UK shares to buy now: how I’d invest £1k today

This Fool explains how he would invest a lump sum of £1,000 in a portfolio of small-cap UK shares for maximum growth potential.

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I think some of the best UK shares to buy now are small-cap growth stocks. I believe these companies are best positioned to make the most of the UK’s economic recovery over the next few years.

As such, I would invest £1,000 in businesses like these today. There are a couple of companies, in particular, that I’d buy straight away. 

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UK shares on offer

Small-cap growth stocks aren’t suitable for all investors. These investments are highly volatile and can be riskier than blue-chip stocks. Smaller businesses tend to have fewer resources, which means they’re more susceptible to employee mistakes and competition. 

Still, when these companies get everything right, they can be great investments.

On that note, I would deploy part of my £1,000 investment in Pendragon (LSE: PDG). This car sales and service company has been hit hard by the pandemic.

However, with some analysts predicting a strong rebound in consumer spending over the next few months, I think the business could achieve significant sales growth. There’s also scope for an increase in service sales as drivers get back on the road.

Of course, this isn’t guaranteed. Pendragon could end up nursing significant losses if consumers don’t return to its showrooms. A weak balance sheet may accentuate its problems. 

Nevertheless, I think this is one of the best UK shares to buy now to profit from the economic recovery.

Property market

Another opportunity is LSL Property Services (LSE: LSL). The UK property market is booming, and this company provides a one-stop-shop for home buyers and sellers. It also offers rental property management and financing services. I think this portfolio of products will help the group capitalise on the growth of the property market. 

There are also plenty of opportunities for the company to expand into new business lines. Acquisitions could be another route for growth. 

Like all investments, this company is exposed to multiple risks and challenges. The property market in the UK is highly competitive and subject to wild swings. A sudden downturn in transaction activity could cause losses. If it suffers reputational damage, it could also lose customers. 

Despite these risks, I would buy the stock for my portfolio of UK shares today. 

Death and taxes

As the saying goes, there are only two certainties in life — death and taxes. With that in mind, I think funeral services provider Dignity  (LSE: DTY) could be a good company in which to place some of my £1,000 investment. 

Over the past few years, the company has had to deal with some serious issues. It has been accused of overcharging customers and anti-competitive practices.

Management now seems to be getting a handle on these problems. Once they’re dealt with, I think this company could be a tremendous long-term growth investment. There’s also plenty of opportunity for further acquisitions as the funeral services industry remains highly fragmented.

That said, the challenges that have plagued the company in the past could come back to trouble it in the future. It still has a fair bit of debt, and recent accusations may have damaged its reputation enough to put smaller operators off from selling to the larger group. 

These risks and challenges aside, I think this is one of the best UK shares to buy now for long-term growth. 

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

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