2 of the best UK shares I’m thinking of buying with spare cash

Jonathan Smith explains why he thinks both St. James’s Place and B&M are two of the best UK shares to consider buying now.

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I always enjoy finding new companies that I rank as the best UK shares to consider buying with my free cash. In this regard, here are two stocks that I like the look of at the moment.

A stock for growth and income

St. James’s Place (LSE:STJ) is a UK-based wealth manager. The share price is up 66% over the past year and has kept the momentum going over the past few months. In fact, in the past three months, the share price is up over 10%. This shows me that the post-crash bounce-back still has momentum. Why is this?

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For a start, half-year results released earlier this summer showed continued growth in key areas. The one that impressed me the most was gross inflows. This was at £9.2bn, up 27% from the 2020 figure of £7.3bn. Given that last year there was uncertainty initially as to whether investors would panic and pull money out of stocks and mutual funds, this figure is very positive. It allows me to have confidence in the outlook going forward. Higher inflows should translate to higher advisory and investment revenue for the business.

Another reason why I think it’s one of the best UK shares to buy now is that I can hold it for both capital and income growth. After seeing a dividend cut last year, the yield is creeping higher and is currently just above 3%. What the company calls the underlying cash result for H1 2021 was up 65% from the same period last year, leading to an interim dividend of 11.55p per share.

One risk with the stock is that borrowings have been steadily increasing over time. This time last year they stood at £435m, but they’re now at £478m. Given the strong financial performance, I’d like to see borrowings reduced. 

Another one of the best UK shares 

Another company that I’d rate as one of the best UK shares is B&M European Value Retail (LSE:BME). Momentum is with the company, with the share price up 27% over the past year but also up 7% over the past three months.

The company sources and buys products mostly from China, relying on a high sales volume model. In fact, B&M stores sell pretty much anything, with shoppers often finding good deals on bulk purchase items.

The outlook seems good, reflected in a recent upgrade of forecasts in an unexpected trading update. The statement noted that pre-tax profit for H1 through to the end of September would be between £275m and £285m. This contrasts with previous expectations of around £235m. Revenue is broadly flat, but stronger gross profit margins are the reason for the increase.

One risk to buying this UK share was noted in the trading update. The company commented that “trading patterns and strength of customer demand remain highly uncertain for the balance of fiscal 2022”. I agree with this, as UK retail sales have been volatile in recent months. Depending on how Covid-19 plays out into the winter, customer spending could swing one way or the other.

Overall, I think both stocks are some of the best UK shares that I’m considering buying at the moment.

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jonathansmith1 has no position in any share mentioned. The Motley Fool UK has recommended B&M European Value. 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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