Earlier in September, we saw a sell-off in the main FTSE 100 index. When I take into account concerns around China and inflation here in the UK, I need to be selective in the best shares to buy now. Here’s what I like at the moment.
A well-diversified retailer
A good way that I can filter for the best shares to buy now is to look at the share performance in the short run. Although longer-term performance also needs to be looked at, if a company has seen growth in the past few months despite the concerns mentioned above, it bodes well.
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For example, JD Sports Fashion (LSE:JD) shares are up 20% in the past three months and 40% over one year. The retailer has over 2,000 locations or sub-locations around the world. The depth of brands it owns gives a broad range of target clients. Even though the UK makes up 41% of group revenue, the company is well diversified with revenue contributions from around the world as well, especially the US.
The risk to buying the shares now is potential disruption in the supply chain into the busy winter trading period. The shortage of drivers to stock stores, or branded suppliers having shortages themselves to provide stock, could be a real issue.
Making use of the professionals
Another one of the best shares to buy now, in my opinion, is Scottish Mortgage Investment Trust (LSE:SMT). The shares are up 12% over three months and 51% over the past year.
The investment trust has a wide remit of the types of stocks it can invest in. As of the end of Q2, companies within the top 10 holdings include Moderna, Tesla and NIO.
The main reason I’d look to buy the trust now is because it’s run by experienced investment managers with a track record of strong performance. Markets are going to be difficult to navigate over the winter, so allocating some of my money to this stock should reduce the pressure on me.
One risk is that the firm has 37% of its holdings in the US. I’d argue that US stock markets look the most overvalued currently, so the managers need to watch this carefully for another potential sell-off.
One of the best defensive shares to buy now
The final best share to buy now that I’d look to is Sage Group (LSE:SGE). The company provides accounting and payroll software to SMEs. The share price is up almost 9% in three months and 5% over a year.
The reason I like the stock now is that it’s a defensive play. The company provides services that I’d say are a necessity for most businesses. In this way, regardless of issues that could spook the market going forward, I’d expect Sage to have constant demand for its software products.
The company also has very low debt levels, making it less risky if we see interest rates rising.
One point to note with Sage is that buying its shares is unlikely to generate me serious returns. If I’d bought five years ago, I wouldn’t have made any profit (excluding the dividend yield). The nature of the industry it operates in means that high growth is unlikely.
Overall, I’m considering buying £500 worth of each of these three shares at the moment.