In this article, we will take a look at the 10 best UK stocks to buy now. You can skip our comprehensive analysis of these British companies and go directly to the 5 Best UK Stocks to Buy Now.
The COVID-19 pandemic hit the United Kingdom as hard as the rest of the world, resulting in lockdown restrictions for most of the year that halted business activities and sent the stock market crashing in early 2020. However, with the coronavirus vaccine being administered all over the country, business activities have returned gradually over the course of the past few weeks and stocks are recovering. There is also an argument to be made that the London Stock Exchange performed better than other other markets around the world during the crisis.
For example, £9.2bn was raised through initial public offerings at the LSE in 2020, 27% more than the previous year. Six out of ten of the largest initial offerings were of international companies during the period. Through the pandemic, 445 businesses returning to the market raised £40.8 billion in follow-on capital, an increase of 67% compared to 2019. However, other indicators tell a different story. The FTSE 100, the benchmark UK index comprising firms with large market capitalizations, is down by almost 14% this year while other markets recover.
Companies that market essential services have managed to ride out the virus storm. Vodafone Group Plc (LSE: VOD.L) improved revenue numbers in the second half of the fiscal year in 2020 after the initial pandemic shock. In Spain, Vodafone Group Plc (LSE: VOD.L) was able to improve a 6.9% year-over-year loss in the first quarter to a 1.8% year-over-year loss in the second quarter. The company was also able to improve sales, adding over 15 million broadband connections year over year at the end of the second quarter of 2020.
Similarly, in February, Barclays PLC (NYSE: BCS). listed in markets at New York and London, reported a 30% drop in pre-tax profits as provision for bad loans due to the pandemic. However, the drop, equating to £3.1 billion in value, was much less than forecast as the investments made by the bank offset the cash it had set aside to deal with the COVID-19 crisis. Barclays PLC (NYSE: BCS) also announced earlier this year that it would resume paying dividends to shareholders despite the hit in profit. The dividends had been halted at the request of the Bank of England last year. BCS is one of the best UK stocks to buy now.
Some other dual listed mentions for the post pandemic recovery are GlaxoSmithKline plc (NYSE: GSK) and BP plc (NYSE: BP). The former is working on a protein-based coronavirus vaccine that Ursula von der Leyen, a top executive at EU, has said has some potential. The latter is buoyed by recent developments in the oil world where production pacts have been signed between oil giants to stabilize prices after a volatile 2020. GlaxoSmithKline plc (NYSE: GSK) and BP plc (NYSE: BP) are some of the best UK stocks to buy now.
Perhaps the biggest UK-based success story of the pandemic era is AstraZeneca PLC (NASDAQ: AZN), also listed in both the US and UK. The pharma giant developed one of the most effective coronavirus vaccines in the world towards the end of last year. AstraZeneca PLC (NASDAQ: AZN) then signed contracts for the vaccine distribution with several governments and ramped up production to meet demand. Smart investors had backed AstraZeneca to succeed before everyone else and reaped the rewards afterwards. It has nonetheless become very difficult to predict the market dynamics in a world constantly in flux.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of 10 best UK stocks to buy now.
Best UK Stocks to Buy
10. ITV plc (LSE: ITV.L)
ITV plc (LSE: ITV.L) is a London-based media firm founded in 2004. Some of the brands it owns include ITV, ITV2, ITV3, ITV4, ITVBe, ITV Encore, CITV, ITV Breakfast, and CITV Breakfast, among others. The content produced by the media company is also available on internet streaming platforms. The company also owns ITV Studios that makes and markets content for other British television channels as well as media houses in the United States. ITV stock has returned more than 70% to investors over the past twelve months.
The stock ranks 10th in our list of best UK stocks to buy now.
On March 9, ITV plc (LSE: ITV.L) reported results for fiscal year 2020, posting a revenue of £2.78 billion, a 16% decrease compared to the previous year. In media firm stocks, Comcast Corporation (NASDAQ: CMCSA) in the US is also a good option. At the end of the fourth quarter of 2020, 84 hedge funds in the database of Insider Monkey held stakes worth $8.8 billion in Comcast Corporation (NASDAQ: CMCSA), up from 82 the preceding quarter worth $8.1 billion.
9. Tesco PLC (LSE: TSCO.L)
Tesco PLC (LSE: TSCO.L) is a Garden City-based retail firm. It was founded in 1919 and is placed ninth on our list of 10 best UK stocks to buy now. The company deals in groceries and general merchandise through convenience and hypermarket stories across the UK. It also has operations in the Czech Republic, Hungary, Poland, Slovakia, Malaysia, and Thailand. Tesco is one of the largest retailers in the world in terms of revenue. It has a market cap of more than $24 billion and posted more than $80 billion in revenue in the last fiscal year.
In December last year, Tesco PLC (LSE: TSCO.L) rallied close to 3% as the Brexit deal was finalized, formally separating the UK from the European Union. Across the pond, Walmart Inc. (NYSE: WMT) is a sound retail bet for the long term. Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Walmart Inc. (NYSE: WMT) with 11.8 million shares worth more than $1.7 billion.
8. Reckitt Benckiser Group plc (LSE: RKT.L)
Reckitt Benckiser Group plc (LSE: RKT.L) is a Slough-based consumer goods company. It is placed eighth on our list of 10 best UK stocks to buy now and was founded in 1814. The company markets health and hygiene products in several countries around the world, including the big Chinese market. Some of the brands it owns include Clearasil, Dettol, Durex, Gaviscon, Mucinex, Nurofen, Scholl, Strepsils, and Veet, among others. The company offers analgesics; footcare products, and sore throat medications as well.
On March 22, news agency Reuters reported that Reckitt Benckiser Group plc (LSE: RKT.L) intended to sell a baby infant formula in China, a business valued at over $2 billion. In the consumer goods market, US-listed The Procter & Gamble Company (NYSE: PG) is on a strong bull run. At the end of the fourth quarter of 2020, 83 hedge funds in the database of Insider Monkey held stakes worth $10.4 billion in The Procter & Gamble Company (NYSE: PG), up from 75 the preceding quarter worth $10 billion.
7. GlaxoSmithKline plc (LSE: GSK.L)
GlaxoSmithKline plc (LSE: GSK.L) is a Brentford-based multinational pharmaceutical firm. It is ranked seventh on our list of 10 best UK stocks to buy now and was founded in 2000. The firm makes and sells vaccines, over-the-counter medicines, and health-related consumer products. Some of the areas it focuses on include respiratory, HIV, immuno-inflammation, oncology, anti-viral, central nervous system, cardiovascular and urogenital, metabolic, anti-bacterial, and dermatology. It has a market cap of over $93 billion.
On April 23, GlaxoSmithKline plc (LSE: GSK.L) announced that it had won conditional approval for the marketing of Jemperli, a drug developed by the firm, for endometrial cancer. In addition to Glaxo, other pharma firms like Pfizer Inc. (NYSE: PFE) should also be considered. Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Pfizer Inc. (NYSE: PFE) with 12.6 million shares worth more than $466 million
6. BP p.l.c. (LSE: BP.L)
BP p.l.c. (LSE: BP.L) is a London-based energy company founded in 1909. It is placed sixth on our list of 10 best UK stocks to buy now. The firm deals in energy solutions like oil, natural gas, biofuels, wind power, and solar power, as well as hydrogen. BP stock has returned more than 10% to investors over the past twelve months. BP is counted amongst the seven major oil companies in the world and has suffered from a global drop in oil prices because of a production war between major oil producers Saudi Arabia and Russia.
On May 3, the UK press reported that BP p.l.c. (LSE: BP.L) was planning to diversify business and prepare bids to build wind farms in Scotland. As oil prices stabilize, another energy stock to watch out for is Exxon Mobil Corporation (NYSE: XOM). At the end of the fourth quarter of 2020, 63 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in Exxon Mobil Corporation (NYSE: XOM), up from 52 in the preceding quarter worth $1.3 billion.
Like GlaxoSmithKline plc (NYSE: GSK), AstraZeneca PLC (NASDAQ: AZN) and Barclays PLC (NYSE: BCS), BP plc (NYSE: BP) is one of the best UK stocks to buy now.
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Disclosure: None. 10 Best UK Stocks to Buy Now is originally published on Insider Monkey.
