As the international interest in bidding for Morrisons has shown, a lot of savvy investors reckon there are bargains to be found right now in the London stock market. I agree and even with just £1,000 to invest, I can think of a variety of British shares to buy now for my portfolio.
Here are some of the ones I’m considering. To manage my risk by diversifying, I would split the £1,000 across two or more of these companies.
JD Sports
Morrisons isn’t the only UK retailer that has developed an attractive, profitable business model. Another one I like is JD Sports. The company is well-known in the UK. It also offers shareholders international exposure as it has rolled out its winning formula to a range of markets spanning Europe, Australasia, and North America.
I expect further expansion ahead, as the group has a long history of impressive growth. That has been highly rewarding for shareholders. But that has added complexity to the supply chain. As the Suez Canal blockage this year showed, a complex supply chain risks being disrupted in unexpected ways.
Lloyds Bank
I continue to be bullish on the prospects for the UK banking sector. The economy has proven its resilience in the face of the pandemic and Brexit. Consumer spending is set to boom and the housing market remains strong. Those are good conditions for a bank to make money.
One such bank is Lloyds, which has been excellent at making money. Last year it turned a profit in excess of a billion pounds even during the pandemic. It has restored its dividend and set out plans to increase it in future.
Although Lloyds is on my list of British shares to buy now, its strong UK focus is also a risk to consider. A lack of overseas diversification makes it more susceptible to any downturn in the UK economy than its internationally focussed rivals.
British shares to buy now
If consumer spending does keep increasing, that could also be good for a number of consumer goods companies.
For example, I think Unilever is set to benefit from higher spending, with its range of brands targeting developing and developed markets. I like the company’s extensive operations, from food service brands such as Breyers through to beauty products like Dove and Brut. With a yield of 3.5%, the company makes my list of British shares to buy now for both income and growth potential. But there is a risk that recession in some markets could lead to weaker demand for premium products.
Another international consumer goods company I would buy now is drinks maker Diageo. It also has a portfolio carefully constructed to straddle a large variety of markets and customer budgets. That helps make it resilient, and allows it to benefit from premium pricing on many products. It has raised its dividend each year for over three decades, and currently yields 2%. There is a risk that younger consumers drinking less alcohol than previous generations could hurt sales.