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How I’d invest £1k in UK shares today

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·3-min read
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If I had £1k to invest in UK shares now, I’d buy a basket of blue-chip stocks. When I say basket, I mean four stocks, investing £250 in each. I think this would give me a good range of investments without spreading my money too thinly.

And the companies I’d buy are some of my favourite investments on the market right now.

UK shares to buy

The first stock I’d acquire is IG Group. This financial services company has reported rapid growth over the past few years as the business has doubled down on expansion. It now offers spread betting and traditional stockbroking services.

What’s more, the company is building up its overseas business. As the group expands, I think its profits will continue to grow, translating into increasing investor returns.

That said, growth is not guaranteed. A bad acquisition could saddle the business with high costs, and this would hold back growth. However, even after considering this risk, I’d still buy IG Group for my £1k portfolio of UK shares.

Another stock I’d buy is Severn Trent. The utility business sits in an entirely different industry to IG, which should give me some diversification. Moreover, utility businesses are considered to be highly defensive companies. As a result, income tends to be reasonably stable and predictable, which supports their dividends.

Regulators can be a thorn in companies’ side, however. If regulators reduce the amount of profit water providers are allowed to earn, Severn Trent could have to cut its 4.1% dividend yield. Despite this risk, I’d buy the stock for income in my portfolio of UK shares.

Diversification

Another company I would buy in a different sector is the pharmaceutical business Hikma (LSE: HIK). This firm manufactures generic drugs and other treatments. As the demand for affordable healthcare grows, I expect the need for these treatments to increase.

As one of the largest companies in the sector, Hikma can afford to invest significant sums in research and development as well as marketing to make sure its products are always at the front of healthcare professionals’ minds.

The company’s primary risks are the potential for lawsuits, as its business model relies on manufacturing other organisations’ treatments at a lower cost. It could also be faced with higher prices for raw materials.

Even after taking these challenges into account, I would buy the stock for my £1k portfolio of UK shares.

The final stock on my list is retailer Marks and Spencer. This is a recovery investment. As the UK economy rebuilds after the pandemic, I think Marks has a chance to grab market share from struggling competitors.

However, the company has struggled with growth in the past, and there’s no guarantee it will manage to take advantage of these opportunities in the future. As such, this investment might not be suitable for all, but I’m comfortable buying £250 worth of the business for my £1,000 portfolio of UK shares.

The post How I’d invest £1k in UK shares today appeared first on The Motley Fool UK.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Hikma Pharmaceuticals. 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.

Motley Fool UK 2021