Best Shares to Buy Now in the UK 2023

There are thousands of shares to choose from – not only in the UK markets but also abroad. This presents many opportunities to build a diversified portfolio, covering growth, undervalued, dividend, and blue-chip companies.

In this guide, we reveal the 10 best shares to buy now. Read on to discover which shares represent the best long-term investments for growth and dividends.

Reviewing the Best Stocks to Invest in UK

In the following sections, we analyze the 10 best shares to buy now. We discuss each company’s core business model, its recent price performance, what the future potentially holds, and any other useful information that you should know as an investor.

1. Amazon – Overall Best Stock to Invest in Long Term

Amazon is one of the best stocks to buy now in the UK. This e-commerce giant dominates the online retail space. Not only does it allow third-party merchants to sell their items, but Amazon also has its own product line. This includes the hugely popular Amazon Echo device, with sales expected to exceed 94 million units this year. But that’s not all – Amazon continues to diversify its business model and is now involved in many other niches and markets.

At the forefront of this is Amazon Prime – a monthly subscription that offers expedited delivery times and access to its video streaming service. More than 200 million people are subscribed to Amazon Prime, so it’s one of the firm’s most important revenue drivers. Amazon is also dominant in the cloud computing space. Amazon Web Services (AWS) has a significant market share over its main competitors – Google and Microsoft.

Amazon is also an online pharmacy. It allows US residents to order treatments cost-effectively. This could be one of Amazon’s biggest divisions in the coming years. What’s more, Amazon has also launched an online and physical grocery store. It has a small market share right now but sales continue to rise each quarter. Nonetheless, this highly diversified business strategy ensures that Amazon has its fingers in many different industries.

There is every reason to believe that this will always be the case. After all, Amazon has never paid a dividend – it prefers to reinvest its profits back into the company, promoting continuous growth. Amazon also has one of the strongest balance sheets globally, so there are no concerns about funding its ambitious ventures. Currently, Amazon has almost $64 billion in cash and short-term investments. This is 5.37% more than 12 months prior.

In terms of its stock price performance, Amazon shares are up 57% year-to-date. This makes it one of the best-performing shares in the tech industry. For instance, over the same period, Google and Microsoft saw gains of 50% and 38%, respectively. Over a five-year period, Amazon shares have grown by just 38%. Nonetheless, if you compare this to the FTSE 100 – which grew by just 1.7%, Amazon is one of the most bought and sold shares with UK investors.

Over a much longer period of time, Amazon has produced unprecedented returns. Back in 1997, Amazon shares were worth just $0.09 (adjusted for stock splits). Today, you’ll pay $135 per Amazon share – 150,000% more than its IPO price. Amazon’s 52-week high stands at $143.63 – just 6% above current prices. Therefore, Amazon could record new highs before the end of the year.

We should also note that sell-side analysts are super bullish on Amazon. Out of 52 analysts in the prior 90 days, 48 rate Amazon a ‘Buy’ or ‘Strong Buy’. The average 12-month price target for Amazon is $168.67. The high 12-month target is $230. Currently, Amazon has a market capitalization of $1.4 trillion.

Note: You can buy Amazon shares in the UK on eToro without paying any international surcharges or commissions. It takes just five minutes to invest and you’ll only need to meet a $10 (about £8) minimum. This is the case with all of the shares we will discuss today.

2. 888 Holdings – Small-Cap Gambling Stock With Year-to-Date Gains of Over 42%

888 Holdings is one of the best shares to buy now if you’re a value investor. Founded in 1997, this company is not only behind the 888sport and 888casino brands, but it also owns William Hill. 888 Holdings – listed on the London Stock Exchange, is one of the best-performing shares in the UK this year. In fact, year-to-date, 888 Holdings shares are up over 42%.

In contrast, the FTSE 100 is up just 1.7% over the same period. Moreover, one of its main competitors, Entain, is down 14.48% year-to-date – so 888 Holdings is clearly on the right track. From a price perspective, there’s a lot to like about 888 Holdings, meaning that its current trajectory is only getting started. First and foremost, 888 Holdings shares are trading well below their all-time high valuation.

The shares were trading at 458p in September 2021. Currently, you’ll pay just 125.40p. This means that you can buy 888 Holdings shares at a huge discount of 72%. If 888 Holdings shares regain their prior all-time highs, you’re looking at an upside of 265%. There is every chance that 888 Holdings will achieve this feat. After all, it has a small market capitalization of just over $562 million.

There’s also some positivity to take away from its recent quarterly earnings report. The firm posted revenues of £440.8 million in Q2 2023 – up 165.46% from the previous year. It also increased its EBITDA by 257.70% – up to £77.8 million. Moreover, 888 Holdings is making improvements to its balance sheet. Its Q2 2023 earnings report shows that cash and short-term investments were up 6.18% from the previous year, standing at £318 million.

Moreover, it generated 339.34% additional cash from operations on a year-over-year basis. Not to mention a 140.22% increase in free cash flow. However, there are also some alarm bells to note. 888 Holdings reported a net income loss of £16.25 million in its most recent quarter. Furthermore, net profit margins were negative at -3.69%. That said, this is a major improvement from late 2022, when net margins were down -14.71%. In terms of its future outlook, one of the main focuses for 888 Holdings should be its US expansion.

William Hill is already the largest sportsbook in the US, but the broader market is still over-regulated in many states. On the flip side, many states are beginning to relax their overly strict gambling laws, so 888 Holdings is well primed to capitalize on this. Finally, 888 Holdings is not currently a dividend payer. December 2021, as 3.60p per share. Once 888 Holdings returns to profitability, its dividend program can be revisited.

74% of retail investor accounts lose money when trading CFDs with this provider.

3. ConocoPhillips – Gain Exposure to Rising Oil and Gas Prices With a Top-Performing Energy Stock 

ConocoPhillips is one of the best shares to buy now if you’re looking for exposure to oil and gas. As a UK investor, you might initially be thinking about BP for this purpose. However, ConocoPhillips represents a far better investment across most measurable metrics. After all, BP shares have grown by 6.42% year-to-date. This is during a time when oil and gas prices are at record highs.

What’s more, BP shares have declined by over 4% on a 5-year basis. In contrast, ConocoPhillips shares are up 75% over the same period. Over the prior year of trading, the firm is up 15.28%. At current prices of $123.07, ConocoPhillips is inching toward its all-time high of $138.49. Moreover, ConocoPhillips is also one of the best dividend stocks in the UK. Currently, you’ll get a running dividend yield of 3.69%.

Its next dividend will be paid on October 16, 2023, at $0.60 per share. Prior to this, it paid a $0.51 dividend per share on September 1, 2023. And in July 2023, it also paid $0.60. All that being said, it’s important to consider ConocoPhillips’s most recent earnings report. Compared to the previous year, Q2 2023 revenues were down 41.41% to $12.76 billion.

Moreover, net income was down 56.64% and margins saw a 26.30% decline. Earnings-per-share also took a huge hit, down 52.94% to $1.84. However, it is crucial to remember that the majority of oil and gas companies reported weak Q2 2023 results. During the period, WTI Crude prices declined to lows of $66 per barrel. Currently, the oil price trajectory is back on the rise. For example, WTI Crude is inching toward $88 per barrel. While Brent Crude prices are already above the $90 mark.

Therefore, ConocoPhillips shareholders should expect a much brighter Q3 2023. Additionally, ConocoPhillips’s Q2 2023 report actually yielded some positives. For instance, it hit record average production levels of 1.805 million barrels per day, representing a 6.7% rise. This means that ConocoPhillips is well primed for higher net margins, considering the current price of oil.

74% of retail investor accounts lose money when trading CFDs with this provider.

3. Apple – 5-Year Gains of Over 230% and Approaching a $3 Trillion Market Capitalization 

Apple is one of the most recognizable brands globally. It’s now the largest stock in the US for market capitalization, currently valued at $2.8 trillion. In July, Apple actually surpassed a $3 trillion valuation – becoming the first US-listed stock to do so. Nonetheless, Apple shareholders continue to enjoy significant growth. For example, Apple shares have grown by over 46% year-to-date.

Its main smartphone competitor, Samsung, has grown by 26% over the same period. Microsoft, Apple’s biggest competitor in the desktop computing space, has grown by 38% year-to-date. Zooming out to a five-year period, Apple shares have grown by over 230%. Over the same period, Samsung and Microsoft have grown by almost 56% and 207%, respectively.

Crucially, the tech-heavy NASDAQ 100 has grown by 106% Over the prior five years of trading. As such, Apple remains one of the fastest-growing tech shares to buy. Although Apple’s largest revenue drivers are its iPhones and Macbooks, the firm continues to diversify its business. For example, Apple’s services division generated revenues of $20.9 billion in Q2 2023 – up 5.5% from the previous year.

This includes monthly subscriptions from Apple’s streaming service, plus revenues generated from the App Store. Apple also continues to develop its wearables division, which includes AirTags, AirPods, and Apple Watches. Going back to Apple’s Q2 2023 earnings report, there were both positives and negatives to take away.

For instance, Apple saw a 1.40% decline in revenue year-over-year, down to $81.8 billion. However, net income rose by 2.26% to $19.88 billion. While net profit margins were increased by 3.71% to 24.31%. Earnings-per-share also saw a notable rise, up 5% to $1.26. Apple also saw a significant improvement to its already robust balance sheet. Cash and short-term investments now stand at $62.48 billion, up 29.55% from the year prior.

There is also a 1.24% decline in liabilities. Apple is also attractive for its ongoing share buyback program. As per its Q2 2023 earnings call, Apple repurchased $23 billion worth of shares in the quarter. What’s more, Apple recorded a 4% dividend increase. That said, the running dividend yield on Apple shares is still low at just 0.52%.

74% of retail investor accounts lose money when trading CFDs with this provider.

5. HSBC – Q2 2023 Revenues Jumped by Over 52% – Running Dividend Yield of 5.71%

HSBC is one of the best UK shares to buy now to capitalize on high interest rates. This is because banks like HSBC can charge more when lending out capital, meaning higher margins and net profits. This is good news for HSBC investors, considering the UK banking industry has been in turmoil since the 2008 financial crisis. However, now could be a good time to enter the market, especially considering HSBC’s recent performance.

In Q2 2023, HSBC reported revenues of £17.93 billion – up over 52% from the prior year. HSBC’s revenue increase has been consistently growing for several quarters. In Q4 2022 and Q1 2023, HSBC revenues were £15.83 billion and £16.1 billion, respectively. Even more importantly, HSBC’s net income saw a 26.43% year-over-year rise in Q2 2023, standing at £6.76 billion for the quarter.

In addition, HSBC is also one of the best shares for dividends. Based on current prices, HSBC is offering a running dividend yield of 5.71%. HSBC shares are also trading at an attractive P/E ratio of 6.2 times. In contrast, Lloyds Banking Group currently has a P/E ratio of 16.59 times.HSBC’s share price is also on a solid upward trajectory.

Year-to-date, the shares are up 10.3%. That said, HSBC is still nearly 11% down on a five-year basis. But with interest rates likely remaining high for the foreseeable future, HSBC offers a superb value. Its market capitalization is currently at just over £115 billion.

74% of retail investor accounts lose money when trading CFDs with this provider.

6. Meta Platforms – Social Media Giant With Year-to-Date Growth of Nearly 140%

Meta Platforms is the world’s largest and most dominant social media company. It owns Facebook, Instagram, WhatsApp, and now Threats – which is aiming to chip away at Twitter’s market share. Crucially, almost 3.6 billion people – which is over 77% of global internet users, use at least one Meta Platforms network every day.

The vast majority of Meta Platform’s revenue comes from advertising. This comes as no surprise, considering the sheer amount of data that the firm holds on its users. This enables Meta Platforms to offer highly targeted ad campaigns. That said, Meta Platforms is also diversifying into other areas. This includes virtual and augmented reality, with Meta Platforms buying Oculus in 2014 for $2 billion.

Most importantly for investors, Meta Platforms’s interest in the ‘metaverse’ is finally cooling down. Its CEO, Mark Zuckerberg, has allocated billions of dollars to his metaverse dream, much to the dismay of shareholders. However, Zuckerberg has since refocused the company on what it does best – advertising. In turn, Wall Street’s interest in Meta Platforms is once again on the rise.

For example, Meta Platforms stock was priced at $124.74 at the start of the year. It’s now trading at $299.17 – meaning year-to-date returns of almost 140%. This makes Meta Platforms one of the best shares to buy for recent performance. That said, there’s plenty of upside left on the table for those entering the market today.

In the medium term, investors are looking at Meta Platform’s all-time high of over $376 – which it hit in September 2021. From current prices, this would require an upside of over 25%. In addition, Meta Platform’s most recent earnings report exceeded Wall Street expectations. For example, Meta Platforms revenues were up 11.02% year-over-year to $32 billion. There was also a 16.46% rise in net income to $7.79 billion.

Net profit margins increased by 4.91% to 24.34%, and earnings-per-share rose by 21.14% to $2.98. Like many Big Tech companies, Facebook also has a highly robust balance sheet. It’s currently holding over $53.45 billion in cash and short-term investments – up 32% year-over-year. Meta Platforms has $206.69 billion in assets, and just $72.66 billion in liabilities. With such a strong financial position, Meta Platforms can weather any economic storm.

74% of retail investor accounts lose money when trading CFDs with this provider.

7. Coca-Cola – Large-Cap Dividend King With 61 Consecutive Years of Dividend Increases 

If you’re more focused on consistent dividend payments rather than growth – Coca-Cola is one of the best shares to buy now. Put simply, Coca-Cola is a Dividend King. It has increased the size of its dividend payment for 61 consecutive years. Coca-Cola has even increased its dividends during times of economic turmoil – including multiple recessions and the COVID-19 pandemic.

This shows that Coca-Cola is a dividend stock that can be relied on.  Currently, you’re looking at a running dividend yield of 3.13%. While not the highest yield available, there’s no reason to believe that Coca-Cola’s dividend increases will stop any time soon. Moreover, many investors will compound their returns by reinvesting dividend payments back into Coca-Cola.

This means that every year, you’ll have more shares and thus – higher dividend payments. In terms of growth, Coca-Cola continues to offer steady returns. Over the prior five years, Coca-Cola shares have increased by 28.57%. This translates to average annualized returns of 5.71%. Add this to your 3.13% running dividend yield, and you’re looking at healthy returns.

It goes without saying that Coca-Cola has a highly robust balance sheet. It holds over $15.6 billion in cash and short-term investments. Moreover, it has over $98 billion in assets and just $70.9 billion in debt. Coca-Cola also reported solid earnings in Q2 2023. Revenues were up 5.71% year-over-year to $11.9 billion. Net income increased by 33.70% to $2.55 billion.

And net profit margins increased by 26.46% year-over-year. Not only that but earnings-per-share increased by 11.43% to $0.78. With shares currently trading at $58.78, now could be a good time to buy Coca-Cola shares. This represents a 9.5% discount from the firm’s 52-week high of $64.99. Coca-Cola currently has a market capitalization of just over $254 billion. Its P/E ratio stands at 24.3 times. In contrast, Pepsi’s P/E ratio is at over 30.6 times – so Coca-Cola offers great value based on the current share price.

74% of retail investor accounts lose money when trading CFDs with this provider.

8. GoPro: Undervalued Growth Stock Trading 90% Below its IPO Valuation 

If you’ve got a higher appetite for risk, GoPro could be one of the best shares to buy now. The firm specializes in action-based cameras that offer the perfect balance between quality and value. Founded in 2002, GoPro was once one of the hottest growth stocks on Wall Street. When the shares went public in 2014, they were priced at $35.76.

By the end of the year, GoPro shares surpassed $85 – representing growth of over 140% in a matter of months. However, the hype didn’t last long. In fact, GoPro shares have been on a downward trajectory since. All that being said, there’s still a lot to like about GoPro’s future potential – especially at current valuations.

For example, the shares are currently trading at just $3.56 – more than 90% below their 2014 IPO price. Crucially, management has completely reshaped GoPro’s business model and we’re already seeing positive results. Previously, GoPro relied on in-store merchants to sell its products. This meant selling its cameras at a much lower net profit margin.

However, the focus is now on direct-to-consumer sales. This is a win-win situation for both GoPro and consumers. On the one hand, GoPro can now offer a more attractive price point, as it sells directly on its website. Even so, GoPro still enjoys much higher net profit margins. Moreover, GoPro has doubled down on its newly launched subscription service.

For $49.99 per year, GoPro subscribers have access to unlimited cloud storage and the ability to stream live. As per its most recent update in August 2023, GoPro now has over two million paying subscribers. This represents annual revenues of almost $100 million. While this might not sound significant, it’s important to remember that GoPro’s market capitalization is just $543 million. Moreover, its subscription service is in addition to its core camera businesses.

74% of retail investor accounts lose money when trading CFDs with this provider.

9. easyJet: Undervalued Growth Stock Trading 90% Below its IPO Valuation 

We view easyJet as one of the best shares to buy now in the aviation industry. Like many airlines, easyJet had a torrid time during the pandemic – with its fleet grounded for many months. That said, easyJet was hit particularly hard and at one point, there were concerns about a potential bankruptcy. However, easyJet managed to secure some much-needed financing and remained a going concern.

Crucially, easyJet appears to be completely turning its misfortunes around. For example, the firm recently retired £1.2 billion worth of debt from its balance sheet. This means that it’s no longer paying unfavorable interest to creditors. What’s more, easyJet’s most recent earnings report produced some notable results. For example, revenues were up 79.51% year-over-year to £1.34 billion.

Net profit margins increased by 60.31%, and net income rose by 28.77%. This was due to increased demand for travel and higher ticket prices. Moreover, while total liabilities stand at over £8.6 billion, easyJet is holding more than £10.5 billion worth of assets. In terms of its share price performance, easyJet is up 27.91% year-to-date.

However, at current prices of 422.10p, easyJet is trading at a fraction of pre-pandemic levels. Before COVID was declared a pandemic, easyJet shares were trading over 1,270p. This means that by investing today, you’ll secure a discount of over 66%. easyJet has a current market capitalization of £3.2 billion. When it releases its Q3 2023 earnings report, we’ll get a snapshot of how it performed during the summer months.

74% of retail investor accounts lose money when trading CFDs with this provider.

10. Tesla: Invest in the World’s Largest Carmaker and the Future of Transportation  

Tesla is last up on this list of the best shares to invest in in the UK. While Tesla was founded as recently as 2003, it’s already the world’s largest carmaker. Its market capitalization is larger than the majority of US carmakers combined, including Ford and General Motors. As an electric vehicle (EV) manufacturer, Tesla is well-primed for changing attitudes towards sustainability.

For example, the European Union pledged to ban petrol and diesel-backed cars in 2035. The UK will follow suit five years earlier. Moreover, Tesla generates revenues from many other sources. For example, it has a monthly subscription service that allows drivers to activate their autopilot feature. Tesla also sells megawatt batteries. These are so efficient that they can power entire factories and energy grids.

Tesla also sells solar panel tiles. These allow homeowners to leverage solar energy discretely and efficiently. This is because they replace traditional roofing tiles. In terms of its share price, Tesla stock is up 133% year-to-date. Over a five-year period, Tesla shares have grown by over 1,335%. In contrast, Ford Motors stock has increased by just 30% over the same period. While General Motors has decreased by 3%.

Tesla’s most recent earnings report was also positive. It saw a 47.20% revenue increase year-over-year, up to $24.93 billion. Tesla also reported a 19.65% rise in net income, up to $2.7 billion. Net profit margins saw an 18.74% decline, down to 10.84%. This was partly due to Tesla’s ongoing discount program.

74% of retail investor accounts lose money when trading CFDs with this provider.

How to Find the UK Best Shares to Buy

We’ve discussed the 10 best shares to buy now in the UK. But there are thousands of other shares in the market, so how do you know which companies are right for your portfolio?

In this section, we’ll explain what you should look for when choosing your own shares to buy.

Assess the Market and Focus on Specific Sectors 

The share markets move in cycles. In many cases, specific sectors and industries will perform well at certain times. While others will collectively perform badly.

For example, the banking industry is performing well right now. The reason for this is that interest rates are still high, meaning banks can make more money when lending out capital. This is why HSBC is one of the best shares to buy now. But you might also consider banking stocks in other countries, particularly the US. For example,  JPMorgan Chase shares are up 25% over the prior year.

Another sector that is hot right now is travel. Many people traveled for the first time in 2023 since the pandemic. This means that aviation stocks are worth exploring. For example, we mentioned that easyJet shares are up 27% year-to-date. Over in the US, Delta Air Lines shares are up 27% over the same period.

Ultimately, the key takeaway here is that the best shares to buy are often found in trending sectors. Equally, however, trends can change very quickly in the share market. For example, while banking stocks are hot right now, this likely won’t be the case when interest rates eventually start to retract.

Snap-up Irrational Share Price Declines  

Another strategy when searching for the best stock to buy today is to look for ‘irrational’ share price declines. By this, we mean that a company witnesses a huge stock price decline that is unjustified. This is usually because of an overreaction from the markets when unfavorable news is reported.

For example, the BBC reported that Manchester United shares declined by 18% in one day earlier this week. The reason for this is that Manchester United’s US owners are no longer planning to sell the club. However, in reality, the fundamentals of Manchester United have not changed. As such, an 18% decline allows you to buy its shares at a much lower price point.

A similar event happened to Meta Platforms in early 2022. When Meta Platforms released its quarterly report, it recorded its first-ever decline in monthly active users since going public. The result? Meta Platforms lost 26% of its share price value in just one day of trading – wiping more than $230 billion from its market capitalization. While the news was unfavorable, this was a huge overreaction. Meta Platforms is now on a strong upward trajectory – with year-to-date gains of almost 140%.

However, just because a stock declines after unfavorable news, this doesn’t mean you should buy it. Instead, you need to assess whether the decline is justified and how it impacts the company’s long-term fundamentals.

Consider Your Risk Tolerance   

When searching for the best shares to buy now, it’s important to consider your risk tolerance. After all, there are thousands of shares to choose from and some are a lot more risky than others. The risk factor will depend on the type of shares you are buying.

For example, if you’re the type of investor who doesn’t feel comfortable with risk, you might be best with blue-chip shares. These are companies that have been operating for many decades. They have a proven track record, especially during recessions.

• Coca-Cola is a good example of a risk-averse stock.
• Not only was Coca-Cola founded in 1892, but it increased the size of its dividend payment for 61 consecutive years.
• Unlike many other stocks, Coca-Cola has never cut or suspended its dividends because of broader economic woes.
• This shows that Coca-Cola is as solid as it comes in the share market.

However, your returns on a Coca-Cola investment will be modest. For example, we mentioned earlier that over the prior five years, Coca-Cola shares have generated average annualized gains of 5.71%. While some investors will be happy with these returns, others will want to target much higher growth.

In this instance, you might want to consider growth shares. These are companies that are expected to grow at a faster rate than the market average. This is usually because the company is still young. However, similar to when you buy Bitcoin, growth shares are very risky. This is because many growth shares are yet to turn a profit. But the returns can be huge, as seen with Tesla.

For example, while the EV maker was founded in 2003, it wasn’t until 2020 that Tesla returned its first full-year profit. But early investors have been rewarded handsomely for keeping faith in Tesla. After all, Tesla shares are up almost 20,000% since going public. in 2010.

If you’re not sure which share type is right for you, it could be worth diversifying to cover all bases. For example, you might allocate the majority of your portfolio to blue-chip shares like Coca-Cola, Johnson & Johnson, and Diageo. You can then allocate a smaller amount to growth shares, such as GoPro and 888 Holdings.

Income or Growth

There are two ways to make money from a share investment.

First, you’ll make money if the value of your shares increases. If you then sell your shares, you will pocket the difference. For example, suppose you buy 1,000 shares at £1 each. This means you’ve invested £1,000. If you sell your 1,000 shares when they are priced at £2, you’ll make £1 profit per share. This will return £2,000, so you’ve made £1,000 in total profit.

Second, you can also make money if your chosen shares pay dividends. If they do, this means the company distributes a portion of its retained earnings to shareholders. This is usually every three months. For example, ConocoPhillips is currently offering a running dividend yield of 3.69%. While HSBC is offering 5.71%.

Now, here’s the thing – some shares are suitable for growth investors, while others are aimed at dividend hunters. For example, if you invest in blue-chip companies like Coca-Cola, your share price gains will be limited. Instead, you’ll be more focused on consistent dividend payments.

However, if you’re more interested in share price growth, you’ll be better off with companies like Tesla, Amazon, and Meta Platforms. None of these companies pay dividends, as they reinvest their earnings back into their growth.

Read and Evaluate Earnings Reports

One of the most successful investors of all time – Warren Buffet, places a significant emphasis on quarterly earnings reports. Why? Well, quarterly earnings give you a solid understanding of how a company is performing. It’s a legal requirement for publicly listed stocks to release their earnings every three months. Moreover, everyone has access to this information at the same time.

In most cases, the CEO of the company will discuss their earnings on a live telephone call. If you’re serious about making money from the share markets – it’s important to listen in. You won’t be able to listen to all earnings calls, so focus on a small number of companies.

Some of the most important metrics to look for are the company’s:

• Revenues
• Net income
• Net profit margins

Ideally, you’ll want to see an increase in revenues when compared to prior periods. Most analysts make comparisons with the prior three and 12 months. If the company is seeing an upward trend in revenues, this is a very good sign. After all, it’s attracting more customers and thus – is selling more of its products and/or services.

In addition, you should also look at the firm’s net income for the period. Sure, revenue is important, but net income is key. This refers to how much money the company made during the quarter after costs. Net profit margins are also crucial. If the company increases its margins, it means it’s making more money on each sale.

If you don’t have time to listen in on earnings calls, you’ll find a summarized version on financial news websites. For example, Google Finance lists all of the information you need – including both the balance sheet and income statement.

Research Sell-Side Analyst Ratings

Sell-side analysts offer invaluable information on most publicly traded stocks. They generally work for an investment bank or brokerage, and they’re tasked with predicting the future value of a company’s stock price. This is known as a ‘target price estimate’.

Moreover, sell-side analysts will give each stock a rating. This usually ranges from:

• Strong Buy
• Buy
• Hold
• Sell
• Strong Sell

Although sell-side analysts cannot predict the future with certainty, they’re usually experienced investors with a proven track record. This means you can evaluate what the majority of sell-side analysts rate a company when choosing which shares to buy. You can also assess the average target price estimate to assess its short and long-term potential. 

Let’s look at an example so you know how sell-side analyst ratings work. 

• Over the prior 90 days, 57 sell-side analysts have rated Meta Platforms stock. 
• 49 of them – which is nearly 90%, rate Meta Platforms stock a ‘Strong Buy’ or a ‘Buy’. 
• Just two analysts rate Meta Platforms a ‘Sell’, and none have it as a ‘Strong Sell’. 
• In simple terms, this means that the majority of sell-side analysts are bullish on Meta Platforms stock. 

In addition, we can also view the target price estimates for the sell-side analysts. The average target for the next 12 months is $365.28. Currently, Meta Platforms shares are trading at $299.17. If the average price target is reached, this would amount to a 12-month growth of 22%. 

Potential Benefits of Investing in Stocks

If you’re new to the stock market, we’ll now discuss some of the benefits of buying shares in 2023.

Build Long-Term Wealth

Shares should be viewed as a long-term project. By regularly investing in the markets, you have the potential to build long-term wealth.

For example, the S&P 500 – which tracks 500 large companies on the US stock market, has averaged annual growth of 10% since its inception. The S&P 500 has been around for nearly a century. It’s gone through multiple global recessions, but over time, has produced consistent returns.

Ultimately, if you’re looking to build wealth for your retirement years, the stock market could be the way to go. After all, you won’t make much by keeping your money in a savings account.

Outpace Inflation

Many UK investors are unaware of the impact inflation can have on their wealth. The Bank of England has a target inflation rate of 2%. This means that every year, your savings lose 2% in value. Currently, inflation is much higher than 2%. Recent figures suggest that UK inflation levels are currently at 6.8%.

The best way to beat inflation and protect your wealth is to invest in assets. More specifically, assets that can produce higher returns than inflation. Whether or not you are able to do this will depend on the success of your investments. After all, not all shares will rise in value.

Receive Regular Income

If you invest in a portfolio of dividend shares, you’ll receive regular income payments. Most dividend companies make a payment every three months. Many investors will look to build long-term wealth through dividend shares alone. This means that they are less concerned with the share value of the company.

After all, as long as the company has the financial means to keep making payments, the investor will simply collect their dividend every quarter. Moreover, you will benefit from compound growth if you keep reinvesting your dividend shares.

• For example, suppose you invest £5,000 into a dividend company.
• The company makes a quarterly dividend payment of £75. You then use that £75 to buy more shares.
• So, when you next receive a dividend, you’ll receive a higher payment.
• This is because you now have more shares in the company.
• If you repeat this strategy every three months for many years, you’ll quickly see your portfolio compound.
• This will be the case irrespective of the company’s share price.

As we mentioned earlier, Dividend Kings have paid a dividend every three months for over 50 years without fail. Not only that, but they’ve increased their annual dividend payment every year.

You Can Avoid Paying Tax on Shares When Going Through an ISA 

The UK government encourages long-term share ownership. If you invest via a Stocks and Shares ISA (Individual Savings Accounts), you benefit from tax advantages.

For example, you can currently invest up to £20,000 into a Stocks and Shares ISA in 2023/24. Any profits you make on your ISA shares will not be liable for capital gains tax. Moreover, you won’t pay any tax on the dividends you receive. Over the course of time, your share investments will grow tax-free.

Shares Allow you to Diversify  

There are tens of thousands of shares to choose from. From a risk-management perspective, this allows you to easily diversify. This means that you can spread the risk across dozens of different companies.

The process has never been easier, as the best stock brokers in the UK support ‘fractional ownership’. This means that you can buy a small fraction of a share. And thus – you can avoid being over-exposed to one company.

Moreover, fractional ownership also allows you to buy shares that would otherwise be out of your budget. For instance, Tesla shares currently trade for over $250 (£200). Apple shares trade for over $182 (about £145) and Amazon at $135 (about £110). This means that to buy a single share in Tesla, Apple, and Amazon – you’d need to shell out over £455.

At eToro, you can buy any share of your choosing from just $10 (about £8) per trade.

Here’s how it works:

• Let’s say you want to buy Tesla shares, which trade for $250
• You only want to invest £20, which is about $25
• This means you are buying 10% of one Tesla share
• If Tesla shares increase by 50%, you’ll make 50% on your £20 investment.
• In this instance, you’ve made a profit of £10

When you buy fractional shares at eToro, you’ll still be entitled to dividends. For example, suppose a company makes a £50 dividend payment. You own 20% of one share. This means you’ll receive 20% of the £50 dividend payment, or £10.

Potential Risks of Buying Stocks in the UK

Now let’s explore the risks of buying stocks in the UK.

Shares can Decline and Never Recover   

The main risk associated with shares is that you could lose money. After all, not all shares will continue to rise in value over time. There are many examples of shares that have declined in value and never recovered. This is especially the case in the UK – which is one of the worst-performing stock markets globally. 

For example, consider the performance of the UK’s primary index fund – the FTSE 100. This index fund tracks the 100 largest companies listed on the London Stock Exchange. If you invested £10,000 into the FTSE 100 five years ago, your portfolio would have grown by 1.7%. So, in five years, you would have made just £170 from a £10,000 investment. You actually would have lost money when you factor in inflation. Over a 10-year period, the FTSE 100 has grown by 14%. Once again, you would have outpaced inflation.

However, it’s not just UK stocks that can perform badly. For example, we mentioned earlier that GoPro is down 90% from its IPO valuation. So, if you bought £10,000 worth of GoPro shares in 2014, your money would now be worth just £1,000.

Foreign Exchange Risks on International Shares    

When compared to the UK stock market, US shares have historically performed better. There’s a lot more interest in US companies – especially those that have a global presence. People feel more comfortable investing in companies they personally use, such as Apple, Meta Platforms, Netflix, or Disney.

Moreover, US residents have access to employer-sponsored investment programs, such as 401 (k) s. This allows workers to directly invest their salary into the stock market. This means there’s a lot more money flowing into the US markets, which promotes continued growth. No such program exists in the UK. 

That being said, you’ll need to consider currency exchange risks before investing in US shares. Or any international market for that matter. For example, if the pound increases against the US dollar after you invest, this will eat away at your profits. This is because after selling your US shares, you’ll receive fewer pounds.

Stock Broker Risks    

In order to buy shares in the UK, you’ll need to use an online stock broker. This in itself presents a risk. If you use a stock broker that isn’t regulated, you’re putting your capital at risk. 

The best day trading platforms in the UK are authorized and regulated by the FCA. In turn, your capital will be protected by the FSCS up to £85,000. Moreover, you will retain ownership of your shares, as FCA-regulated brokers cannot use your investments to cover their debts.

Conclusion    

In summary, we’ve ranked the 10 best shares to buy right now in the UK. We’ve covered a broad range of investments – including growth, blue-chip, and dividend shares. 

All of the shares discussed today can be purchased at the FCA-regulated broker eToro. Both UK and international shares can be bought without paying any commission. You can easily diversify too, as you only need to invest $10 (about £8) into each share.

74% of retail investor accounts lose money when trading CFDs with this provider.

References    

• https://www.statista.com/statistics/1022701/worldwide-amazon-echo-unit-shipment/
• https://seekingalpha.com/symbol/AMZN/ratings/sell-side-ratings
• https://www.wsj.com/market-data/quotes/AMZN
• https://www.londonstockexchange.com/stock/888/888-holdings-plc/company-page
• https://www.bloomberg.com/quote/COP:US
• https://www.cnbc.com/2023/05/04/apple-aapl-earnings-report-q2-2023.html
• https://markets.ft.com/data/equities/tearsheet/summary?s=HSBA:LSE
• https://www.barrons.com/articles/dividend-hikes-stocks-payouts-36f0edd2
• https://www.bbc.com/news/business-66725924
• https://www.nytimes.com/2021/01/27/business/tesla-earnings.html
• https://www.cnbc.com/2018/08/30/warren-buffett-i-like-quarterly-reports-from-companies-but-not-guidance.html
• https://www.spglobal.com/spdji/en/indices/equity/sp-500/
• https://www.bankofengland.co.uk/monetary-policy
• https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2023
• https://www.fscs.org.uk/media/press/2019/apr/higher-protection-limits/

FAQs