As the economy reopens, I have been looking for UK shares to buy for my portfolio that may see revenue and profit growth in September.
Here are three companies on my investment watch list.
UK shares to buy for growth
B&Q owner Kingfisher (LSE: KGF) has seen a significant increase in its sales over the past 18 months. Sales have jumped as stuck-at-home consumers have undertaken home improvement projects. In its fiscal second quarter, sales across the group were up 22.3% compared to the same period two years ago.
While I think it is unlikely this explosive growth is sustainable, as the economy continues to rebound, I reckon the company will experience more normal spending patterns. And with wages rising, consumers have money to spend. Kingfisher could benefit from this.
Those are the primary reasons why I would buy this company for my portfolio today. However, I should note that one critical risk to the group’s growth is the potential for a housing market slowdown. This may result in consumers becoming more cautious, and fewer housing transactions may lead to a reduction in DIY spending.
Holidays are back on the cards
The reason why I would buy both of these stocks is simple. While I believe the outlook for the hotel industry is improving, I am well aware that coronavirus is still rampaging around the world. Until the pandemic is brought under control, the travel and tourism industry will remain under pressure.
Still, as noted above I think the industry is recovering, so I want some exposure in my portfolio. By acquiring both Whitbread and IHG I will not have all of my eggs in one basket. Further, both of these company operates different business models.
Whitbread owns and manages the Premier Inn brand, which has the majority of its sites in the UK and Germany. Meanwhile, IHG uses a franchise model, where franchisees run hotels using its brands in markets around the world. This business model is far more flexible because the company can add and remove franchisees, expanding or contracting its footprint how it sees fit. The group also owns a range of upmarket and cheaper brands, giving it exposure to all sections of the market.
By acquiring these UK shares in September, I hope to be able to invest in the travel and tourism sector recovery while at the same time minimising risks associated with investing in the industry. Another series of economic lockdowns could significantly harm both enterprises, and they may have to take evasive action to remain afloat. With this threat hanging over the sector, I want to have as much diversification in my portfolio as possible.
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended InterContinental Hotels 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.