I’ve recently been looking for UK shares to buy for my portfolio that may benefit from the economic recovery. However, I’ve also been adding companies that I think will continue to report growth no matter what the future holds. Here are three such businesses I have been eyeing up.
UK shares to buy
The first company is the London Stock Exchange (LSE: LSE).
The owner of the UK’s primary equity market and other financial businesses, this company essentially owns the plumbing of the UK financial system. I think this gives it a unique competitive advantage. As long as the country’s financial system continues to function, I reckon the LSE should continue to grow.
That being said, there have been periods in the past when the group has struggled. These include the financial crisis. The enterprise also has a lot of debt and has borrowed more to fund the acquisition of information provider Refinitiv. This elevated level of borrowing could be a significant risk for the group.
Still, I would buy this company for my portfolio UK shares today, considering its competitive advantages and position in the UK economy.
Property market
Another company I would buy is LSL Property Services (LSE: LSL).
This operation owns a range of businesses covering everything from the buy-to-let market to estate agents and mortgage surveyors. It conducts mortgage valuations for some of the largest mortgage lenders in the country.
While this does mean LSL’s fortunes are tied to those of the UK property market, I think its diversification gives the group an edge. For example, despite a 14% decline in revenues last year and one of the worst economic depressions in UK history, LSL still reported net income of £16.3m.
Of course, there’s no guarantee the company’s diversification will make it immune from any housing market stress. A sudden increase in interest rates could cause substantial stress in the property market. This may have a significant negative impact on the group as every part of the market may suffer.
Even after taking this risk into account, I would still add LSL to my portfolio of UK shares today for its growth potential.
Insurance income
The final company I would buy is Lancashire Holdings (LSE: LRE). The Lloyd’s of London insurer is benefiting this year from a substantial increase in insurance rates. In some segments of the market, rates have risen by more than 10%. This implies insurers such as Lancashire are on track for a strong performance this year.
However, they are still counting the cost of the pandemic, the final cost of which is not yet known. It could be substantially more than current predictions, which means the sector may have to put aside more money than expected.
This is probably the most considerable risk Lancashire faces right now.
I believe rising rates should go some way to mitigating the risk outlined above. That’s why I would buy the stock for my portfolio of UK shares, even though there could be a significant negative surprise on the horizon.
