With many companies recently announcing strong results for the past year, I have had my eye on some top UK shares to buy now for my portfolio. Here are five I would consider.
High street name
Banking giant Lloyds needs little introduction. As well as Lloyds itself, the company owns Halifax and Bank of Scotland. That gives it national reach. It has a strong mortgage business as the leading lender to homebuyers across the country. When conditions are good, that can be a licence to make money. In the first nine months of this year, the bank recorded £5.4bn of profits after tax. I will be looking for more good news when the company unveils its full-year numbers this month.
If the housing market enters a downturn, that could hurt profitability at the group. But for now I continue to see upside in the Lloyds share price and would happily buy for my portfolio.
2 more top shares
Two well-known shares have seen their prices suffer from City concerns about profitability have provided me with a buying opportunity for my portfolio.
Consumer goods giant Unilever has seen its shares slide 2% over the past year, when the FTSE 100 index has added 17% in value. That reflects risks to profits from cost price inflation and doubts about the company’s strategy after its failed bid for GlaxoSmithKline’s consumer goods business. In the long-term, I think Unilever’s stable of premium brands like Ben & Jerry’s and Domestos should help it grow profits in years to come. Meanwhile, the yield of 3.8% attracts me.
An ever worse performer over the past year has been online retailer Boohoo. It has seen its stock fall to penny share territory, after tumbling 75% in 12 months. I do see risks, such as the negative impact of supply chain problems on profit margins. But the company has an enthusiastic customer base, a track record of profitability and massive space for expansion in markets like the US. I have bought it for my portfolio at what I hope will turn out to be a bargain price.
Economies of scale
I would also pick up a couple of shares for my portfolio that I see benefiting from economies of scale.
First is British American Tobacco. The company revealed in its full-year results today that revenue last year was a massive £25.7bn. British American benefits financially from the huge scale of its business. That might not ultimately protect it from declining cigarette volumes, but the company can offset some of the profit impact with price increases. What may help is growth in next-gen products like vaping. Such products saw revenue growth of 42% last year, to £2bn. A modest dividend increase means the shares yield 6.6%.
With over 7,500 employees, digital ad agency holding group S4 Capital is seeing increased economies of scale. That also brings higher staffing and management costs though, which could eat into profit margins. But I think those concerns have been reflected in the recent share price fall. I see the current S4 Capital share price as an attractive entry point for my portfolio. With a plan to double revenues and gross profits organically within three years, the company is a UK growth share positioned to benefit from an ongoing shift to digital media.