2 brilliant UK shares I’d buy for 2022

I’m optimistic about the stock market in 2022. The difficult period this autumn means the UK market, in my opinion, remains undervalued. There are certainly a lot of high-quality companies around and I think these two UK shares in particular could do well in 2022 and for many years after that.

A top UK share

Polar Capital Holdings (LSE: POLR), the boutique asset manager, is a company I’ve felt good about for a while. I’ve added the shares to my portfolio and am almost certain to buy more in 2022.

In the six months to 30 September, assets under management (AuM) — a key metric in analysing asset management companies — increased from £20.9bn to £23.4bn, a rise of 12% over the period. And then AuM have increased to £25bn as of 12 November.

Core operating profit (excluding performance fees, other income and exceptional items) was up 65% to £36.3m compared to the comparable half-year period.

When combined with opportunities to grow internationally, add new investment teams and funds to its roster and its already high margins, I think the future looks very bright for Polar Capital. The stock combines a dividend yield of 5% with the potential for the share price to grow dramatically.

Of course, there are risks. If its funds start to underperform then Polar Capital shares could suffer as investors pull out their money. Polar is also quite reliant on its tech fund, although it does have some diversification outside of tech too.

For me, the potential upside of the shares far outweighs the risks and I’m very likely to keep adding to my holding.

Jim Slater-style growth stock? 

UP Global Sourcing Holdings (LSE: UPGS) is a share that has no doubt been hit in recent months by concerns over shipping issues. This may carry on for a while into 2022, but at some point it should normalise. One of the best times to invest is when others are fearful, according to none other than Warren Buffett.

There’s a potentially attractive entry point now into the shares as they trade on a forward P/E of just 13. The price-to-earnings-growth ratio, on a forward basis, is just 0.5, making it potentially a Jim Slater ‘Zulu-style’ undervalued growth share, that is, a share with a PEG under 0.7. 

UP Global Sourcing has been growing revenue and profits at an impressive rate, even through the pandemic. With a market cap below £200m it has plenty of headroom to grow further.

The company is an owner, licensee, designer, developer and manager of a series of brands focused on the home. These brands include Salter and Russell Hobbs. The former was acquired in July 2021 for an initial cash consideration of £32m, with a further deferred consideration of £2m potentially to be paid over two years. Acquisitions are both a source of growth, but also pose a risk if they are poorly managed. 

Another risk is that shipping costs and inflation persist and this hampers its growth. That in turn would hit the shares.

But I think the risks are small and that this growing company could provide a very healthy return in 20202 and beyond. That’s why I’m very likely to buy the shares.