If you’re getting involved with investing in the stock market, it can be easy to be overwhelmed by the sheer amount of choice that you have when buying stocks. There are so many possibilities with different advantages and disadvantages that it can be hard to choose.
This can sometimes make investing seem like a daunting prospect but the good news is that it isn’t as tricky as it looks once you’ve done some research.
When searching for the best shares to buy now, UK investors can take advantage of expert investment advice which can help you to make properly informed decisions when they want to buy stocks and shares.
If you want to be able to invest with confidence, read on to find out some of the best stocks to consider in your portfolio right now.
The dawn of a new year is the perfect time to re-evaluate your investment portfolio. Take the time to reflect on the performance of your investments and see what you need to change for the coming year.
To help you, here are some stocks you may want to watch closely at the start of 2022.
Please note: these picks are not personal recommendations or financial advice. Do not buy these investments solely based on what you read in this article.
Dutch semiconductor firm ASML is at the heart of combatting the current computer chip shortage which is expected to last until 2023. The chip shortage is affecting several industries across the world but is hitting tech and transport companies the hardest.
ASML has a monopoly on lithography machines, which are required to make advanced computer chips, and is currently selling them with a 50% profit margin. ASML is also expected to hit a 35% profit margin this year and has demonstrated an impressive 712% return over the last five years.
As experts don’t expect the demand for semiconductors to slow down, the best may be yet to come.
Source: The Telegraph
2. CBAK Energy Technology Inc.
The stock price of leading Chinese lithium battery producer CBAK has been steadily declining since the end of 2020, from a peak of about $8 to the current price of between $1 and $2.
CBAK make batteries for vehicles, tools, and energy transfer packs, and have recently agreed to work with AZAPA R&D to develop a custom battery pack for electronic vehicles. The deal could put both companies at the forefront of the switch to electronic vehicles in east Asia.
The battery pack will be compatible with small electronic cars produced by Daihatsu, one of the most popular car brands in the region.
Source: Penny Stocks
3. Drax Group
Drax, once one of the largest coal burners in the UK, has begun the switch to renewable energy sources and performed fantastically as a result. The biomass power company is expected to lead the crowd with the move away from fossil fuels.
Drax’s eyes are firmly set on the future. Its biomass technology will top up the demand where wind and solar power fall short, and Drax aim to be carbon negative by 2030, which makes it even more appealing for the climate conscious.
Shares in Drax have returned 138% over the last five years, and the company has the potential to build upon that by becoming an international powerhouse in renewable energy.
Source: The Telegraph
Many travel stocks suffered during the pandemic, and most faltered again with the discovery of the Omicron variant, but the coming year could lay the groundwork for a strong recovery. easyJet is one such company that could capitalise on increased travel and relaxed restrictions.
The easyJet share price has been turbulent throughout the pandemic and is currently a little over £6. The last time the share price for the airline was this low (prior to the pandemic) was back in 2012.
easyJet are one of the most popular European airlines and will likely see an impressive increase in customers when European travel becomes safer and more reliable.
5. Frontier Developments plc
Video game developer Frontier Developments did not have a good 2021. The disastrous release of its biggest games, Jurassic World Evolution 2 and the ‘Odyssey’ expansion for Elite Dangerous, saw its share price slump from a high of £34 in January to a low of £17 in November.
However, the future is looking bright, as Frontier is expected to release a highly anticipated Formula One management simulator by the end of the year. It also has several smaller projects under the control of their publishing arm, Frontier Foundry, which are set to release this year too.
Source: The Motley Fool
6. Future plc
Future is a British media company known for selling print magazines. Future purchase the rights to popular magazines and publish them under their name. This widens the company’s user-base, helps generate ad revenue, and helped their underlying profit and operating margins last year to jump by 32%.
As part of their move to a digital model, Future recently acquired comparison site GoCompare in a bid to boost web traffic and advertising revenue.
A robust business model with a large readership could help Future continue their trajectory into 2022, especially with many people still spending a lot of time at home.
Florida-based cybersecurity awareness training company KnowBe4 simulate phishing attacks to educate the employees of its clients on how to detect cybercrime.
The company focuses on the human aspect of cybercrime while leveraging machine learning and artificial intelligence to generate automated, data-driven training sessions.
The company already serves more than 40,000 customers and has the systems in place to grow in the future. Shares in the company peaked in June 2021 at $33.66 and have hovered around $20 to $27 since then but may rise over the next few years as cybercrime evolves.
Source: The Motley Fool
8. Lloyds Banking Group
Despite Lloyds’ share price more than halving in 2020, the high street bank is poised for a strong recovery in 2022. Lloyds is currently the UK’s biggest mortgage lender, increasing home loans by £2.7 billion in 2021, bringing its lending for the year up to £15.3 billion.
Over the next decade, Lloyds is planning on buying 50,000 rental homes, which it hopes will bring in £300 million in pre-tax profits over the next 10 years.
If you have a long-term investment strategy, now could be a good opportunity to make use of the comparatively low share price.
9. MGM Resorts International
With travel stocks looking to rebound this year, it may be worth looking into those that have already started their recovery. After a steep decline in share price at the start of the pandemic, MGM has steadily recovered since, surging past its pre-pandemic share price in February 2021.
The US based travel and resorts giant is yet to dip below its early 2020 share price and will be looking to capitalise on a strong pandemic performance as travel hopefully opens up again this year.
Source: Yahoo Finance
Image-centric social media platform Pinterest ended 2021 on a low due to a reduction in monthly users, from 478 million in Q1 to 444 million in Q3. Pinterest’s stock price has been steadily declining since July and is now at a two-year low.
Despite a declining user base, the average revenue per user on the platform grew by 37%. Plus, Pinterest is all about sharing products and places that users enjoy. This means that there is no guesswork for advertisers, and Pinterest can charge more for advertising deals.
Source: The Motley Fool
1. Choose a stockbroker or investment platform
Then simply apply to open an account online. You will need to input your personal information and you may also need to upload your ID, such as your driver’s license, to the site to prove your identity.
2. Deposit funds
Next, deposit funds into your account. Remember to only deposit as much as you can afford (and potentially lose), and to never invest money you need for paying bills or living your daily life.
3. Do your research
Once you’re set up on a platform, do your research. Read around expert opinions of the best UK stocks (and US) share prices and keep an eye on the stock market news to make informed investment decisions.
4. Buy your shares
Finally, you can start buying shares. Remember to keep a close eye on your portfolio so that you can make changes to your holdings as necessary.
If you want to get started with investing, there are several ways that you can go about it and this typically depends on what you want to buy.
For example, with many stocks and shares, you can typically buy and sell them online through a variety of different apps and platforms. However, with some assets, you may need to work with a professional, such as an online stockbroker.
Here are some of the things that you’ll need to get started:
As obvious as it sounds, one of the most important things you’ll need to get started is an initial start-up pool of capital. The amount of money that you start with can be important as it may affect not only what type of investments may be suitable for you but also your tolerance to risk.
Please note that if you’re considering taking out a loan to boost your starting capital, this can be considerably risky and you may benefit from seeking professional advice (such as from a credit broker) before you do so.
It’s also important to note that some investments and investment platforms also have a minimum deposit that you have to make.
Tolerance to risk
The second thing you need to have before you start investing is a solid understanding of how much risk you are willing to take with your money. This can be important as it helps to determine whether a buying opportunity is right for you.
One of the main things that can help you here is to ask what your “investing horizon” is. Essentially, this is how long you’re willing to invest for.
If you’re willing to invest for a long period (such as five or ten years) then you can afford to take greater risks as you can overcome periods of short-term market instability. For example, if a portfolio contains stocks and shares from retail stores, even though they have suffered due to supply chain worries, in the long term they may still see strong growth.
The final thing that you’ll need before you start investing is accurate stock market information, to ensure that you don’t lose money when trading. This is why many funds employ a research team, as if you want to maximise your chance of making a return on your initial investment, it’s important to be aware of current market conditions.
For example, it isn’t always best to simply invest in the biggest companies, as they may not fit with your investing strategy. If you’re building a portfolio with passive income in mind, they may not pay the best dividends.
Of course, it’s important to note that while many retail investor accounts lose money when trading, being informed can help you to minimise this risk.
Is now a good time to invest?
When it comes to getting started with investing, as the old saying goes, there’s no time like the present.
If you fill in your search bar on Google and check the stock market news, it’s easy to be disheartened by headlines involving economic uncertainty and global disruptions. For example, you may have seen that the recent speculation over interest rates rises may affect the performance of companies in the financial services market.
You may be concerned that even if a UK company demonstrates strong revenue growth due to the worldwide economic recovery, it can be hard to shake the concern over whether its share price will return to pre-pandemic levels. However, it pays to take a long-term approach to these things.
If you’re concerned about short-term disruptions, such as the coronavirus outbreak, affecting your investments then the good news is that it’s the long term that matters most. While there are fluctuations, markets historically tend to rise over time.
As long as you have a reasonable time horizon, your portfolio should be able to recover from any losses and see a profit.
How long should I invest for?
When it comes to investing, “time in the market, not timing the market” is one of the golden rules. When you do your own research into investing in UK stock, you may notice that many investments are described as long-term commitments.
The longer you invest, the greater your potential for making a profit. So, if you want to mitigate your exposure to risk, you may want to leave your money invested for at least five years.
How can diversifying my assets help me?
If you want to minimise your exposure to risk, one of the best ways to do this is by diversifying your portfolio. Essentially, this is the art of not putting all of your eggs in one basket.
By spreading out your assets over a range of different sectors, asset classes, and often physical locations, you can reduce your portfolio’s exposure to risk. This means that if there’s a market crash in a particular economic area, the impact on your portfolio will be limited. Furthermore, gains in other sectors may even make up for a loss.
For example, during the initial lockdown in 2020, there was significantly less traffic on the roads and many jobs had to be put on hold. This meant that there was a much lower demand for fuel and so oil prices fell sharply.
If you had heavily invested in an oil company, you would have lost a lot of money. However, if only a part of your portfolio was held in such companies, your loss would have been limited.
What are some risks I need to be aware of?
Whenever you invest, it’s important to be aware that no matter how well-informed you are, there is always the risk of losing money. Even if a specific stock seems like a good investment, stock market fluctuations can mean that you never fully know how an investment will perform.
For example, future disruptions in the supply chain could impact the stock price movements, but you would have no way of predicting this. This is why it can be important to have a reasonably long investing horizon so that you can ride out any difficult periods.
Since investing carries a large amount of risk, it’s important never to commit more money than you would be willing to lose. Of course, if you want to minimise this chance then it can often be beneficial to seek independent advice when dealing with financial matters
What do I need to know about tax?
While it’s important to be wary about the risks that come with investing, it’s also important to be aware of the consequences of success. Investing can be a great way to grow your wealth and build a strong portfolio to provide you with an income.
However, if you invested in a successful company registered in the UK, when you come to reap the rewards of your decision, your net income could rise significantly. If this is the case, then there may be tax implications to consider. This can eat into your wealth so it’s important to stay aware of any potential pitfalls.
What is Capital Gains Tax?
One of the most significant issues that you may run into is Capital Gains Tax (CGT). Essentially this is a tax that you have to pay when you dispose of (such as selling or gifting) your assets. Typically, if you make a profit on them, you have to pay a portion of your newfound gains in tax.
Each year you have an allowance called the “Annual Exemption”, which is basically how much profit you can make through capital gains in a given year before you have to pay tax. In the 2021/22 tax year (6 April to 5 April) this stands at £12,300, so you can still make a fairly large amount of money before running into any tax issues.
After this point, the amount that you have to pay is determined by your marginal rate of Income Tax:
If you’re a basic-rate taxpayer, you typically have to pay CGT at 10% on any profit you make above your allowance.
Higher- and additional-rate taxpayers
If you’re a higher- or additional-rate taxpayer then you typically have to pay CGT at 20% on any profit that you make above your allowance.
A useful example of this can be found on the government website if you’re still unsure how it works:
Your taxable income (your income minus your Personal Allowance and any Income Tax reliefs) is £20,000 and your taxable gains are £12,600. Your gains are not from residential property.
First, deduct the tax-free allowance from your taxable gain, which in this case is £12,600 minus £12,300. This leaves £300 to pay tax on.
Add this to your taxable income. Because the combined amount of £20,300 is less than £37,500 (the basic rate band for the 2020 to 2021 tax year), you pay CGT at 10%.
This means you’ll pay £30 in tax.
Are there ways to invest without having to worry about CGT?
Since tax can eat into your profits, it’s understandable why you might want to minimise how much you have to pay. Thankfully, there are ways that you can overcome this.
There are some assets where gains are not taxed, such as UK government gilts. However, another useful tool to mitigate tax is investing in a Stocks and Shares ISA. The main benefit of these is that they are a tax-efficient way to invest as money contained within them is entirely free from Income Tax and CGT.
This means that any growth on investments in a Stocks and Shares ISAs is free from CGT. This can be a valuable way to cut down your tax bill.
While you may agree with many of our share choices, you may also wonder how we came to these conclusions as it can be important to take careful and considered investment advice. As you may well know, you should never blindly trust something you read on the internet.
If you’re curious why we chose these, here are the four essential ways that we decide which are the best shares to consider:
As you might imagine, one of the most crucial things to do when choosing investments is to keep a close eye on important international investing news.
While you can never fully predict future results, at least not without the aid of a crystal ball, researching and analysing these events can help us to identify likely market movements that could boost the value of the stock price.
While you can never be right 100% of the time, thorough research can help us to work out which stocks could perform well moving forwards.
Once we’ve done our research on important financial events and highlighted a potential stock, the next step is to do some deeper analysis. This involves looking at a company’s recent history – such as their annual revenue, average gross profit, business activity, and whether the company pays dividends.
This can help us to get an idea of their intrinsic value and, if this is higher than its current price, this may be a sign that their stock price is undervalued by the market. These can often be sensible choices if you’re looking for future growth.
Technical analysis can also be used to find valuable investment opportunities and essentially involves looking at a stock’s recent movements (such as in the previous quarter) to determine where its price may go next. This can help us to highlight patterns such as bull runs and price reversals.
One of the main advantages of doing this method of identifying stock picks is that these patterns typically have well-defined price targets. This means that when we recommend a share to buy, we have a particular target in mind.
Lastly, while our team is made up of professionals, it never hurts to get a second opinion. This is why we often cross-check our findings with those from external analysts. If our predictions line up with theirs, we can be more confident in recommending our picks to you.
How can seeking personal advice help me?
When it comes to investing, there can be a lot of things to have to bear in mind. You need to choose the best investments for you, as well as diversifying your portfolio and managing any potential tax bills that you incur.
This can be difficult to manage and if it’s all too much, it could impact your investing performance and reduce your profits. If you want to avoid this, working with a financial advisor could be a useful option for you for personal advice on any investment decision.
One of the main benefits of working with an advisor is that they can help you to make a properly informed decision when growing your wealth, which can give you greater confidence.
They can also act as a sounding board if you’re ever unsure whether a particular investment would fit your risk tolerance. Furthermore, if you ever wanted to reassess your investing strategy regarding risk, they are in a good position to help you make an impartial decision.
If this all seems like a lot to take in, here is a brief summary of the main things you need to know when investing in shares:
Get accurate market information
If you want to be able to invest with confidence, it’s important to be able to make an informed decision. Studying world events, market movements, and financial activity can all be useful ways of finding out which shares you should consider buying. Furthermore, make sure you use reliable sources when looking for information.
Invest for the long term
If you want to maximise your chance of making a profit and minimise your chance of seeing a loss, it’s important to invest for at least five years. Having a longer investing horizon can help you to overcome periods of market disruption.
Diversify your assets
Buying a diverse array of assets in a variety of sectors can help to make your portfolio more resistant to economic shocks. This can give you greater peace of mind to know that your wealth is continuing to grow, no matter what.
Be aware of tax liabilities
If you make large profits with you’re investing, it’s important to be aware of how much tax you may have to pay. One of the most important ones to be aware of is CGT, as this can significantly eat into your returns.
Work with an advisor
If you want to be able to invest with confidence, working with an advisor can benefit you. They can help you to manage many of the difficult aspects of the process, giving you less to worry about so you can focus on choosing which shares and stocks that can grow your wealth.
This article is for informational purposes only and does not constitute financial advice. All contents are based on my understanding of HMRC legislation, which is subject to change.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Any prices indicated in this article will be subject to change, and the current price of any stocks will vary. We suggest you check the current price of stocks and conduct your own research.