I follow a simple investing strategy of choosing stable performers in sectors I understand. I have picked three UK shares to buy now for my long-term portfolio based on the future potential of the industry and market performance of each company.
I closely follow the global gaming market and as an avid gamer, I understand what makes companies tick. Frontier Developments (LSE:FDEV) is the first company on my list of UK shares to buy because of its tested business strategy and exciting lineup for 2022.
They use a release and nurture approach. This means that Frontier’s games generate revenue long after their initial release. This is usually done through paid downloadables and expanding franchises. This is evident with games like Planet Coaster, which is generating a positive cash flow five years after release.
The pandemic created a boom in the gaming industry and Frontier capitalised well. Revenue in 2021 grew 19% to £90.7m. I think the company is making intelligent forays into mobile gaming as well. Banking on successful titles, the company has a host of sequels and genre-tested releases planned, like Jurassic World 2 and F1 Racing Simulator.
Success in the gaming industry is predicated on multiple factors and can never be taken for granted. But, I cannot ignore the dominance of the industry in the entertainment space. I think this is the right time for me to invest in the gaming industry and Frontier is on top of my UK shares to buy list.
Beverage industry giants
Coca-Cola HBC (LSE: CCH) is Europe’s largest CocaCola bottler, with a stronghold on the European beverage market. Marketed by one of the most beloved brands in the world, I think it is a stable investment that almost guarantees returns in the long term. Along with Coke, the company also licenses popular products like Fanta, Monster Energy, and Costa Coffee. This adds to its diversity, which I think allows it to garner a large and faithful consumer base.
The company has rebounded well from the effects of the pandemic. Its shares have grown a respectable 21.3% in the last 12 months. However, the company is heavily reliant on Coca Cola products, which is a concern. But, the steady 2.2% dividend yield and unbeatable market share makes it the perfect defensive UK share to buy for my portfolio today.
Another beverage giant I am looking at is Diageo (LSE:DGE). The alcoholic beverage brand looks in good shape after the pandemic and has a global presence. It has planned expansion strategies in markets like China, India, Africa, and Latin America, along with a large market share in established areas like the UK and US.
Diageo owns popular brands like Johnnie Walker and Smirnoff. It also has plans to expand its premium and local brand portfolio with its large cash reserves of £3.64bn supplemented by the 76% growth in operating profits in 2021. Alcohol import and export is highly regulated and changes can cause a dip in sales at any given time. But, I have been following this company for a while and think Diageo’s dominance makes it a UK share to buy for my portfolio.
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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo 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.