of the market expectations. And the news on profits was even better with the directors expecting them to be “materially ahead”.
City analysts expect earnings to grow by about 8% in the trading year to February 2023. But estimates are not guaranteed and it’s possible for Bloomsbury to miss its forecasts. However, with the share price near 372p, the forward-looking earnings multiple is just under 17 when set against analysts’ expectations. And the anticipated dividend yield is about 2.6%.
The valuation looks quite full to me. But I like the firm’s quality indicators and its strong balance sheet. For me, Bloomsbury makes an attractive candidate as a long-term hold.
Well-placed to benefit from infrastructure spending
Construction company Galliford Try (LSE: GFRD) operates a cyclical business. And that kind of set-up comes with risks for investors. But I think the firm is well-placed to benefit from infrastructure spending and could see a boom in its business in the coming years.
In January, the company issued an “in-line” trading update and a bullish outlook. The directors reckon Galliford Try is “well-placed to benefit from increasing Government investment in economic and social infrastructure”. And the firm’s pipeline of work with high-quality private sector clients is also “robust”.
City analysts expect earnings to increase by about 18% in the trading year to June 2023. And with the share price near 180p, the forward-looking earnings multiple is just under 11 when set against that forecast. And the anticipated dividend yield is around 3.9%.
I think that valuation looks fair. And I’m also encouraged by the company’s strong balance sheet with its robust net cash position. In conclusion, I’d be happy to make this stock a core holding in my portfolio with a five-year-plus investment horizon in mind.
