2 UK shares to buy

Rupert Hargreaves takes a look at two UK shares he would buy for his portfolio considering their growth potential and digital capabilities.

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When looking for UK shares to buy, I like to scan the whole market and not just focus on the FTSE 100. I think there are just as many, if not more, attractive investments outside the blue-chip index. 

With that in mind, here are two non-FTSE 100 shares I’d buy for my portfolio right now. 

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UK shares to buy

The first company on my list is Moonpig Group (LSE: MOON). The online greetings cards and gifts retailer only recently came to the market, but it’s made a big splash since its landing. 

In the company’s financial year to the end of April 2021, group revenue increased 113% year-on-year and adjusted profit before tax rose 125%. These numbers are awe-inspiring, and I think they show the group’s true potential. 

While it is likely that Moonpig benefited from a number of one-off transactions due to the pandemic, as most bricks-and-mortar stores closed, the transactions have provided the company with valuable consumer data.

For example, it has 190m cumulative consumer transactions on its database, with 50m reminders set by consumers for events. This suggests the firm will benefit from repeat business as we advance. 

This potential for repeat business is why I would buy the stock for my portfolio of UK shares. 

That said, I think the company will see a drop in revenues and profits this year as the world returns to some sort of normal. This could have a negative effect on the stock price. Sales may also suffer as this is a competitive market, and competition is springing up all the time. 

Reach for growth 

The second company I would buy for my portfolio of UK shares is publisher Reach (LSE: RCH). The owner of various regional and national newspapers has reported explosive growth over the past two years. Management has been focusing on growing the group’s digital divisions. Thanks to these efforts, growth on the digital side of the business has offset declines in traditional media. 

Its first-half figures show the extent of the shift. For the 26 weeks to 27 June, group revenue rose 2.6% overall, with digital revenues increasing 43% and print revenues falling 5%. And as margins on the digital side are far wider than those for print, the group’s operating profit jumped 26% year-on-year. Its opening profit margin jumped from 19% to 23%. 

As the company’s digital transition continues, I think profits will continue to grow, and its share price should begin to reflect this. These are the reasons why I would buy the stock for my portfolio of UK shares. 

Challenges the enterprise may face as we advance include competition from other online publications and restrictions on online advertising and the use of digital data. These restrictions could increase costs and reduce overall profitability. They may also hold back growth in the long run. 

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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