The Motley Fool

2 of the best UK shares to buy this February

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

University graduate student diploma piggy bank
Image source: Getty Images

Some of the best UK shares I’m considering this February are those that performed well in 2020 but whose share prices have drifted lower in January. In addition, I am only looking for good quality companies that show earnings growth, solid return metrics, and strong balance sheets.

Short-term lower prices could be an opportunity to buy some of the best UK shares at a discount. Share prices can move around for so many different reasons, and sometimes, fundamentally strong companies can be available to buy on sale.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Of course I could be wrong and it could be the start of a deeper correction. But by focusing on good quality companies, that are performing well and run by competent management, I feel comfortable taking that risk.

Best UK shares on sale

One company I’m looking at this February is Flutter Entertainment (LSE: FLTR). If the name doesn’t sound familiar, it used to be called Paddy Power Betfair. This £25bn FTSE 100 online betting company has grown significantly over the past decade. It also owns FanDuel, PokerStars, and FOX Bet in the US.

The UK has relatively relaxed online gambling laws, in my opinion. In contrast, in the US, several states are only just opening up their markets to this burgeoning sector. This is where I think the opportunity is for Flutter Entertainment (and others in the industry). The UK gambling sector offers some of the best UK shares right now, in my opinion.

Several US states recently legalised online sports betting and additional states are moving towards legislation. The pandemic also accelerated demand for online betting options and I reckon this trend could continue.

Flutter Entertainment’s share price increased by 64% last year, but has pulled back and drifted lower over the past month. I can’t see any particular major reason for this, so I look at it as a possible buying opportunity for my Stocks and Shares ISA.

With a price-to-earnings ratio (P/E ratio) of 40, Flutter shares might look expensive to some. But with revenues growing at 25% per year, I will take a further look.

Volatile markets

Many new investors started investing in stocks and shares in 2020. Some reasons for this include volatile markets, and millions of people being stuck at home. There was also a greater desire to capitalise on rapidly rising share prices in several popular technology stocks.

New investors and volatile markets helped online trading services provider IG Group (LSE: IGG). It recently reported a “record” performance in its first half, seeing profit more than double on a year ago. Trading revenue surged 67% and active clients rose 55% in the six months to 30 November. In addition, IG Group unveiled its $1bn acquisition of tastytrade, a US-based online brokerage. This could help further diversify the business into higher growth US markets.

The IG group share price rose by 24% in 2020, but has retreated by nearly 10% over the past month. I think this could be an opportunity for me to buy one of the best UK shares around.

I consider IG group to have high-quality metrics. For instance, it has a return on capital of nearly 40%, an operating margin of over 50%, and an undemanding P/E ratio of under 13. I could even add this to my income portfolio as it offers a near 6% dividend yield.

I believe the downsides include a possible normalisation in financial market volatility, or a stabilisation in the macro environment.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Harshil Patel owns shares of IG Group. The Motley Fool UK owns shares of Flutter Entertainment. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.