2 of the best UK shares to buy now

Harshil Patel looks at which UK shares to buy for his ISA to ride Britain’s home improvements boom.

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The best UK shares to buy can sometimes be related to big themes. One trend that came out of the pandemic was a rise in home improvements. I reckon more time spent at home and less cash spent on holidays abroad is creating a mini boom for the industry.

More homeowners are borrowing money to fund improvements around their homes. Figures from mortgage broker Mojo Mortgages suggest the average amount of money being applied for rose by 25% during the pandemic because of the home improvements surge.

Best UK shares to buy now

This bodes well for homewares retailer Dunelm (LSE: DNLM). I reckon it’s among the best UK shares to buy in the sector right now. It recently reported bumper annual results with sales growing by 26% versus last year and by 19% versus the pre-pandemic 2019.

This was despite store closures during lockdowns. Dunelm, like many retailers, benefited from a rise in online sales. Digital sales more than doubled during the year. With rapid online growth, the digital arm is becoming an important area of focus. It accounted for 46% of all sales compared to 27% a year earlier.

Despite the positive trends, I note that there are still macro-economic uncertainties. There are some near-term concerns with industry-wide supply chain disruption, including driver shortages and rising shipping costs.

That said, Dunelm is a well-run business and should be well-placed to manage these challenges. All in all, I’m considering buying some for my Stocks and Shares ISA.

Building Britain

Among the top UK shares to buy that could be benefiting from the home improvements theme is kitchen manufacturer Howden Joinery (LSE:HWDN), also referred to as Howdens. In its half-year results in July, it reported strong sales growth compared with both 2020 and 2019. I reckon positive trends have continued since then, which could bode well for Howden shares.         

Howdens has a proven and relatively resilient business model. It’s designed for trade customers. By supporting builders and kitchen-fitters with favourable pricing, reliable stock and excellent service, Howdens is rewarded with loyalty.

This successful model is encouraging it to grow its business further. It’s continuing to open new depots across the UK. From the 754 depots cited in July, it reckons there’s the potential to have at least 900 UK depots. With progress made so far, it could be a good source of future growth.

Similarly to Dunelm and much of the industry, it’s experiencing cost pressures. Howdens point out that higher costs are a result of Brexit and Covid-19-related disruption. That said, it has managed to mitigate rising costs by increasing prices. Also, slowing demand for new kitchens would impact the business. But as chief executive Andrew Livingston pointed out: “We remain confident in our business model for the future.”   

Overall, Howdens demonstrates excellent returns, solid profit margins and encouraging earnings growth. I consider it to be one of the best UK shares to buy right now and would add it to my portfolio.

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 assessed. Consider taking independent financial advice.

Harshil Patel has no position in any of the shares mentioned. The Motley Fool UK has recommended Howden Joinery 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.

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