2 brilliant UK shares I’d buy for 2022

These UK shares could be among the top performers in 2022, argues Andy Ross, and they combine a solid mix of income and growth potential.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m optimistic about the stock market in 2022. The difficult period this autumn means the UK market, in my opinion, remains undervalued. There are certainly a lot of high-quality companies around and I think these two UK shares in particular could do well in 2022 and for many years after that.

A top UK share

Polar Capital Holdings (LSE: POLR), the boutique asset manager, is a company I’ve felt good about for a while. I’ve added the shares to my portfolio and am almost certain to buy more in 2022.

In the six months to 30 September, assets under management (AuM) — a key metric in analysing asset management companies — increased from £20.9bn to £23.4bn, a rise of 12% over the period. And then AuM have increased to £25bn as of 12 November.

Core operating profit (excluding performance fees, other income and exceptional items) was up 65% to £36.3m compared to the comparable half-year period.

When combined with opportunities to grow internationally, add new investment teams and funds to its roster and its already high margins, I think the future looks very bright for Polar Capital. The stock combines a dividend yield of 5% with the potential for the share price to grow dramatically.

Of course, there are risks. If its funds start to underperform then Polar Capital shares could suffer as investors pull out their money. Polar is also quite reliant on its tech fund, although it does have some diversification outside of tech too.

For me, the potential upside of the shares far outweighs the risks and I’m very likely to keep adding to my holding.

Jim Slater-style growth stock? 

UP Global Sourcing Holdings (LSE: UPGS) is a share that has no doubt been hit in recent months by concerns over shipping issues. This may carry on for a while into 2022, but at some point it should normalise. One of the best times to invest is when others are fearful, according to none other than Warren Buffett.

There’s a potentially attractive entry point now into the shares as they trade on a forward P/E of just 13. The price-to-earnings-growth ratio, on a forward basis, is just 0.5, making it potentially a Jim Slater ‘Zulu-style’ undervalued growth share, that is, a share with a PEG under 0.7. 

UP Global Sourcing has been growing revenue and profits at an impressive rate, even through the pandemic. With a market cap below £200m it has plenty of headroom to grow further.

The company is an owner, licensee, designer, developer and manager of a series of brands focused on the home. These brands include Salter and Russell Hobbs. The former was acquired in July 2021 for an initial cash consideration of £32m, with a further deferred consideration of £2m potentially to be paid over two years. Acquisitions are both a source of growth, but also pose a risk if they are poorly managed. 

Another risk is that shipping costs and inflation persist and this hampers its growth. That in turn would hit the shares.

But I think the risks are small and that this growing company could provide a very healthy return in 20202 and beyond. That’s why I’m very likely to buy the shares.

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.

Andy Ross owns shares in Polar Capital Holdings. The Motley Fool UK has recommended Polar Capital Holdings. 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.

More on Investing Articles

Newspaper and direction sign with investment options
Investing Articles

When cheap markets meet favourable conditions, sentiment flips very quickly

London’s stock market is cheap — some sectors, even cheaper. Given a change in sentiment, the uprating could be substantial.

Read more »

Investing Articles

Empty Stocks and Shares ISA? I’d snap up these 3 stocks to start with!

Sumayya Mansoor explains how she would start to build wealth from scratch with an empty Stocks and Shares ISA and…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

7.7% yield and going cheap! Why is this unknown FTSE 250 stock flying?

It's no household name, but there's one FTSE 250 stock with a high dividend yield and booming profits that looks…

Read more »

Photo of a man going through financial problems
Investing Articles

I’d stop staring at the Nvidia share price and buy this FTSE 100 stock instead

This writer reckons there is a smarter way to invest in Nvidia today without taking on stock-specific risk. Here is…

Read more »

Young lady working from home office during coronavirus pandemic.
Top Stocks

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Young Asian man drinking coffee at home and looking at his phone
Dividend Shares

These 3 FTSE 250 stocks offer me the highest dividend yields, but should I buy?

Jon Smith considers FTSE 250 shares with a very high yield, but questions whether the income is going to be…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Is FTSE 100 takeover target DS Smith a great buy?

A mega-merger between FTSE 100 giants DS Smith and Mondi has the City abuzz. But is there any value in…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

The WPP share price dips as profits fall. Here’s why it could be a top dividend buy

I'm starting to think the WPP share price undervalues the stock, especially if the long-term dividend outlook comes good.

Read more »