The stock market rebounded quickly from the crash in March. And looking at the recovery patterns, it is clear that certain sectors have much higher investor interest at the moment. Although it is never wise to invest based just on trends, studying the market recovery gives me an overview of promising industries gaining prominence. Here, I will analyse two companies on top of my UK shares to buy list. Both operate in booming sectors and look like excellent long-term investments for my portfolio.
Going green
The Russian invasion of Ukraine has caused a global shake-up of the crude oil industry. To offset their fossil fuel dependence, the European Union released a docket that detailed plans to fast-track existing renewable energy projects in a bid to “make Europe independent from Russian fossil fuels well before 2030”. And the REPowerEU program plans on achieving this by exploring sustainable energy alternatives.
Greencoat UK Wind (LSE: UKW) is a company that is working towards acquiring and maintaining global wind energy assets. Its share price is already up 8.8% this year. And I think this is a clear sign that investors are cognizant of the change in the global energy market.
I recently wrote about the company’s plan to increase its offshore assets, which generally produce more electricity than onshore farms. News broke yesterday that Greencoat acquired a 50% stake in the German Borkum Riffgrund offshore wind farm for €350m. And the Dublin-based energy trust is also set to invest over $5bn by 2027 into wind farms in Texas and Illinois.
However, by increasing its offshore assets, there is a risk of higher operating and maintenance costs, which could affect revenue. And compared to hydrogen fuel, tidal energy, and nuclear power, wind energy is not as cost-effective.
But wind farms are already a part of the UK’s power grid and a clean energy resource. And global economies see it as a great alternative to crude oil. This is why I think Greencoat is one of the best UK shares for me to buy right now operating in a booming sector.
Let’s play
Keyword Studios (LSE:KWS) is a services company focused on different aspects of video game production. The company offers animation, design, voiceovers, and post-release support to large global gaming giants like Microsoft, Nintendo, Google, and Electronic Arts.
As one of the largest gaming shares listed in the UK, Keyword acquires and operates brands that perform a specialised role in the game development space. Keyword’s revenue in 2021 rose to €512m, up 37% from 2020. And pre-tax profit went up 22% to €54m in the same period. This is despite the larger gaming market slowing down in 2021 after the pandemic-driven gaming boom in 2020.
And the service provider has stated in the past that it will not directly create or distribute games. This means that the firm’s revenue is not tied to new releases, a huge positive in the gaming world. However, game development is tricky and even promising titles are sometimes shelved indefinitely. This could affect revenue in the long run and is a concern to keep in mind.
But given the sector’s fast expansion in the last 24 months, I think Keyword Studios is one of the top UK shares to buy right now for my long-term portfolio.