My 3 favourite UK shares to buy now

As the first half draws towards a close, Christopher Ruane shares three names from his list of UK shares to buy now for his portfolio.

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With the first half drawing to a close next week, I’ve been reviewing my share holdings. I have a shortlist of UK shares to buy now for my portfolio. Here are my three favourites.

UK shares to buy now in banking

The Lloyds (LSE: LLOY) share price has been rising. It recently hit a ceiling close to 50p before falling back a little bit. Still, it’s up 48% over the past year.

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Is the recent reversal a sign that these UK shares are overpriced? Or is it a buying opportunity?

I see it as a chance to top up my holding in Lloyds. The company benefits from owning some of the best-known banking brands in the UK market. It has restarted its dividend. It plans to increase dividends in future.

That was true several months ago too, though. So why would I buy now specifically?

I am becoming more upbeat on the outlook for the UK economy. Reopening has revealed the economic power of millions of consumers keen to spend. Even dampeners for some companies – such as foreign travel restrictions – could work in Lloyds’ favour, I reckon. Customers will have more money to spend in the UK economy. A buoyant housing market is good news for Lloyds, as the country’s leading mortgage lender.

That also points up a risk in Lloyds, though. Heavy exposure to the UK housing market risks increased defaults and lower profits when the UK economy moves into another difficult patch.

UK shares to buy now: S4 Capital

Digital advertising network S4 Capital (LSE: SFOR) has also had a good run over the past year. Up 134%, it has comfortably outperformed Lloyds.

It’s now just 7% below its all-time high. So, why would I still consider S4 Capital as a UK share to buy now for my portfolio?

In short, I see continued strong growth prospects here. The company typically maintains an upbeat tone – but given its performance, I think that optimism is justified. Like-for-like revenue and reported gross profit both grew around a third in the first quarter. Adding in the impact of acquisitions, total growth is even stronger. Reported revenue and gross profit both grew 71% versus the prior year.

The company expects more of the same, raising revenue and gross profit growth forecasts for the year from 25% to 30%. But there could be risks in growing too fast. Integrating many acquisitions quickly can lead to costly staff turnover and less satisfied clients spending less. 

Yield pick: Imperial Brands

While S4 is at the cutting edge of digital technology, Imperial Brands makes its money in a mature industry. The company owns tobacco brands such as Lambert & Butler and Golden Virginia.

Declining tobacco consumption in many markets risks smaller revenues in future. But the reason I still consider Imperial among UK shares to buy now for my portfolio is its yield of 8.7%. The company generates substantial cash flow which helps it to support the dividend, for now at least. But it did cut its dividend last year, and the payout is never guaranteed.

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Christopher Ruane owns shares in Imperial Brands, Lloyds Banking Group and S4 Capital. The Motley Fool UK has recommended Imperial Brands and Lloyds Banking Group. 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.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

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