If I had £1,000 to invest in UK shares today, I’d buy a portfolio of growth stocks. So here are three companies I’d add without hesitation.
UK shares I’d buy
The first I’d buy with an investment of £1k is Boohoo (LSE: BBO). This fast-fashion business is profiting from the continuing rise of online retail, and it seems to be a well-managed enterprise. It has a strong balance sheet and has been using the pandemic to swoop on struggling peers, buying up growth at a low price.
If the company can continue to remain relevant with customers and buy additional growth without overpaying, I think this could make an excellent investment for the next few years.
That said, if management does start to overpay on acquisitions and misread key fashion trends, growth could come to a sudden halt. The list of retail businesses that have collapsed over the past decade is extensive. Boohoo needs to work flat out to make sure it doesn’t go the same way.
I think the trends that have become clear over the past 12 months will accelerate. In my opinion, that also bodes well for gaming developer Frontier (LSE: FDEV).
One group of analysts believes this company could report earnings growth of as much as 60% in 2022. A slew of game releases, such as F1 simulation and ED Odyssey, could help drive this growth. Frontier’s portfolio of existing titles provides solid foundations from which to grow as well.
These are the reasons why I would buy this company for my £1,000 portfolio. I believe it is one of the best UK shares to own because it’s one of the few ways investors can plug into the booming gaming market.
In the UK, at least, there aren’t many other options of high-profile gaming companies achieving such impressive growth rates.
Still, this business doesn’t come without its risks. The stock is currently changing hands at a forward P/E of more than 44. That doesn’t leave much room for error, in my opinion. If Frontier’s growth fails to live up to expectations, this valuation implies the stock could drop substantially.
Changing for the future
Magazine publisher Future (LSE: FUTR) has taken a relatively old business model and put a twenty-first-century spin on it. The company has built a portfolio of specialist magazines and used the data derived from these publications to help bolster its advertising business.
This has created a virtuous cycle, where the cash generation from old titles helps fund new acquisitions, which generates more cash flow, which funds new purchases… and so on. By using this strategy, the company’s net profit is expected to hit £140m by 2022. That’s up from a loss of -£1.3m in 2015.
Of course, these are just projections at this stage. Future’s growth isn’t guaranteed. The online advertising market is incredibly competitive. As such, if revenues come under pressure, the company may not be able to fund its acquisitions. This may bring growth shuddering to a halt.
Despite this significant challenge, I’d buy the stock for my portfolio of UK shares today.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended boohoo group and Frontier Developments. 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.