In this article, we discuss 11 best UK stocks to buy now. If you want to see some more stocks from our selection, click 5 Best UK Stocks to Buy Now.
Market experts and analysts from advisory firms believe that the underlying economic recovery after the pandemic has been erased almost completely in the current macro backdrop. Amid the inflationary pressures and ongoing war, Sanjay Raja, senior economist at Deutsche Bank, believes that the UK GDP growth in the first quarter of 2022 might not even reach 1%.
The GDP is also expected to contract in the second quarter of the year, owing to higher COVID health spending, increasing taxes, a slowdown in the manufacturing sector, and higher prices for energy and commodities. If negative GDP growth continues beyond July, the UK will decidedly be in a recession, according to Suren Thiru, head of economics at British Chambers of Commerce, and Sanjay Raja.
PricewaterhouseCoopers announced that economic growth in the UK is forecasted to decline to 3.8% this year, down from 4.5% that the firm speculated before Russia invaded Ukraine. The sanctions on Russia will raise the inflation rate to 8.4% in the second quarter of 2022.
In this uncertain stock market and economic environment, it is important to look out for stocks that offer growth opportunities, and have increased their yearly sales revenue and net income. Some of the most notable stocks that investors seek include DocuSign, Inc. (NASDAQ:DOCU), Roblox Corporation (NYSE:RBLX), and Microsoft Corporation (NASDAQ:MSFT), but in this article, we discuss the best UK stocks to buy now.
We selected UK stocks that have delivered higher sales revenue and net income in 2021 as compared to 2020. These stocks display positive analyst ratings, growth prospects, and solid business fundamentals. Data from 900+ elite hedge funds tracked by Insider Monkey at the end of December 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Best UK Stocks to Buy Now
11. Ferguson plc (NYSE:FERG)
Number of Hedge Fund Holders: 12
Ferguson plc (NYSE:FERG) is headquartered in Wokingham, United Kingdom, operating as a distributor of plumbing and heating products in the United States and Canada. Berenberg analyst Harry Goad on March 17 maintained a Buy recommendation on Ferguson plc (NYSE:FERG) but lowered the firm’s price target the stock to 14,000 GBp from 15,000 GBp.
On March 28, Ferguson plc (NYSE:FERG) entered into an agreement with Barclays Capital Securities Limited to repurchase up to £90 million of its common shares commencing from March 28 and ending by April 12, 2022. This buy back program is a continuation of the $2 billion repurchase announced on March 15, 2022.
Ferguson plc (NYSE:FERG) declared on March 23 a semi-annual per share dividend of $0.84. The dividend is payable on May 6, to shareholders of the company at the close of business on March 25. The stock delivers a dividend yield of 1.95% as of April 11.
The company reported in a March 15 press release a FQ2 non-GAAP EPS of $1.93. Revenue for the period Revenue of came in at $6.51 billion, up 31.8% on a year-over-year basis, beating market consensus by $430 million.
According to Insider Monkey’s fourth quarter database, 12 hedge funds were bullish on Ferguson plc (NYSE:FERG), up from 10 funds in the prior quarter, with collective stakes amounting to $7.9 billion. Nelson Peltz’s Trian Partners is a prominent stakeholder of the company, with a position worth over $2 billion.
10. Smith & Nephew plc (NYSE:SNN)
Number of Hedge Fund Holders: 13
Smith & Nephew plc (NYSE:SNN) is headquartered in Watford, United Kingdom, operating as a seller of medical devices worldwide. The company offers knee implants, hip implants, and medical devices for orthopedic trauma.
On February 22, Smith & Nephew plc (NYSE:SNN) declared a final dividend of 23.1¢ per share. Together with an interim dividend of $14.4¢, the total FY2021 distribution is 37.5¢ per share. The dividend is payable on May 11, to shareholders of the company as of April 1.
In 2021, the full-year revenue for Smith & Nephew plc (NYSE:SNN) came in at $5.2 billion, up from $4.5 billion in the prior year. The net income in 2021 grew approximately 17% year-over-year to $524 million. For this year, the company expects revenue growth of 4.0% to 5.0%. The consensus revenue estimate for 2022 is $5.52 billion and Smith & Nephew plc (NYSE:SNN) forecasts growth to be higher in the second half of 2022.
Barclays analyst Hassan Al-Wakeel on April 5 maintained an Overweight rating on Smith & Nephew plc (NYSE:SNN) and raised the firm’s price target on the shares to 1,680 GBp from 1,670 GBp.
Among the hedge funds tracked by Insider Monkey, 13 hedge funds held long positions in Smith & Nephew plc (NYSE:SNN) at the end of December 2021, with collective stakes amounting to approximately $111 million. Billionaire Israel Englander’s Millennium Management is the leading shareholder of Smith & Nephew plc (NYSE:SNN), with more than 1 million shares worth $36.4 million.
In addition to DocuSign, Inc. (NASDAQ:DOCU), Roblox Corporation (NYSE:RBLX), and Microsoft Corporation (NASDAQ:MSFT), Smith & Nephew plc (NYSE:SNN) is a notable stock to consider.
9. Global Ship Lease, Inc. (NYSE:GSL)
Number of Hedge Fund Holders: 17
Global Ship Lease, Inc. (NYSE:GSL) is a London-based company that charters mid-sized and small containerships to container shipping companies. Global Ship Lease, Inc. (NYSE:GSL) delivers a dividend yield of 4.13% as of April 8, and the stock has gained close to 88% in the last year.
On February 10, Global Ship Lease, Inc. (NYSE:GSL) declared a quarterly dividend of $0.25 per share, in line with previous. The dividend was paid on March 4, to shareholders of record on February 22.
The full-year revenue in 2021 grew 42.6% year-over-year to $402.5 million, up from $282.3 million in 2020. The net income for Global Ship Lease, Inc. (NYSE:GSL) in 2021 equaled $171.5 million, a growth of 312.61% from the prior year.
Riley analyst Liam Burke raised the price target on Global Ship Lease, Inc. (NYSE:GSL) to $38 from $33 and maintained a Buy rating on the shares on March 3, after the company published its Q4 results. Global Ship Lease, Inc. (NYSE:GSL) is benefiting from the accretive acquisition of additional fleet assets that increased the company’s vessel count to 65, the analyst told investors.
According to the fourth quarter database of Insider Monkey, 17 hedge funds were bullish on Global Ship Lease, Inc. (NYSE:GSL), compared to 14 funds in the prior quarter. The total stakes owned in Q4 amounted to approximately $150 million. David Salanic’s Whitefort Capital is the biggest stakeholder of the company, with 963,226 shares worth over $22 million.
Here is what Massif Capital has to say about Global Ship Lease, Inc. (NYSE:GSL) in its Q4 2021 investor letter:
“We initiated a 6% position in GSL, bringing total maritime transit exposure up to ~9% of the portfolio when combined with our 3% SBLK position. GSL is a containership owner, leasing ships to container companies (such as Maersk) at fixed rates. As owners, they own and manage the vessels (responsible for crews, maintenance, insurance) but do not have fuel costs. GSL focuses on mid-size to smaller containerships, which serve the faster-growing inter-regional trade routes that represent ~70% of global containerized trade volume.
As they own its containers, their business is both pro-cyclical (chartered tonnages used as growth platform by liner shipping companies) and counter-cyclical (with the sale and leaseback structures used by liner companies as a balance sheet management tool). GSL has a track record that includes both organic acquisitions and a strategic combination in Q4 2018 that doubled the size of the fleet.
We like GSL because they do not have as much operational leverage as a company like ZIM (which leases on both sides of the trade), and they sign 2–5-year contracts. Liners have been eager to secure that capacity for extended durations spanning multiple years, significantly longer than has been the case historically and well-aligned with GSL’s strategic preference to lock in value over time and provide forward visibility on cash flows…” (Click here to see the full text)
8. Diageo plc (NYSE:DEO)
Number of Hedge Fund Holders: 19
Diageo plc (NYSE:DEO) markets and sells alcoholic beverages worldwide. The company distributes its drinks under the Johnnie Walker, Crown Royal, Smirnoff, Casamigos, Captain Morgan, Baileys, Tanqueray, and Guinness brands, among others.
Diageo plc (NYSE:DEO) posted earnings for the first half of 2022 on January 27, reporting a 1H non-GAAP EPS of £0.85, beating market consensus estimates by £0.05. Revenue over the period came in at £7.96 billion, up 15.9% year-over-year, surpassing analysts’ predictions by £290 million. The company expects organic net sales momentum to continue through the second half of fiscal 2022, however, global supply chain constraints still remain a challenge in the foreseeable future.
Diageo plc (NYSE:DEO) announced a £0.2936 per share interim dividend on February 23, an increase of 5% from its earlier dividend. The dividend will be paid on April 12, to shareholders of record on February 25.
On April 6, Credit Suisse analyst Sanjeet Aujla kept an Outperform rating on Diageo plc (NYSE:DEO) and raised the firm’s price target on the shares to 4,700 GBp from 4,500 GBp.
According to Insider Monkey’s fourth quarter database, 19 hedge funds were bullish on Diageo plc (NYSE:DEO), up from 18 funds in the earlier quarter. The total stakes held in Q4 amounted to roughly $936 million. Nicolai Tangen’s Ako Capital held the largest position in the company, with 1.7 million shares worth $382.6 million.
Here is what Lindsell Train has to say about Diageo plc (NYSE:DEO) in its Q4 2021 investor letter:
“A very important aspect of the rationale for investing in this smaller and more rarefied category is the fact that alcohol brands with a premium or luxury positioning tend to be highly differentiated, with a greater ability to increase prices over time than a “value” or mass market brand – even in downturns or periods of turbulence. Over time, these inflation-busting protective qualities usually result in considerable value creation: in January this year, against a backdrop of a sharp increase in input cost prices, Diageo reported increased operating profit margins – crucially, driven by price increases rather than cost savings – and indicated an expectation of operating profit growth of between 6 and 9% to 2025. Such an outlook would not be possible without a portfolio of beverages enjoying substantial pricing power.” (Click here to see the full text)
7. BP p.l.c. (NYSE:BP)
Number of Hedge Fund Holders: 26
BP p.l.c. (NYSE:BP) operates as an energy company in the United Kingdom, working in the oil, natural gas, biofuels, wind power, solar power, and electric vehicle charging segments.
On February 9, BP p.l.c. (NYSE:BP) posted earnings for the fourth quarter. The company reported an EPS of $1.23, exceeding analysts’ estimates by $0.09. BP p.l.c. (NYSE:BP)’s revenue for the period jumped roughly 13% year-over-year to $50.55 billion, outperforming market consensus by more than $26 billion. For 2021, the full-year revenue grew 48.37% as compared to 2020, reaching $156.7 billion. Net income in 2021 reached $7.5 billion, a significant improvement from the net loss of $20.3 billion in the last year.
BP p.l.c. (NYSE:BP) declared a $0.3276 per share quarterly dividend on February 10, in line with previous. The dividend was paid on March 25, to shareholders of record on February 18. BP p.l.c. (NYSE:BP)’s dividend yield on April 8 came in at 4.30%.
Deutsche Bank analyst James Hubbard on March 23 maintained a Buy recommendation on BP p.l.c. (NYSE:BP) but lowered the firm’s price on the stock to 450 GBp from 455 GBp.
Among the hedge funds tracked by Insider Monkey, 26 funds reported owning stakes worth $1.2 billion in BP p.l.c. (NYSE:BP) at the end of the fourth quarter of 2021. Fisher Asset Management is the largest stakeholder of the company, with 13.7 million shares worth more than $367 million.
6. Cushman & Wakefield plc (NYSE:CWK)
Number of Hedge Fund Holders: 27
Cushman & Wakefield plc (NYSE:CWK) is a London-based real estate company that operates globally, specializing in multiple services including agency leasing, investment management, project development, tenant representation, valuation, and advisory.
On April 5, Goldman Sachs analyst Chandni Luthra initiated coverage of Cushman & Wakefield plc (NYSE:CWK) with a Buy recommendation and a $25 price target. The analyst believes Cushman & Wakefield plc (NYSE:CWK) is positioned to deliver clients with office properties even amidst a continuously volatile real estate landscape. The analyst expects solid top-line growth in the brokerage business, in addition to an improving margin profile.
In 2021, Cushman & Wakefield plc (NYSE:CWK)’s full-year revenue equaled $9.3 billion, up almost 20% from the previous year’s revenue of $7.8 billion. The net income of $250 million also rebounded sharply in 2021 from the loss of $220.5 million in 2020.
According to Insider Monkey’s Q4 data, 27 hedge funds placed long calls on Cushman & Wakefield plc (NYSE:CWK), compared to 24 funds in the earlier quarter. Harris Associates is the biggest stakeholder of the company, with 5.85 million shares valued at $130.2 million.
Just like DocuSign, Inc. (NASDAQ:DOCU), Roblox Corporation (NYSE:RBLX), and Microsoft Corporation (NASDAQ:MSFT), Cushman & Wakefield plc (NYSE:CWK) is a promising contender in this market.
Here is what Vulcan Value Partners Small Cap Fund has to say about Cushman & Wakefield plc (NYSE:CWK) in its Q4 2021 investor letter:
“Cushman & Wakefield plc was a material contributor during the quarter. The company is a global commercial real estate services firm that runs a highly diversified, asset-light business. During the quarter, Cushman and Wakefield reported strong earnings, increased fee revenue and margins, and increased its guidance. After being negatively impacted from the global pandemic, Cushman and Wakefield’s business is rebounding strongly. This great business benefits from scale, secular tailwinds, and is run by shareholder-oriented management with strong ownership.
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Disclosure: None. 11 Best UK Stocks to Buy Now is originally published on Insider Monkey.