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UK shares to buy now: how I’d invest £1,500

Preparing a budget during a pandemic
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With dealmaking in the UK stock market continuing to suggest areas of undervaluation, I think now could be a good time for me to invest some money. If I had £1,500 to put to work, I’d consider these three UK shares to buy now for my portfolio.

UK shares to buy now: Unilever

Consumer goods giant Unilever (LSE: ULVR) has lost 16% of its value over the past year. I see that as a buying opportunity.

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The owner of brands from Dove to Hellmann’s has operations across the globe with billions of customers. That gives it a level of resilience even as consumer demands shift. Additionally, its portfolio of premium brands help give the company pricing power. That can enable it to sustain profits and pay out dividends. After the Unilever share price fall over the past year, the dividend yield currently stands at 3.7%.

But there are risks investing in Unilever. For example, the company is wrestling with input cost inflation. If it can’t pass that on to consumers as higher prices, profitability could fall.

I like the blue chip consumer goods behemoth and would happily add £500 of Unilever shares to my portfolio today.

On the buses

I liked Stagecoach (LSE: SGC) even before potential takeover interest was announced this week. While the Stagecoach share price rose in response to that news, I would still consider adding some more to my portfolio.

As the mooted takeover implies, some analysts think Stagecoach is undervalued. It operates a wide network of bus routes in the UK often with little or no competition. It also operates the Megabus coach brand. The company has become more focussed in recent years, retreating to its core UK bus and coach market. Stagecoach has deep experience in that business and I think it understands it well. While the pandemic saw demand nosedive, it has been recovering. By summer, the company’s regional bus vehicle mileage had returned to around 94% of pre-Covid levels.

With its penny share status I see continued value in Stagecoach. It currently trades at a price-to-earnings ratio of 14. I think that could be cheap given the potential upside as passenger demand recovers. I see Stagecoach as UK shares to buy now for my portfolio. But one risk is management getting distracted by takeover negotiations at a time when the business still needs to rebuild from its pandemic hit. I already hold Stagecoach and would happily buy another £500 of its shares for my portfolio.

Energy yield

The third of the UK shares to buy now for my portfolio would be BP (LSE:BP). The energy major yields 4.9%, which I find attractive.

As the recent concern about gas prices suggests, the energy market is in flux. Unpredictable demand over the past couple of years has set up a potential mismatch between supply and demand as the global economy roars back to life. That could be positive for energy suppliers such as BP. On that basis, I think there may be further upside from the current BP share price. I’d happily add £500 of BP to my portfolio today. But price volatility can also bring risks, with any fall in the oil price likely to harm BP profits.

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Christopher Ruane owns shares in Stagecoach. The Motley Fool UK has recommended Unilever. 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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