Making my money stretch that bit further by investing in UK shares with high growth potential can be a great way for me to generate passive income for the years to come.
In this article, I look at the industries I believe are worth investing in, and the shares I think could grow considerably in the next five to 10 years. Let’s say I have £10,000 to allocate, here’s how I’d do it.
Choosing the industries
First, I’d pick the sectors that I think are going to be in high demand. This way, I can take a look at the growth potential of the market as a whole, instead of just an individual share. Further, if a share I choose is a low performer, then at least the wider segment’s success could potentially drive share price growth.
Here are the industries that I believe show potential for growth:
- Cybersecurity: Demand for this sector is clearly high as revenue for UK cybersecurity companies is rising every year. One thing to bear in mind though is that cyber attacks are constantly changing so individual companies may find it hard to keep a competitive advantage.
- E-commerce: Offline retail growth is almost non-existent as the e-commerce market continues to develop. That said, we could see some pullback in this sector as pandemic restrictions are lifted.
- Renewable Energy: The pandemic and some extreme weather have made many world leaders realise the damage we’re doing to the earth. I expect demand in this sector to skyrocket, driven by consumer demand and legislation. That said, profitable growth in this area could be slow and due to reinvesting, dividend returns might be marginal.
Choosing my UK shares
Now let’s look at the shares that I’m selecting. In the cybersecurity sector, I’m looking at BAE Systems and Avast. Both of these share prices have risen since the start of 2021 and the firms are performing well financially. BAE Systems could run into some ESG issues in the future however, and the Avast share price might see some volatility if Norton‘s bid falls through.
For my online retail UK shares, I would add Boohoo and Ocado to my portfolio. Ocado is developing rapidly, but due to its investment in growth, it’s losing money at the moment. Boohoo, on the other hand, is reporting good revenue and profits growth. But both of these companies will have to face strong competition from the likes of Amazon and Zalando.
The ESG companies I would pick are The Renewables Infrastructure Group and ITM Power. Renewables Infrastructure has a well established basis with investments in solar, wind and battery storage, however the share price isn’t exactly cheap with a 10% premium to Net Asset Value (NAV). ITM is generating a lot of revenue, but the company is relying on unsigned deals that could fall through.
These are the UK shares and industries that I believe have great potential to grow in the next decade. Generally speaking, they’re all in some way reliant on the new technological era we find ourselves in. I believe that right now the global economy is only seeing the baby steps of what’s to come.