I’m considering these three UK shares for my portfolio right now:
Luxury goods
Global luxury goods manufacturer, retailer, and wholesaler Burberry CLSE: BRBY) sells via stores, concessions, outlets, digital commerce, and franchisees in department stores. The company also licenses third parties to manufacture and distribute products using the Burberry trademarks.
In January, the company delivered a robust third-quarter trading update and said full-price sales grew at a double-digit percentage compared with two years earlier. Burberry reckons it is attracting new, younger consumers to the brand. And the directors said they are “confident” of finishing the year strongly.
City analysts have pencilled in an increase in earnings of around 55% for the current trading year to March 2022 followed by a further uplift of around 12% for the year after that. But estimates could be missed if operational challenges arise to thwart progress.
Meanwhile, new chief executive Jonathan Akeroyd starts on 15 March. And new blood at the top could will bring new energy and enthusiasm to drive the business forward.
The share price is near 1,957p as I write and that leads to a forward-looking earnings multiple of just over 19. And the anticipated dividend yield is around 2.7%. That’s not a cheap valuation and could lead to some risk for me as an investor. But Burberry scores well against quality indicators and has growth ambitions. I think the stock would make a promising addition to my long-term portfolio.
Sausage skins
Devro makes collagen products for the food industry around the world — think sausage skins. The company delivered its full-year trading update in January. And the directors said revenue growth at around 5% in 2021 was “encouraging” with positive movements in volume, price, and mix.
Operating profit will likely be “in line with expectations”. And that means an uplift of about 10% compared to the previous year. Looking ahead, City analysts expect earnings to increase by a mid-single-digit percentage in 2022.
And with the share price near 220p, the forward-looking earnings multiple is about 12 with the anticipated dividend yield around 4.4%.
The valuation looks fair. But I don’t think Devro will ever set my portfolio alight with high growth. Nevertheless, the business operates in a steady, defensive sector and the firm’s dividend record reflects that. The stock looks like a useful hold for the long term and I’d consider it now.
Healthcare
The third stock I’m tempted by today is global healthcare company GlaxoSmithKline (LSE: GSK).
With the final results report on 9 February, chief executive Emma Walmsley said the business ended the year strongly. And the company saw “another quarter of excellent performance driven by first-class commercial execution”. Looking ahead, she said 2022 started with good momentum. And the year will likely deliver “a step-change in growth” and multiple R&D catalysts. The company also plans to demerge its Consumer Healthcare business in 2022.
The recent share price of 1,630p throws up a forward-looking earnings multiple of around 13 when set against analysts’ expectations for a mid-single-digit uplift in earnings in 2023. And the anticipated dividend yield is around 3.3%. I think that valuation looks fair.
There are no guarantees that growth will materialise as expected. But I think GlaxoSmithKline is at an interesting point in its development. And I’d add the stock to my long-term portfolio now.
