3 UK shares ChatGPT thinks will lead the next bull market charge

Harvey Jones called in artificial assistance to help him pick out a trio of UK shares that could fly in the next year or two. But he’s only going to buy one of them.

| More on:
Investor looking at stock graph on a tablet with their finger hovering over the Buy button

Image source: Getty Images

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.

I have my own ideas about which UK shares will take off in the next bull run, but I fancied giving artificial intelligence (AI) a shot. So I asked ChatGPT to name three growth stocks it thought would benefit when the outlook brightens and investors get their mojo back. 

Its first suggestion didn’t surprise me. It’s the number-one FTSE 100 performer over the last year, and at the very top of my own shopping list. The other two did surprise.

I’m hungry to buy IAG

ChatGPT’s first pick was British Airways owner International Consolidated Airlines Group (LSE: IAG). It praised IAG’s “resilience amid past economic downturns” but I’m not sure I totally agree. IAG was on the brink during the pandemic, although that was an extreme case, to be fair.

The IAG share price has soared 110% in the last year, with people hungry to travel post-lockdown, while it’s whittled down debt to €6bn. That’s still high, but far from lethal.

Created with Highcharts 11.4.3International Consolidated Airlines Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Running an airline isn’t cheap, and IAG’s had to pour money into fleet modernisation to stay ahead of the competition. It’s exposed to volatile fuel prices, consumer downturns and geopolitical events, and always will be.

But with transatlantic routes – its niche – particularly buoyant, it looks good value trading at 7.7 times earnings.

I didn’t expect Bellway

Now for the first AI surprise: FTSE 250 housebuilder Bellway (LSE: BWY). My own play on the housebuilding sector’s Taylor Wimpey, so I haven’t paid much attention to the others. ChatGPT has a wider outlook.

My ‘bot buddy says builders will benefit from lower interest rates which “typically make mortgages more affordable and stimulate housing demand”

It added that Labour’s “commitment to addressing housing shortages, coupled with potential planning reforms, could further bolster the sector”.

ChatGPT highlighted Bellway’s strong balance sheet and strategic land acquisitions, while warning that it remains “exposed to fluctuations in the housing market and economic cycles”.

The Bellway share price has struggled lately, falling 4% over the last year, and 36% over five years. It looks a little pricey trading at 19 times earnings. The dividend yield‘s a modest 2%. With Taylor Wimpey at just under 12 times earnings and yielding almost 8%, I’ll stick with that.

Thanks ChatGPT, but no thanks.

AJ Bell shares are tempting but pricey

Finally, my chatbot chum picked out investment platform AJ Bell (LSE: AJB), saying that “as savings rates fall, individuals may seek higher returns through investments, driving growth”.

ChatGPT also praised its “user-friendly interface and diverse product offerings”, while warning it operates in a highly competitive industry with pressure on fees and margins. Stock mark volatility can also hit assets under management and associated revenues.

I’m wary. The AJ Bell share price has been going great guns, up 40% in the last year. It looks expensive though, trading at almost 22 times earnings.

Created with Highcharts 11.4.3Aj Bell Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Also, falling interest rates will cut margins on customer cash balances, a strong source of revenue lately. Of the three, IAG’s the one I want. It’s leading the charge right now, even without a bull market.

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.

Harvey Jones has positions in Taylor Wimpey Plc. The Motley Fool UK has recommended Aj Bell Plc. 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

Investing Articles

Here’s how much an investor would need to spend on Legal & General shares to target a £1,000 passive income

Using a well-known FTSE 100 firm as an example, our writer illustrates the passive income potential (and pitfalls) of stock…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

£10,000 invested in Unilever shares 12 months ago is now worth…

After years of inertia, Unilever shares have come to life over the last 12 months. And the FTSE 100 company…

Read more »

Investing Articles

Is it finally time for me to buy this FTSE 100 stock?

Stephen Wright has watched 3i outperform the rest of the FTSE 100 for what feels like forever. Is it finally…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Want to start buying shares with under £1,000? 3 things to figure out first

Christopher Ruane considers a trio of points he thinks a new investor on a limited budget could helpfully consider before…

Read more »

Buffett at the BRK AGM
Investing Articles

5 great lessons from the latest Warren Buffett letter

Christopher Ruane has been poring over the latest shareholder letter from investor Warren Buffett. Here's a handful of stock market…

Read more »

Investing Articles

The dirt cheap easyJet share price is staring me in the face

When Harvey Jones looks at the easyJet share price, he sees a brilliant buying opportunity staring right back at him.…

Read more »

British Pennies on a Pound Note
Investing Articles

This share helps me earn a second income — and it sells for pennies

Christopher Ruane looks at some pros and cons of one share he owns primarily for its potential to help boost…

Read more »

Investing Articles

Is it game over for JD Sports shares?

Harvey Jones has taken an absolute whipping at the hands of JD Sports shares. Should he accept defeat or pin…

Read more »