Amid the recent stock market rally, I have been looking for UK shares to add to my portfolio. With that in mind, here are five London-listed businesses I’d buy with £5,000 today.
UK shares to buy
The first company is steel producer Evraz. I believe the world is gearing up for an economic boom. Rising government expenditure on infrastructure projects will be one of the key contributors to this growth.
As such, I believe steel demand will grow rapidly over the next few years. As one of the largest steel producers in Europe, Evraz could be one way to play this theme.
That said, steel’s a highly volatile business, and the company may not be suitable for all investors due to the unpredictable nature of steel production. Despite these risks, I’d buy the stock from my portfolio of UK shares today.
On the same theme, I’d also acquire shares in BHP. This company is one of the world’s largest iron ore producers. That suggests to me it should also benefit from the infrastructure boom. It also produces other vital commodities such as copper. Rising commodity prices could help boost group profits and shareholder returns.
However, both Evraz and BHP are exposed to similar risks. These companies may benefit from rising commodity prices, but commodity prices can fall just as fast. If prices do slump, these businesses may have to eliminate dividends and reduced spending to conserve cash. That could hurt growth in the long term.
Housing boom
As the UK housing market booms, I’d add Persimmon to my basket of UK shares. This homebuilder could benefit from rising home prices and growing demand for affordable properties.
The enterprise’s key challenges are rising interest rates, which may reduce demand for properties and an increased supply of homes, which may push down prices.
Furniture retailer SCS is also benefiting from the UK housing boom. That’s why I’d buy the company alongside my portfolio of recovery UK shares. Despite the pandemic, group gross sales increased 14% in the 26 weeks to the end of January. I think it’s unlikely this kind of growth will continue indefinitely.
If the housing boom slows, the company’s sales may suffer, which is the most prominent risk facing the firm. However, as a recovery play, I think SCS still ticks all the right boxes.
Income and growth
The final business I’d buy for my basket of UK shares is 888 Holdings. While the firms outlined above are all recovery plays, 888 has prospered during the pandemic.
The key risks the business has to manage are the potential for more regulations on the gambling sector and increasing competition. Both of these challenges could send the group’s growth into reverse.
Although growth is expected to slow in the next two years, I still remain positive. I’d buy the stock for its cash generation and growth potential.