In my mind, top UK shares are those companies that have a leading position in their respective markets. Unfortunately, these kinds of businesses are few and far between. However, there are businesses like this out there. As such, here are three I’d buy with £3,000 today.
Top UK shares with competitive advantages
The first company on my list is the property group Foxtons (LSE: FOXT). This London-focused estate agent has a strong brand in the capital and around the world. This has helped it stand out from its peers in the highly competitive property market.
Thanks to the buoyant UK property market, the company recently reported its best set of first-half results since 2016. Property sales increased 86% against the same period in 2019. Meanwhile, lettings income increased 2%, while mortgage broking income increased 31%.
I think these numbers show off Foxton’s competitive advantage and support my view that this is one of the top UK shares on the market today. That’s why I would buy the stock.
That said, I’m not going to take the group’s growth for granted. As I noted above, the property market is highly competitive. It’s also subject to peaks and troughs, which Foxton’s has no control over. These are the two primary risks the firm faces today.
Growth through trust
I’d also buy the UK technology group Trustpilot (LSE: TRST). The internet has revolutionised the way we live and work. Unfortunately, not all of those that have moved online are trustworthy.
Trustpilot has evolved to bridge the gap between technology and trust. I think it provides a valuable service in a world where many customers are buying from a website for the first time and may never meet a customer service representative. And as the e-commerce sector continues to grow, I think the demand for Trustpilot’s services will only expand.
Still, trust can be a double-edged sword. The company needs to ensure customers can continue to trust its reviews. If not, they may start to go elsewhere. This is probably the most considerable risk the business faces today. Maintaining the quality of reviews on its platform is paramount.
Despite this challenge, I’d buy Trustpilot for my portfolio today.
Storied history
The final company I’d buy is the chemicals group Croda (LSE: CRDA). With a long history of producing chemicals for different industries, the company has a solid reputation with its customers.
In a sector that’s environmentally sensitive and could be potentially damaging to its customers, particularly for the beauty industry, this reputation is more valuable than any of its services. As such, I think Croda’s primary competitive advantage is its reputation. This is the main reason why I’d buy the shares today.
Like Trustpilot, reputation can be fickle. Croda needs to keep investing to stay ahead. If it doesn’t, the company’s growth could grind to a halt. I’ll be keeping an eye on this risk as we advance.