I am always on the lookout for the best UK shares to boost my portfolio and generate the best returns possible.
Finding the best stocks to buy now is the challenging aspect. Two core aspects I consider are the overall macroeconomic environment and a stock’s core fundamentals. By examining what is going on in the economy in relation to a stock’s fundamentals, I believe I can identify whether or not a stock could be a good addition to my portfolio.
With that in mind, I have identified three stocks that I am considering adding to my portfolio right now.
UK shares pick #1
My first pick is FTSE 100 incumbent Polymetal International (LSE:POLY). Polymetal is a top-10 global gold producer and top-five silver producer with core assets in Russia and Kazakhstan. With over 12,000 employees, it has a portfolio of nine producing gold and silver mines as well as a pipeline of future projects too. Currently, Polymetal is the second-largest producer of gold in the whole of Russia.
When the markets crashed due to the pandemic, many investors moved away from stocks and shares and towards commodities and commodities stocks. Precious metals prices are on the rise with gold leading the way. I believe this trend is likely to continue due to inflation fears in all the major world economies. Basically, as the price of precious metals rises, the potential for Polymetal to increase revenues is good. Some of the best UK shares currently are commodities stocks.
As I write this today, Polymetal shares are trading for 1,366p. A year ago, shares were trading for 18% higher, at 1,668p. I see this share price dip as a buying opportunity. The volatility that comes with commodities can explain the share price drop.
I believe Polymetal has good fundamentals too. It has a good history of performance. For example, Polymetal has reported revenue and gross profits have increased year on year for four years. In addition, Polymetal is an excellent dividend payer, which would make me a passive income if I invested. Since its initial public offering (IPO) in 2011, it has paid close to $2bn in dividends to shareholders.
I must note the risks involved with Polymetal too, however. Commodities are volatile, especially in times of economic uncertainty. This volatility can affect performance, share price, and overall investor sentiment too. Also, competition is rife in the commodities sector which could hinder Polymetal’s performance as well.
My next pick is luxury watchmaker and luxury items purveyor Watches of Switzerland (LSE:WOSG).
Despite the current economic uncertainty, WOSG has reported strong growth recently. I believe this is because, like in all periods of financial downturns, the ultra-wealthy are usually the least affected. Furthermore, the number of newly wealthy individuals is on the rise. This is in part driven by a boom in tech stocks and tech-related investments such as cryptocurrencies. I see evidence of this when reviewing the Forbes 400 list for 2021, where tech individuals dominate.
As I write, shares in WOSG are trading for 1,142p per share. A year ago shares were trading for 408p, which is a 179% return. Like Polymetal, WOSG has a good track record of performance. I can see that revenue and gross profit have increased year on year for the past four years. A recent trading update in August was impressive too. It showed that Q1 revenue had nearly doubled compared to the same period in 2020, which tells me WOSG’s momentum shows no signs of slowing down just yet.
WOSG has a good history of performance, a strong brand and a loyal customer base to help boost performance. There are risks involved too, however. My biggest fear for WOSG is that post-pandemic spending could slow down. Buying a pricey timepiece may become less of a priority, even for the ultra-rich. This would affect performance and the WOSG share price.
UK shares in technology are a good bet
My final pick is FTSE 100 incumbent Informa (LSE:INF). Informa is a tech exhibition firm. It runs multiple events across the world for many industries and companies to showcase products and services. The pandemic hit Informa hard as many events were cancelled. My belief in Informa being a good UK share for my portfolio is based on the continued reopening of world economies and pent up demand.
As I write, shares are trading for 522p. At this time last year, shares were trading for 23% less, for 424p.
Informa’s most recent trading update in July was a useful one for me. The half-year report published financial information as well as a clear growth plan that looked exciting to me. Financially, Informa reported that pandemic-related losses were stabilising and substantially less than last year.
From an operational perspective, Informa said it would be looking to grow its exhibitions in the US, China, and Middle East. This is exciting as the US and China are the two largest tech exhibition markets in the world. The Middle East is also emerging as a strong tech hub too.
With a clear plan of growth and attempting to return to pre-pandemic levels of trading, Informa announced it expects to record revenues of £1.8bn in 2022. This is an upgrade on earlier forecasts of £1.7bn, which is a sign of confidence. Informa derives its confidence primarily from the over 100 events it has planned between now and 2022 in the regions mentioned earlier.
I am aware of the risks associated with Informa. The rise in Covid-19 cases could definitely mean the cancellation of events and exhibitions, which would affect performance, financials, and investor sentiment once more. The fact Informa operates around the world means it will have different Covid-19 regulations to contend with, which will make operations much harder day to day as well as events too.
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Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.