As the stock market moves around, I have been looking for UK shares to buy now for my portfolio. If I had £1,000 to invest right now and wanted to expose myself both to growth and income opportunities, here is what I would do.
Going for growth
When it comes to growth, I would start by putting £250 into JD Sports (LSE: JD). The JD Sports share price has fallen by a third in the past year and it now has a market capitalisation of £6.3bn, which is less than seven times expected headline profit before tax and exceptional items of £900m for last year. Meanwhile, the current trading year has started positively for the company, with like-for-like sales up 5% on the start of last year.
So why have the shares fallen? I think investors are concerned that a worsening economy could lead shoppers to spend less, potentially hurting sales at JD. Meanwhile, cost inflation continues to threaten profitability. While I recognise those risks, I see continued growth opportunity at the company with its strong brand, growing international presence and deep understanding of customer trends. That is why I hold it in my portfolio — and would consider buying more shares.
My second growth choice would be food supplier Cranswick. The company has a strong track record when it comes to growing sales, profits and indeed its dividend. The payout has been increased annually for over three decades. I think this demonstrates that Cranswick’s strategy of adding value to meat through the way it processes and sells it can also create value for shareholders.
Dividends are never guaranteed. One risk I see to Cranswick’s growth prospects is food supply chain problems pushing up input prices. But I see long-term growth potential and would happily invest £250 in Cranswick shares.
Income picks
I would also spend £250 on each of two income shares for my portfolio.
The first is insurer Direct Line (LSE: DLG), which offers a yield of 9.1% at its current share price.
I see risks that may justify the falling share price. For example, new rules about insurance renewal pricing could hurt profits at Direct Line. The number of policies in force fell 8.7% last quarter compared to the same period last year. That is concerning.
So, why do I rate Direct Line among UK shares to buy for my portfolio? I expect insurance to remain in strong demand. Direct Line is well-placed to benefit from that, as it has a recognised brand, large existing customer base and longstanding reputation in the marketplace. Business growth prospects look unexciting for now, but the income potential is enough for me to buy Direct Line for my portfolio.
UK shares to buy now
My second income choice would be fund manager M&G.
The financial services company has a yield of 8.7%. It aims to maintain or increase its dividend annually, although whether it can do so will depend on its business results.
One of its key assets, like Direct Line, is a strong and widely recognised brand that helps attract customers. I think that could help it even if an economic downturn reduces the amount of money clients invest. That is why M&G makes the list of UK shares to buy now for my portfolio.