In this piece, we will take a look at the 12 best UK stocks to buy now. If you want to skip our overview of the British economy, the biggest players, and recent trends, then take a look at 5 Best UK Stocks To Buy Now.
Britain is one of the most developed countries in the world and also one of the biggest economies. This is despite the fact that Britain is also quite small in terms of area. Britain is also quite historic, with a history that dates back centuries and even includes the Roman Empire. Over the course of the years, the country has undergone several shifts, starting from warring kings, conflicts within Europe, outward expansion to create the biggest empire in human history, and finally, winning the second world war after spending most of its treasure and limiting its direct political influence to Britain, Northern Ireland, and Wales.
These days, the British economy is nursing its wounds. The U.K. was one of the hardest hit countries by the Russian invasion of Ukraine since it imports half of its natural gas. Global fuel prices shot up after the invasion, and for the British, this came right at the time when they were smack in the middle of a political crisis that saw Boris Johnson leave the prime minister’s office. Mr. Johnson’s successor, Liz Truss then ended up creating history and not in a good way. Britain is a net importer and it often runs large budget deficits that run into trillions of pounds. These deficits are financed through foreign borrowing, making the British economy vulnerable to the mood swings of the global bond market.
How does this relate to Ms. Truss? Well, the shortest living prime minister in British history tried to stoke the British economy and return it to growth. This required reducing taxes and providing businesses with incentives to invest and operate in Britain. These are noble objectives, however, British bondholders are also paid interest through the taxes that the government collects, and her fiscal plan came when the global bond market itself was facing jitters from the Federal Reserve’s rapid interest rate hikes that had dampened global risk appetite. So, when the plan was unveiled, there was ‘anarchy’ all around and as bonds were sold, the British Pound collapsed and the Bank of England had to intervene and provide some liquidity to the market.
Since then, the economy seems to have stabilized. Reliance on imported fuels continues to create problems for policymakers and the public, with the recent uptick in crude oil prices due to sluggish Chinese demand ensuring that inflation in the United Kingdom continues to be highest among all advanced economies. During September, British CPI surprised economy watchers as it continued to stay at 6.7%. However, when compared to the peak of 11.1% in 2022, the rate of price increases has dropped considerably over the course of twelve months, yet sticky core CPI, which removes the impact of volatile food and energy prices sits at 6.1% which is creating worries of whether the economy might have to enter a recession to definitively bring down the CPI.
Speaking of which, the British economy grew by a modest 0.2% on a monthly basis in August, with high interest rates taking their toll on the housing market and the services sector also presenting dismal performance. The slow growth underpins troubles that British consumers are facing, as high inflation and rising mortgage payments leave them unable to spend their money freely which then drags down the entire economy.
Shifting gears to take a look at the corporate side of the UK, several of the largest companies in the world in crucial industries such as energy, banking, and consumer goods are British. We took a look at the biggest British companies as part of our coverage of 30 Most Valuable UK Companies and calculated that as of December 2022, the most valuable companies had a combined market capitalization of $2 trillion. Out of these, the five largest British firms are AstraZeneca PLC (NASDAQ:AZN), Shell plc (NYSE:SHEL), Linde plc (NYSE:LIN), Unilever PLC (NYSE:UL), and SBC Holdings plc (NYSE:HSBC).
So, as the British economy whimpers, what are the top British stocks to buy? We took a look, and some notable picks are Ferguson plc (NYSE:FERG), Linde plc (NYSE:LIN), and Roivant Sciences Ltd. (NASDAQ:ROIV).
Photo by Marc Rentschler on Unsplash
Our Methodology
To make our list of the best UK stocks to buy, we first made a list of the 40 biggest British companies in terms of market capitalization who had average share ratings higher than Buy and which are also traded on U.S. exchanges. Then, the number of hedge funds that had bought their shares as of June 2023 was determined through Insider Monkey’s database, and the best UK stocks to buy are as follows.
12 Best UK Stocks To Buy Now
12. International Game Technology PLC (NYSE:IGT)
Number of Hedge Fund Investors In Q2 2023: 32
International Game Technology PLC (NYSE:IGT) is headquartered in London and it provides slot machines, online gaming platforms, and associated products and services. October 2023 has seen the firm score a slew of wins, as it has secured multi years contract expansions with companies in Malaysia and the U.S.
By the end of this year’s second quarter, 32 out of the 910 hedge funds polled by Insider Monkey had bought and invested in International Game Technology PLC (NYSE:IGT)’s shares. Israel Englander’s Millennium Management is the largest shareholder among these, as it owns 1.8 million shares that are worth $59 million.
Along with Linde plc (NYSE:LIN), Ferguson plc (NYSE:FERG), and Roivant Sciences Ltd. (NASDAQ:ROIV),International Game Technology PLC (NYSE:IGT) is a top UK stock that hedge funds are buying.
11. Pentair plc (NYSE:PNR)
Number of Hedge Fund Investors In Q2 2023: 33
Pentair plc (NYSE:PNR) is an engineering company that provides water management products for pools, home filtration, and waste treatment systems. Despite a sluggish British economy, the firm has beaten analyst EPS estimates in all four of its latest quarters and the shares are rated Buy on average.
During June 2023, 33 out of the 910 hedge funds surveyed by Insider Monkey had held a stake in the firm. Pentair plc (NYSE:PNR)’s biggest hedge fund investor is Ian Simm’s Impax Asset Management due to its $705 million stake.
10. nVent Electric plc (NYSE:NVT)
Number of Hedge Fund Investors In Q2 2023: 35
nVent Electric plc (NYSE:NVT) is an electrical equipment provider for construction and industrial use. Its stable operation allows the company to pay out a dividend, and right now, nVent Electric plc (NYSE:NVT) pays a 17 cent dividend for a 1.47% yield.
Insider Monkey dug through 910 hedge funds for their Q2 2023 shareholdings and discovered 35 nVent Electric plc (NYSE:NVT) investors. Out of these, John W. Rogers’ Ariel Investments owns the largest stake which is worth $136 million.
9. GSK plc (NYSE:GSK)
Number of Hedge Fund Investors In Q2 2023: 35
GSK plc (NYSE:GSK) is one of the biggest pharmaceutical companies in the world. The firm scored a win in September when the FDA approved its treatment for anemia, and a large chunk of its stock traded on the London Exchange is held by institutional investors who own 45% of the shares.
As part of their shareholdings for this year’s second quarter, 35 among the 910 hedge funds profiled by Insider Monkey had invested in the firm. GSK plc (NYSE:GSK)’s biggest hedge fund investor is Ken Fisher’s Fisher Asset Management through its $492 million investment.
8. Liberty Global plc (NASDAQ:LBTYK)
Number of Hedge Fund Investors In Q2 2023: 36
Liberty Global plc (NASDAQ:LBTYK) is a communications company that provides internet services, data packages, video programs, and other products. The firm expanded its operational presence in October as it bought another communications firm operating in the Netherlands.
As of June 2023 end, 36 out of the 910 hedge funds tracked by Insider Monkey were Liberty Global plc (NASDAQ:LBTYK)’s shareholders. Out of these, the largest shareholder is Seth Klarman’s Baupost Group since it owns 45 million shares that are worth $799 million.
7. BP p.l.c. (NYSE:BP)
Number of Hedge Fund Investors In Q2 2023: 36
BP p.l.c. (NYSE:BP) is a global energy giant with conventional and renewable energy production facilities all over the world. The firm sought to woo investors in October 2023 as it outlined that its earnings by 2030 should now be $2 billion higher on the back of resilient demand for fossil fuels.
After digging through 910 hedge fund holdings for this year’s second quarter, Insider Monkey discovered that 36 had invested in the energy giant. BP p.l.c. (NYSE:BP)’s biggest investor in our database is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital as it owns $756 million worth of shares.
6. Clarivate Plc (NYSE:CLVT)
Number of Hedge Fund Investors In Q2 2023: 39
Clarivate Plc (NYSE:CLVT) is a technology company that focuses on the healthcare sector by providing universities, firms, and other entities with data analytics products. Its shares are rated Buy on average, but August was a bad month for the stock as Barclays, RBC, and BofA downgraded the stock to Underweight, Sector Perform, and Underperform.
39 out of the 910 hedge funds part of Insider Monkey’s Q2 2023 database were Clarivate Plc (NYSE:CLVT)’s shareholders. Out of these, Leonard Green’s Leonard Green & Partners owns the largest stake which is worth $1.1 billion.
Ferguson plc (NYSE:FERG), Clarivate Plc (NYSE:CLVT), Linde plc (NYSE:LIN), and Roivant Sciences Ltd. (NASDAQ:ROIV) are some best UK stocks to buy.
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Disclosure: None. 12 Best UK Stocks To Buy Now is originally published on Insider Monkey.