UK shares I’d buy as the FTSE 100 slumps

Since reaching a 52-week high of around 7,130 at the beginning of May, the FTSE 100 has since fallen back below 7,000.

It’s difficult to pinpoint precisely one reason behind this decline. It seems UK shares rallied off the back of reopening optimism and improving economic performance. The outlook for the economy has continued to improve over the past few weeks.

However, investors have started to become concerned about rising inflation and the impact new coronavirus outbreaks will have on company performance.

But as a long-term investor, I’m not particularly bothered about what may happen with inflation and coronavirus in the next six to 12 months.

I want to acquire UK shares I can buy and hold for the next five to 10 years. And with that being the case, I’ve been looking for FTSE 100 stocks that have fallen back to attractive levels in the recent stock market sell-off. 

UK shares on offer 

The companies I’m interested in fall into two different buckets. On the one hand, growth companies may benefit from technological change and economic growth over the next few years.

On the other hand, there’s a basket of recovery stocks I want to own. These companies may not necessarily be suitable for all investors because their futures are far from certain. Nonetheless, I think buying these UK shares at low levels could produce high returns in the best-case scenario. 

FTSE 100 companies featuring on my list of growth shares include Rentokil Initial and Rightmove. I think both of these organisations are great because they operate in growth industries.

The UK property market is constantly growing. Whether it be through rising house prices or increased building, the market for buying and selling properties in the UK is unlikely to ever disappear. 

Meanwhile, pests and vermin are just a fact of life. Some forecasts suggest global warming could lead to a substantial increase in rodent numbers. As one of the best-known pest control businesses in the country, that can only be good news for Rentokil. 

That’s not to say these UK shares don’t face risks and challenges. Rentokil is very acquisition-driven, and it uses a lot of debt. High interest rates could send the cost of this debt spiraling and cause problems with the company’s acquisition strategy, hurting growth. Rightmove could also suffer if interest rates rise. This may hit demand for property and send transaction volumes lower. 

Even after taking these risks and challenges into account, I’d buy both of these FTSE 100 UK shares after recent declines. 

FTSE 100 recovery plays 

On the recovery side of the portfolio, I think banks are some of the best investments. NatWest Group and Barclays stand out to me right now. 

Thanks to its investment division, Barclays has weathered the pandemic exceptionally well. As a result, it’s now in a great position to return to growth as the economy recovers.

NatWest doesn’t have a significant investment business. Nevertheless, I like its recovery potential as one of the UK’s largest banks. 

The risks and challenges these FTSE 100 groups face include higher interest rates, which could hit demand for lending. Another economic slump would also hurt both lending and deposit growth. 

Still, I’d acquire both UK shares as ways to invest in the UK economic recovery.