In this article, we discuss 11 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.
5. Ferguson plc (NYSE:FERG)
Number of Hedge Fund Holders: 32
Ferguson plc (NYSE:FERG) was founded in 1887 and is headquartered in Wokingham, the United Kingdom. The company distributes plumbing and heating products in the United States and Canada. On October 13, Ferguson plc (NYSE:FERG) announced a series of financing transactions to increase its liquidity by $800 million to fund general corporate expenses. Ferguson plc (NYSE:FERG) is one of the top UK stocks to monitor.
JPMorgan analyst Elodie Rall on September 30 maintained an Overweight rating on Ferguson plc (NYSE:FERG) but lowered the firm’s price target on the shares to 12,500 GBp from 13,200 GBp.
Among the hedge funds tracked by Insider Monkey, Brian Ashford-Russell and Tim Woolley’s Polar Capital is the largest stakeholder of Ferguson plc (NYSE:FERG), with a position worth over $4 billion. Overall, at the end of the second quarter of 2022, 32 hedge funds were long Ferguson plc (NYSE:FERG), up from 18 funds in the preceding quarter.
4. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 39
Shell plc (NYSE:SHEL) is a London-based energy and petrochemical company, selling crude oil, natural gas, and natural gas liquids in Europe, Asia, Oceania, Africa, the United States, and the rest of the Americas. On October 27, Shell plc (NYSE:SHEL) declared a $0.50 per ADS quarterly dividend, in line with previous. The dividend is payable on December 15, to shareholders of record on November 11. The company also announced $4 billion in share buybacks and posted market-beating Q3 2022 financial results. Shell plc (NYSE:SHEL) is one of the best UK stocks to invest in.
On October 13, investment advisory JPMorgan maintained an Overweight rating on Shell plc (NYSE:SHEL) but trimmed the price target on the shares to 2,900 GBp from 3,000 GBp. Analyst Christyan Malek issued the ratings update.
According to Insider Monkey’s data, 39 hedge funds held stakes worth $3.46 billion in Shell plc (NYSE:SHEL) at the end of Q2 2022, compared to 37 funds in the prior quarter worth $5.6 billion. Ken Fisher’s Fisher Asset Management featured as the largest stakeholder of the company, with 20.25 million shares valued at more than $1 billion.
Here is what Harding Loevner International Equity Fund has to say about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:
“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multinational companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”
3. AstraZeneca PLC (NASDAQ:AZN)
Number of Hedge Fund Holders: 47
AstraZeneca PLC (NASDAQ:AZN) is a Cambridge-based company focused on the discovery, development, and commercialization of prescription medicines. On October 27, AstraZeneca PLC (NASDAQ:AZN) announced that its medicine Ultomiris lowered the risk of relapse by 98.6%, compared to placebo, in patients with a type of central nervous system disorder in a phase 3 trial. AstraZeneca PLC (NASDAQ:AZN) is one of the premier UK stocks to consider.
On October 19, Berenberg analyst Luisa Hector reiterated a Buy recommendation on AstraZeneca PLC (NASDAQ:AZN) but reduced the price target on the stock to 118 GBp from 120 GBp.
According to Insider Monkey’s data, 47 hedge funds were long AstraZeneca PLC (NASDAQ:AZN) at the end of the second quarter of 2022, compared to 45 funds in the prior quarter. Rajiv Jain’s GQG Partners is one of the biggest stakeholders of the company, with 18.7 million shares worth $1.2 billion.
Here is what Baron Funds specifically said about AstraZeneca PLC (NASDAQ:AZN) in its Q3 2022 investor letter:
“AstraZeneca PLC (NASDAQ:AZN) is a global pharmaceutical company focused on oncology, respiratory, cardiovascular, and metabolism drugs. Despite incremental positive news flow, shares were hurt by the broader flight out of European stocks and the decline in the British Pound that started late in the quarter. We retain conviction in AstraZeneca given its best-in-class growth profile combined with its strong pipeline and commercial launch characteristics. We highlight breast cancer drugs Enhertu and Dato-DXd as two promising near-term opportunities.”
2. Linde plc (NYSE:LIN)
Number of Hedge Fund Holders: 48
Linde plc (NYSE:LIN) was founded in 1879 and is based in Woking, the United Kingdom. It is an industrial gas and engineering company, offering atmospheric gasses, process gasses, electronic gasses, specialty gasses, and acetylene. On October 24, Linde plc (NYSE:LIN) declared a quarterly dividend of $1.17 per share, in line with previous. The dividend is payable on December 16, to shareholders of the company as of December 2. After posting market-beating Q3 results, the company raised full-year 2022 adjusted EPS guidance to $11.93-$12.03 from the earlier outlook of $11.73-$11.93 and an $11.91 consensus, representing a 12% to 13% growth year-over-year.
On October 17, Societe Generale analyst Peter Clark assigned a Buy rating to Linde plc (NYSE:LIN) but lowered the price target on the stock to $370 from $400. The analyst expects earnings “reliability” ahead but trimmed the price target to factor in the “correcting stock markets.”
According to Insider Monkey’s data, 48 hedge funds were long Linde plc (NYSE:LIN) at the end of the second quarter of 2022, compared to 54 funds in the last quarter. Ian Simm’s Impax Asset Management is the leading stakeholder of the company, with 2.8 million shares worth $813.6 million.
Here is what ClearBridge International Growth EAFE Portfolio has to say about Linde plc (NYSE:LIN) in its Q2 2022 investor letter:
“The replacement of demand for Russian gas with green hydrogen positions Linde (NYSE:LIN) well. Green hydrogen, made by using renewable energy to split water into its basic elements, hydrogen and oxygen, and subsequently cleanly burn the hydrogen as fuel, is seen as key to lowering emissions in hard-to-decarbonize industries such as steel and cement, as well as transport. In 2021 Linde announced a long-term agreement to provide European semiconductor maker Infineon (OTCQX:IFNNY) with onsite production and storage of green hydrogen for the company’s site in Villach, Austria. Securing a clean, domestic source of energy for semiconductor manufacturing appears strategic today amid heightened concerns of reliable supply from Taiwan.”
1. Willis Towers Watson Public Limited Company (NASDAQ:WTW)
Number of Hedge Fund Holders: 50
Willis Towers Watson Public Limited Company (NASDAQ:WTW) operates as an advisory, broking, and solutions firm worldwide. The company offers actuarial support, plan design, administrative services, health and group benefit programs, and benefits outsourcing services. Willis Towers Watson Public Limited Company (NASDAQ:WTW) paid a $0.82 per share quarterly dividend to shareholders on October 17. It is one of the best UK stocks to invest in.
On October 13, Piper Sandler analyst Paul Newsome upgraded Willis Towers Watson Public Limited Company (NASDAQ:WTW) to Overweight from Neutral with an unchanged price target of $250. The analyst attributed the upgrade to the firm’s valuation, as the stock is notably trading below the price target. He also thinks Willis Towers Watson Public Limited Company (NASDAQ:WTW)’s organic growth and cost saving initiatives could improve in the second half of the year “as management is publicly under pressure to deliver.”
According to Insider Monkey’s data, 50 hedge funds were long Willis Towers Watson Public Limited Company (NASDAQ:WTW) at the end of June 2022, compared to 49 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with 4.8 million shares worth $953.4 million.
Here is what Artisan Partners specifically said about Willis Towers Watson Public Limited Company (NASDAQ:WTW) in its Q3 2022 investor letter:
“Willis Towers Watson Public Limited Company (NASDAQ:WTW) shares rose 2% in the quarter. This modest increase made it one of our best performers during a difficult quarter. Absent significant news, the business continues to benefit from a hard insurance market. Results are still lagging peers, but the management team seems to be making progress in closing the gap. In the meantime, the company is returning significant amounts of capital to shareholders. Over the past eight months, it has repurchased $4 billion in stock and reduced the share count by 15%. And there is more on the way. This is a good business in a fantastic industry trading at 12X normalized earnings . We believe it is worth much more.”
You can also take a look at 10 Best International Dividend Stocks To Buy and 10 Best TSX Stocks To Buy.
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Disclosure: None. 11 Best UK Stocks To Buy Now is originally published on Insider Monkey.
