I’m searching for the best UK shares to buy for my portfolio in May. Here are two I’d happily buy next month and look to hold for the next five years, at least.
Bringing the house down
I think getting exposure to the residential rentals market is a great investment idea. And I’d do this by buying shares in Grainger (LSE: GRI), the country’s largest private-sector landlord.
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Rents are rocketing because of a chronic lack of available properties. It’s a theme that’s been exacerbated by rising buy-to-let costs that have prompted an exodus of landlords in recent years. I fully expect this shortfall to continue for several years at least too, as rental home supply will likely fail to keep up with demand growth.
According to the Deposit Protection Service, average rents rose to £849 in the first quarter. This was up 6.1% on an annualised basis. Tenant costs increased in all regions, with 10 of the 12 regions recording growth above 4%.
Rents set to keep soaring
The problem with investing in Grainger shares is that they aren’t cheap. Today, the company trades on a forward price-to-earnings (P/E) ratio of 35.4 times.
Any sort of premium valuation leaves a UK share in danger of a price correction if newsflow begins to sour. In the case of Grainger this could include rising costs or problems with meeting its construction targets.
However, it’s my opinion that Grainger merits a large earnings multiple. The outlook for the British rentals sector remains ultra-bright and is likely to remain so for some time. Analysts at Savills for example have predicted rents in the UK will rise almost 20% between now and 2026.
A top cybersecurity stock
I believe that buying some UK technology and IT services shares could be a good idea as the digital revolution clicks through the gears. One way I’d look to do this is by buying Kape Technologies (LSE: KAPE) for my stocks portfolio.
This particular company is an expert in the field of digital security and privacy. It makes antivirus software which battle cyber attacks, for example, and services which protect users’ anonymity when going online.
The cyber security market alone is tipped to grow strongly this decade. Analysts at Statista, for instance, think the industry will be worth $211.7bn by 2026. That’s up significantly from the $146.3bn it’s tipped to be worth this year.
The market opportunity for Kape Technologies is huge. But there’s no guarantee it will deliver monster profits growth in the years ahead. For example, the company is coming up against the might of industry heavyweights such as Norton and Microsoft.
Still, it’s my opinion that the size of the market opportunity — and the excellent progress Kape is making right now — makes the UK share a top stock to buy today. Kape saw revenues leap 20.7% (on a pro-forma basis) in 2021, blasting past even its own expectations.