The best LSE shares to buy now!

An oil company and residential construction firm may be among the best LSE shares to buy now, given their recent strong growth.

| 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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

Key points

  • The London Stock Exchange (LSE) is full of diverse growth shares
  • Energean’s revenue increased from $28m to $497m between the 2020 and 2021 calendar years
  • Barratt Developments recently acquired Gladman Developments for £250m, increasing its potential construction sites by 406 

The London Stock Exchange is full of interesting and diverse companies. I’m currently on the lookout for the best LSE shares to buy now and I think I’ve found two firms that fit the bill. With surging oil and gas prices, I think European giant Energean (LSE:ENOG) could be a good investment for my portfolio at the moment. What’s more, historical results also draw me to residential construction business Barratt Developments (LSE:BDEV). Let’s take a closer look at these two companies.

An oil and gas LSE share

Energean is a giant within the oil and gas industry and operates four segments around the Mediterranean area. These are Europe (especially Italy), Egypt, Israel and new markets, including Malta. Its shares currently trade at 1,174p.

In addition, there is no doubt that the business is also currently benefiting from surging oil and gas prices. Revenue increased from $28m to $497m between the 2020 and 2021 calendar years. WTI Crude oil, for instance, is up 87.75% in the past year and 16% in the past month. It currently trades around $109 per barrel.

While this is good for firms in the sector at the moment, I question how long this underlying energy price trend can continue.

In an update for the three months to 30 September 2021, the company increased production guidance from 38,000-40,000 barrels of oil equivalent per day (boed) to 40,000-42,000 boed. This is a testament to the firm’s output efficiency and its expanding operations in Israel. Ultimately, it succeeded in achieving production of 41,000 boed.

A residential construction business

Barratt bought Gladman Developments in January 2022 for around £250m. This latter firm specialises in acquiring plots for construction, and brings 406 sites to Barratt’s portfolio. This enhances the potential areas for construction. Barratt currently trades at 506.8p.

In a recent update for the six months to 31 December 2021, the company recorded pre-tax profits of around £430m, an increase of 0.6%, year on year. What’s more, its dividend cover increased by about 50%.

Historically, Barratt’s results are also strong. For the years ended June, between 2017 and 2021, pre-tax profits rose from £765m to £812m, while earnings-per-share grew from 61.3p to 64.9p. This consistent growth is attractive as a potential shareholder. It should be noted, however, that past performance is not necessarily indicative of future performance.

There are risks with this sector, too. Rising interest rates essentially mean that that mortgages will become more expensive. This may cause the housing market to slow down as fewer people are able to purchase new homes. This problem, however, may subside in the near future.

Despite this, I think this LSE share might be cheap. Based on trailing and forward price-to-earnings (P/E) ratios compared to competitor Persimmon, I think the Barratt share price may be undervalued. It has trailing and forward P/E ratios of 8.52 and 6.74, while Persimmon has ratios of 9.07 and 8.53. The idea that I may be getting a bargain is very appealing.

Overall, while there are risks associated with both Energean and Barratt, I think they have strong records and are expanding in a controlled fashion. I will be buying both LSE shares very soon.       

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.

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Here’s what a FTSE 100 exit could mean for the Shell share price

As the oil major suggests quitting London for New York, Charlie Carman considers what impact such a move could have…

Read more »

Two white male workmen working on site at an oil rig
Investing Articles

Shell hints at UK exit: will the BP share price take a hit?

I’m checking the pulse of the BP share price after UK markets reeled recently at the mere thought of FTSE…

Read more »

Investing Articles

Why I’m confident Tesco shares can provide a reliable income for investors

This FTSE 100 stalwart generated £2bn of surplus cash last year. Roland Head thinks Tesco shares look like a solid…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

£20,000 in savings? I’d buy 532 shares of this FTSE 100 stock to aim for a £10,100 second income

Stephen Wright thinks an unusually high dividend yield means Unilever shares could be a great opportunity for investors looking to…

Read more »

Investing Articles

Everyone’s talking about AI again! Which FTSE 100 shares can I buy for exposure?

Our writer highlights a number of FTSE 100 stocks that offer different ways of investing in the artificial intelligence revolution.

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

3 top US dividend stocks for value investors to consider in 2024

I’m searching far and wide to find the best dividend stocks that money can buy. Do the Americans have more…

Read more »

Investing Articles

1 FTSE dividend stock I’d put 100% of my money into for passive income!

If I could invest in just one stock to generate a regular passive income stream, I'd choose this FTSE 100…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Forecasts are down, but I see a bright future for FTSE 100 dividend stocks

Cash forecasts for UK dividend stocks are falling... time to panic! Actually, no. I reckon the future has never looked…

Read more »