The UK’s major stock market indexes — the blue-chip FTSE 100, the mid-cap FTSE 250, and the FTSE SmallCap — all remain significantly below their pre-pandemic highs. This means investors have a rare opportunity to purchase a diverse portfolio of strong businesses at heavily discounted prices. Here are 10 UK shares I’d buy to start investing today.
Blue-chip bargains
When investing in UK shares, I’d always start by looking to the FTSE 100 for some blue-chip cornerstone stocks.
Drinks giant Diageo owns a host of valuable spirits brands. In my view, its global operations, and labels like Johnnie Walker whisky and Smirnoff vodka, make it a world-class business. With its shares currently 29% below their previous high, I’d happily buy Diageo for the long term.
The same goes for BAE Systems, whose shares are trading at a 36% discount to their high of earlier this year. From heavyweight military hardware to cybersecurity, BAE is a powerhouse in the defence sector.
Pharmaceuticals and consumer healthcare group GlaxoSmithKline, and insurer and asset manager Legal & General are two more high-quality FTSE 100 businesses, in my view. Their shares are currently at discounts of 27% and 40% to their pre-pandemic levels. As such, both look very buyable to me as cornerstone stocks for the long term.
Mid-cap UK shares
With a strong foundation of blue-chip companies, I’d start diversifying by investing in some FTSE 250 stocks. I believe Biffa (28% discount), ITV (52%), National Express (68%) and Victrex (27%), are not only trading at attractive levels, but also have good long-term growth prospects.
- Biffa is the UK’s leading sustainable waste management business. There’s a nice structural growth story here of regulation, recycling and energy from waste.
- Integrated producer-broadcaster ITV has growth opportunities as it transforms into a digitally-led media and entertainment company.
- National Express is well-positioned to continue its impressive international expansion in the transport sector.
- World-leading producer of an organic thermoplastic polymer (polyether ether ketone), Victrex has growth opportunities across both its industrial and medical divisions.
All four companies have been adversely impacted by the coronavirus pandemic to a greater or lesser degree. However, due to their discount prices and growth potential, I’d be happy to buy them for the long term.
Small-cap UK shares
Some people avoid smaller companies when they start investing. Certainly, it can be a tricky pool to fish in. However, right now, I’m seeing the combination of a well-run business and distressed share price among a number of stocks in the UK small-cap space.
Two that currently look very buyable to me for the long term are Carr’s Group and Fuller, Smith & Turner. The former’s shares are down 36% from their pre-pandemic 2020 high, and the latter’s 48%.
Carr’s was founded in 1831 as a baking business. Today, it’s an international agriculture and engineering group. Its interests range from feed blocks for livestock to robotic and remote handling equipment for a range of industries.
Fuller’s was founded in 1845, and as the owner of an extensive UK estate of premium pubs and hotels will probably be known to more readers than Carr’s. However, I don’t expect the coronavirus pandemic to derail either business any more than any other global crisis of the last 175+ years.