If I had £1,500 to invest, these are the top UK stocks I’d buy now

With the stock market entering a traditionally busy trading period, Christopher Ruane picks three top UK stocks he’d consider for his portfolio.

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Autumn is a time the stock market often becomes livelier again. Some of the top UK stocks have already had a busy summer, from merger talks to profit upgrades. The next few months could even see an acceleration of this frantic dealmaking activity.

If I had £1,500 to put into top UK stocks now, here are three I would consider buying. To diversify, I would spread my money evenly across the three and invest £500 in each.

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Retail success story with expansion opportunities

While a lot of investors focus on Morrisons or Tesco, they aren’t the only successful UK retailers.

Variety store chain B&M (LSE: BME) has recorded some stellar performance in recent years. Last year, for example, earnings per share more than doubled. Despite that, the shares continue to evoke mixed feelings. Some analysts worry that the surge in demand while B&M UK stores stayed open during lockdown was a singular event that won’t be repeated.

But the company has developed compelling assortment and pricing, which its customer base seems to appreciate. Declining occupancy rates in high streets offers the chain opportunities to expand, and could even lead to lower rents. The company’s buying prowess enables it to achieve strong margins. Last year’s profit margin at B&M was 8.9%, for example, compared to under 1% at Morrisons and 1.3% at Tesco. I think B&M’s long-term growth story is set to continue – the chain issued a profit upgrade this month. I would consider adding B&M to my portfolio today.

Digital star among top UK stocks

As a long-standing bull on digital ad agency S4 Capital (LSE:SFOR), I have looked at its dizzying share price performance lately and wondered whether the positive momentum is sustainable. It’s fallen back from all-time highs reached earlier in the week, but nonetheless the S4 Capital share price has more than doubled over the past year.

Despite that, I would consider adding to my position. The company’s appetite for acquisitions continues to be demonstrated, with its announcement last week that it would buy the technology services company Zemoga. In its interim results this month, S4 increased its like-for-like gross profit guidance for the third time this year. The company now expects organic growth of 40% for the year. Add its acquisitions to that and total growth should be higher.

I see a risk in its heavy exposure to tech – any downturn in tech spending could hurt S4’s revenues. But I remain a buyer for my portfolio.

Beaten down consumer goods giant

The third of the top UK stocks I would consider buying to tuck away in my portfolio for years to come is consumer goods giant Reckitt. Its shares have tumbled 21% over the past year. They have been hurt by concerns about the underperforming infant formula business hurting earnings, as well as cost inflation reducing profitability across the business.

I think the sell-off has been overdone. Reckitt is working to solve the challenges of its infant formula business. It has agreed to sell most of the formula business in the key Chinese market. Meanwhile, the company’s premium portfolio of brands such as Dettol gives it pricing power and a broad footprint. I see the price decline as a buying opportunity for my portfolio.

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Christopher Ruane owns shares in S4 Capital. The Motley Fool UK has recommended B&M European Value, Morrisons, and Tesco. 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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