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11 Best UK Stocks To Buy Now

In this article, we discuss 11 best UK stocks to buy now. If you want to see more stocks in this selection, click 5 Best UK Stocks To Buy Now

On October 22, Moody’s downgraded the United Kingdom’s economic outlook from “stable” to “negative”, citing political instability and skyrocketing inflation. However, Moody’s credit rating for the UK remains unchanged at Aa3. The agency noted that this credit rating supports the UK’s economic resilience “despite the weakening in fiscal policy predictability in recent years”. The Guardian cited Jeremy Hunt, a British politician and the Chancellor of the Exchequer, who said: 

“We will do whatever is necessary to drive down debt in the medium term and to ensure that taxpayers’ money is well spent, putting the public finances on a sustainable path as we grow the economy.”

On September 30, the Office for National Statistics (ONS) posted revised UK GDP statistics, which reflected a 0.2% increase in the first quarter of 2022, up from a prior estimate of a 0.1% decrease during the period. However, the ONS noted that the UK economy “continues to slow”. The Bank of England has raised the interest rate to 2.25%, in a series of seven consecutive hikes since December 2021. 

While the UK is experiencing a tumultuous economic backdrop, valuations for the most prestigious companies in the country are at a record low, which creates an attractive buying opportunity. Some of the best UK stocks to buy now include Shell plc (NYSE:SHEL), AstraZeneca PLC (NASDAQ:AZN), and Linde plc (NYSE:LIN). 

Our Methodology 

We selected the following UK stocks based on positive analyst coverage, strong business fundamentals, and robust dividend profiles. We have assessed the hedge fund sentiment from Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022. 

Photo by Ruben Sukatendel on Unsplash

Best UK Stocks To Buy Now

11. Prudential plc (NYSE:PUK)

Number of Hedge Fund Holders: 6

Prudential plc (NYSE:PUK) is a London-based provider of life and health insurance, retirement and asset management solutions, and savings products for individuals in Asia and Africa. On October 10, the company entered a strategic partnership with Google to make protection, health, and savings solutions more accessible across Asia and Africa. Prudential plc (NYSE:PUK) will leverage Google Cloud’s data analytics infrastructure and the Google ecosystem for its digital transformation and enhance user engagement at its Pulse health and wealth platform. Prudential plc (NYSE:PUK) is one of the best UK stocks to invest in. 

On September 23, investment advisory JPMorgan raised the firm’s price target on the shares to 1,450 GBp from 1,380 GBp and maintained an Overweight rating on the shares. 

According to Insider Monkey’s second quarter database, 6 hedge funds held stakes worth $31 million in Prudential plc (NYSE:PUK), compared to 8 funds in the prior quarter worth $35.8 million. Paul Marshall and Ian Wace’s Marshall Wace LLP is the leading position holder in the company, with 457,151 shares valued at $11.5 million. 

Like Shell plc (NYSE:SHEL), AstraZeneca PLC (NASDAQ:AZN), and Linde plc (NYSE:LIN), Prudential plc (NYSE:PUK) is one of the top UK stocks to invest in. 

Here is what Third Point Management has to say about Prudential plc (NYSE:PUK) in its Q3 2021 investor letter:

“During the quarter, Prudential successfully completed its previously announced spin-off of Jackson National and raised additional equity in Asia for the remaining Pru-Asia business. We are pleased to see the value gap begin to close but see considerable additional appreciation potential as Asian-domiciled and other global investors begin to fully appreciate its significant discount to its peers, excellent franchise, and growth potential.”

10. RELX PLC (NYSE:RELX)

Number of Hedge Fund Holders: 9

RELX PLC (NYSE:RELX) was incorporated in 1903 and is headquartered in London, the United Kingdom. The company specializes in information-based analytics and decision tools for corporate customers in North America, Europe, and internationally. RELX PLC (NYSE:RELX)’s 1H GAAP EPS of $0.47 exceeded the £0.40 EPS in the prior-year quarter. Similarly, the revenue of $3.97 billion increased 17.1% on a year-over-year basis. The company also paid a $0.1901 per share semi-annual dividend on September 13. RELX PLC (NYSE:RELX) is one of the best UK stocks to consider. 

On October 25, investment advisory Morgan Stanley raised the price target on the shares to 3,020 GBp from 2,920 GBp and reiterated an Overweight rating on the shares. Analyst Patrick Wellington issued the ratings update. 

Among the hedge funds tracked by Insider Monkey, 9 funds reported owning stakes worth $106.2 million in RELX PLC (NYSE:RELX) at the end of the second quarter of 2022, compared to 10 funds in the earlier quarter worth $132.6 million. Jim Simons’ Renaissance Technologies held the largest stake in the company, comprising 2.20 million shares valued at $59.2 million.

Here is what Cooper Investors has to say about RELX PLC (NYSE:RELX) in its Q2 2021 investor letter:

“As noted in our previous update stock numbers in the Fund had become temporarily elevated due to participation in a number of spin-off and IPO opportunities. This has reduced back to 42 positions after three stocks were sold during the quarter with proceeds used to upsize recent investments, these sales (includes) RELX.

RELX, an owner of highly recurring subscription journals and data assets has been owned in the portfolio for nearly 5 years and delivered a solid risk adjusted total return of over 70% (in local currency terms). During the period of ownership management have simplified the corporate structure and continued to deploy capital into faster growing data assets, mainly in the US. Shares were punished in 2020 as the group’s Exhibition business suffered a material drop in earnings due to restrictions preventing physical events taking place. After a decent recovery in the share price this year we have redeployed what was a smaller Stalwart position into superior VoF propositions.”

9. Vodafone Group Public Limited Company (NASDAQ:VOD)

Number of Hedge Fund Holders: 15

Vodafone Group Public Limited Company (NASDAQ:VOD) is based in Newbury, the United Kingdom, and the company is engaged in telecommunication services across Europe and internationally. On October 7, American Tower Corporation (NYSE:AMT) announced that it will bid for a stake in Vodafone Group Public Limited Company (NASDAQ:VOD)’s wireless infrastructure unit, Vantage Towers. Vantage Towers is located in Germany, and it was listed for sale last year. Vodafone Group Public Limited Company (NASDAQ:VOD) is one of the top UK stocks to buy now. 

On October 4, Oddo BHF analyst Stephane Beyazian upgraded Vodafone Group Public Limited Company (NASDAQ:VOD) to Outperform from Neutral with a price target of 142 GBp, up from 140 GBp. The analyst sees the shares as too low due to the sale of its Hungary unit, the acquisition of Nowo in Portugal, and the merger news with Three UK. 

According to Insider Monkey’s Q2 data, Vodafone Group Public Limited Company (NASDAQ:VOD) was part of 15 hedge fund portfolios, compared to 14 in the prior quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the largest stakeholder of the company, with 9.5 million shares valued at nearly $149 million. 

8. British American Tobacco p.l.c. (NYSE:BTI)

Number of Hedge Fund Holders: 17

British American Tobacco p.l.c. (NYSE:BTI) provides tobacco and nicotine products to consumers worldwide. Its cigarette brands include Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans. On September 28, British American Tobacco p.l.c. (NYSE:BTI) declared a $0.7404 per share quarterly dividend, in line with previous. The dividend is payable on November 15, to shareholders of record on September 30. British American Tobacco p.l.c. (NYSE:BTI) delivers a dividend yield of 7.12% as of October 27. 

Barclays analyst Gaurav Jain on August 30 raised the firm’s price target on the shares to 4,500 GBp from 4,400 GBp and reaffirmed an Overweight rating on the shares.

Among the hedge funds tracked by Insider Monkey, 17 funds reported owning stakes worth $2.3 billion in British American Tobacco p.l.c. (NYSE:BTI) at the end of June 2022, compared to 19 funds in the last quarter worth $2.2 billion. Rajiv Jain’s GQG Partners held the largest stake in the company, with more than 34 million shares valued at $1.46 billion. 

Here is what Distillate Capital has to say about British American Tobacco p.l.c. (NYSE:BTI) in its Q1 2022 investor letter:

“Distillate Capital’s International FSV Strategy is less expensive, more fundamentally stable, and less levered than the benchmark All Country World Ex U.S. (ACWI-EX US) Index. The largest new position is British American Tobacco (NYSE:BTI), which was not owned previously due to leverage, but now passes that threshold and offers an 11% free cash flow to market cap yield.”

7. Unilever PLC (NYSE:UL)

Number of Hedge Fund Holders: 21

Unilever PLC (NYSE:UL) is a London-based fast moving consumer goods company, which operates through Beauty & Personal Care, Foods & Refreshment, and Home Care segments. On October 27, the company announced that sales were affected negatively by ongoing pressure on European and Chinese consumers in Q3 2022. However, Unilever PLC (NYSE:UL) acknowledged that sales climbed meaningfully from last year, mainly due to a 12.5% increase in prices in the third quarter. Unilever PLC (NYSE:UL) is one of the best UK stocks to invest in. 

Morgan Stanley analyst Pinar Ergun on September 29 assumed coverage of Unilever PLC (NYSE:UL) with an Equal Weight rating and a $42.75 price target. The analyst believes investors are largely favoring Unilever in the food sector but will be looking to see growth in the coming quarters in order to turn more optimistic on the stock.

Among the hedge funds tracked by Insider Monkey, Unilever PLC (NYSE:UL) was part of 21 public stock portfolios at the end of Q2 2022, compared to 23 funds in the earlier quarter. Tom Russo’s Gardner Russo & Gardner is the biggest position holder in the company, with approximately 7 million shares valued at over $319 million. 

Here is what Mayar Capital specifically said about Unilever PLC (NYSE:UL) in its Q2 2022 investor letter:

“In 1895 the Lever brothers created a new brand of hand soap. Inspired by the growing demand for hygiene products, the Lifebuoy brand of soaps was launched to ‘make health infectious’. 128 years later the Lifebuoy brand continues as a leading soap brand – albeit without the coal tar-derived ingredients list. In fact, the market research firm Kantar ranked Lifebuoy as the global #3 most chosen FMCG brand in 2020, just below Coca-Cola (KO) and Colgate (CL) – an astonishing fact given the age of the brand. While the brand is largely absent from shelves here in the UK, it is a juggernaut in Asian markets, and is the #1 brand in India.

There are two observations about the Lifebuoy story which tell us a lot about Unilever PLC (NYSE:UL), which is currently our largest holding in the Fund.

The first is the enduring power of brands in the consumer goods market. According to Kantar’s list of most chosen brands, the top 20 global marques have an average age of 116 years, with over half being founded in the 19th century. Fashions come and go, but there is something special about low-cost consumable goods that advantages strong, time-worn brand names…” (Click here to view full text)

6. BP p.l.c. (NYSE:BP)

Number of Hedge Fund Holders: 27

BP p.l.c. (NYSE:BP) is a London-based company that engages in the energy business worldwide. It provides natural gas, biofuels, onshore and offshore wind power, solar power generating facilities, and decarbonization solutions and services. BP p.l.c. (NYSE:BP) announced on October 17 that it plans to buy the renewable natural gas firm Archaea Energy Inc. (NYSE:LFG) for $4.1 billion, or $26 per share in cash, including $800 million of net debt.

On October 24, HSBC analyst Kim Fustier upgraded BP p.l.c. (NYSE:BP) to Buy from Hold with a 530 GBp price target. European oil majors have “visibly lagged” U.S. peers in the latest rally, building an “unjustified” valuation gap, the analyst told investors in a research note. The analyst thinks macro drivers will lead the sector higher and that oil stocks will be defensively positioned if the economic environment worsens. She cited valuation for the upgrade of BP p.l.c. (NYSE:BP) and believes that oil stocks can potentially perform well given high crude prices into year-end.

According to Insider Monkey’s second quarter database, 27 hedge funds held stakes worth $1.76 billion in BP p.l.c. (NYSE:BP), compared to 17 funds in the last quarter worth $1.86 billion. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest stakeholder of the company, with 26.5 million shares valued at $750.4 million. 

In addition to Shell plc (NYSE:SHEL), AstraZeneca PLC (NASDAQ:AZN), and Linde plc (NYSE:LIN), BP p.l.c. (NYSE:BP) is one of the best UK stocks to buy according to elite hedge funds. 

Click to continue reading and see 5 Best UK Stocks To Buy Now

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Disclosure: None. 11 Best UK Stocks To Buy Now is originally published on Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

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A New Dawn is Coming to U.S. Stocks

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Click to continue reading…