“Okay, Google, what shares to buy today?” The market situation changed in last few month because of the Covid-19 pandemic. Thus, some shares became more valuable, while the others are falling. However, this downward trajectory presents good prospects for anyone intending to invest in the stock market.
It is important for beginners to understand that they should never buy shares using money they will need over the next five years. This is particularly so given that the world is increasingly becoming an uncertain place. Nonetheless, if you have contingency savings that give you the leeway to invest, the present crash is a perfect time to buy shares. In this article, we give you an overview of the top shares to buy right now in the UK.
Criteria For Identifying The Best Shares To Buy
Blue-chip companies are the best bet. These are established firms that are considered safe and have low volatility owing to their profitability. These characteristics make them viable options for investors.
In the UK, they are part of the FTSE 100. In the USA, they are listed in the S&P 500 Index. The mention of large companies makes you think of buying Amazon or Apple shares even when in the UK. It is true that as an investor, you are likely to earn long-term gains by investing in these firms. However, there are certain factors you should consider.
“Firstly, you should analyze the market. And then you may choose shares to buy.”
Categories Of Companies In Stock Market
In any stock market, some companies will be categorized as having the best value because their trailing price-to-earnings (P/E) ratio is the lowest in the market. A low P/E is indicative of the fact that a shareholder is spending less money for each dollar of profit the company generates in a financial year. Examples of companies with low trailing P/E ratios include NRG Energy Inc. and the Norwegian Cruise Line Holdings Ltd.
Other firms’ stocks are regarded as fast-growing because their earnings per share increase from one year to another are the highest. Examples include Gilead Sciences Inc. and ServiceNow Inc.
Alternatively, the third category is the stocks that have the greatest momentum. These are companies whose shareholders earn the highest rate of return. Examples include Apple and AMD. These three categories highlight the conditions beginners and seasoned investors should consider when selecting stocks. The conditions include the following:
- Excellent present and forecasted profitability.
- Recent earnings which highlight a company’s momentum (whether growth is slow or fast).
- A higher intrinsic value than the market value since such a setup guarantees price growth at a later stage.
- The funding model for the firm’s business operations, that is, whether capital is drawn from debt or equity. The choice of the source of funds should be conservative in that it should not increase the company’s long-term debt.
- The asset utilization ratio. The figure varies from one industry to another. Regardless of this fact, the ratio indicates how much a company earns from one dollar of the assets in its portfolio.
Best Companies To Invest In
The information above helps to recommend the best shares to buy right now in the UK. With that being said, which are the best companies to invest in? Notably, as an investor, the focus should be on companies that have strong balance sheets and market position, faithful and devoted clients, and low liabilities. Such firms satisfy the criteria mentioned above. Here is a list in no particular order.
We advise that youbuy Apple shares even as a UK citizen. The tech giant has a loyal following which is enmeshed in the Apple ecosystem. As such, they have a high propensity of buying the company’s products. Further, Apple has a strong balance sheet given that it posted revenues of $64 billion and profits of $13.7 billion in the last quarter of 2019.
For this reason, Apple has excellent present and forecasted profitability. Its revenues are robust. It has a favourable market position for investors given that it has the highest market capitalization of companies in the S&P 500. Lastly, it has a low liability of just $14 billion down from $50 billion in the 2018 fiscal year.
Amazon is poised to profit in the present pandemic as more people choose to shop from home. Interestingly, while other companies are announcing that they will lay off workers, Amazon has plans of hiring tens of thousands of new employees. It is ranked fourth in the S&P 500 and reported $87.4 billion in revenue for the fourth quarter of 2019. Notably, it surpassed expectations.
Its profits for this period were $3.3 billion up from slightly over $2 billion in the previous quarter. This assessment shows that Amazon’s profitability is guaranteed and as an investor, it would be prudent to buy Amazon shares even while in the UK.
Unlike the Amazon and Apple, Tesco’s share price is cheaper for anyone intending to buy. At 214 GBX (Great Britain Pence) or $2.52, they are among the best shares to invest in as a beginner. In 2019, the company’s dividend payout was £0.06 which represented a 92.33% increase from the previous fiscal year. According to analysts, this figure is expected to rise by 45.58% to £0.08.
Additionally, Tesco reported an earning per share of 0.1337 which was also an increase from what was recorded in 2018. Its revenues also increase by 11.17% to £63.9 billion. Tesco’s shares satisfy the criteria above given that its earnings and profitability are on an upward trajectory indicating a momentum that is favourable to investors. Notably, Tesco is part of the FTSE 100 index.
BAE is part of the FTSE 100 index with a share price of 450 GBX ($5.29). This figure makes it an attractive bet for beginners because it is cheap to buy. Multiple assessments by analysts were that the company’s stock was overweight. This term implies that it is of a higher value than other firms’ stocks. Notably, BAE’s profits increased from £1.22 billion in 2018 to £1.63 billion in 2019. Its revenue equally rose. As such, the company satisfies the criteria summarized above.
What Shares To Buy Right Now?
Apple, Amazon, Tesco, and BAE Systems are some of the best shares to buy right now. They are bound to be resilient during the current pandemic owing to their historical financial reporting and strong market positions.
BAE Systems and Tesco. This is because they have cheap share prices which makes them affordable to beginners who may not have a lot of money at their disposal. Furthermore, these companies’ finances satisfy the conditions detailed above.
Apple. The tech giant has a loyal following and will, therefore, never lack customers. This implies that it will always post consistent revenues and profits. It also has a high momentum and robust financial position.
Amazon, Apple, Tesco, and BAE Systems.