February is the shortest month of the year. I have already been looking ahead and thinking about what UK shares to buy for my portfolio in March. Here are two that appeal to me.
Paper to pageviews
First is media group Reach (LSE: RCH). It is probably best known for its ownership of the tabloid Mirror newspaper. But it owns a range of media properties, including regional newspapers and websites.
Newspapers continue to fall in popularity. But Reach’s strategy to deal with that is to try and spread its journalistic expertise over both print and media assets. That way, it hopes to continue to make what profits it can from the once highly lucrative newspaper business, while also building revenue streams in digital areas.
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I think that strategy makes a lot of sense and so far it seems to be working. The company continues to lose readers in its newspaper division. But double-digit percentage growth in digital mean that it is eking out modest revenue growth. In its most recent trading update, the company said that revenue in its financial year to date had grown 2% compared to the same period the year before, driven by a 29.2% increase in digital revenue.
Over time, as it becomes more focussed on digital channels, I think the company could improve its rates of revenue growth. One risk is profit margins, which tend to be lower in digital than the company has been used to in newspapers.
Ready for takeoff
Another share I am considering is aircraft engineer Rolls-Royce (LSE: RR). The fundamentals of its business are attractive to me. Engines have a high price tag. As reliability is crucial, customers are willing to pay for quality. Only a few companies have the engineering know how to compete in this area, which helps keep prices high. Once an airline buys an engine, it needs to maintain it. Commonly it pays the manufacturer to help do that.
That adds up to a strong business model over the long term. But as the pandemic saw civil aviation demand fall sharply, Rolls’ fortunes followed. It diluted shareholders to boost liquidity with a rights issue. The risk that it would do so again has kept me out of the shares, as it was bleeding cash. But it has now turned the corner and is generating free cash flow once more. I see that as a key step on the company’s road to revival, as it reduces liquidity risks. The company has also gone back into the black after some massive losses in the past couple of years.
I am hopeful that the worst days for Rolls-Royce are behind it and would consider adding it to my portfolio in March.
UK shares to buy in March
Both of these companies sell into large markets. Both have established businesses and brands that help set them apart from competition. That could help build revenues and profits in the years to come. I would consider adding them both to my holdings in the coming month.
