2 top UK shares to buy and hold for 5 years!

Here I look at two companies that I think are the best UK shares to buy for my long-term growth portfolio.

| 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.

a couple embrace in front of their new home

Image source: Getty Images

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.

sdf

Despite recent turbulence, I think the UK market looks pretty attractive at the moment. Every time there is a reactionary fall in the market, the rebound has been strong and swift. The crash during the last week of February is a good example. Shares recovered quickly and the FTSE 100 index is already at the 7,500 mark.

I think now is a great time to add some future-focused growth shares to my portfolio. Here are my top UK shares to buy right now operating in exciting sectors that look primed for growth. 

Blue-chip UK share to buy

I have been tracking Diageo (LSE:DGE) since May 2021 when it was trading at 3,250p. It is currently trading at 4,000p, up 23% in 12 months. It has outperformed the FTSE 100 index by nearly 15% during this period and has shrugged off the pandemic crash. 

I value stability a lot, especially in 2022. And I think Diageo’s business strategy fosters steady growth. The company is focusing on strategic acquisitions in target markets like China, India, and South America. These are areas set for big expansion over the next decade and Diageo is working on acquiring top brands overseas. And its dominance of the North American and European markets makes it a steady income generator.

In the recently released half-yearly results (ended 31 December 2021), the company reported net sales of £8bn, up 15.8% from the previous six-month period. Organic sales grew 20% and the company’s operating profit jumped 22.5% to £2.7bn.

My big concern right now is the lack of healthy, non-alcoholic options in its brand portfolio. Lack of diversity means the company will miss out on this growing beverage segment. And acquiring regional distilleries overseas comes with regulatory risks that could increase operating costs. 

But overall, the company looks healthy. Its business strategy is robust and sales have remained high throughout the pandemic period. The business looks well-equipped to maintain its current trajectory over the next decade which is why I think it is one of the top UK shares to buy for my long-term portfolio.

Hacking the video game market

Despite the surge in popularity, some investors are still hesitant to consider gaming shares. This is understandable given how few companies dominate the industry. But Keyword Studios (LSE:KWS) is a gaming share that largely avoids the pitfalls of releasing games. 

Despite being one of the largest gaming shares in the UK, this company does not directly develop or launch games. Instead, it provides a range of services from animation to voice acting for large game studios like Microsoft and Electronic Arts.

Industry numbers show that the number of large game titles released per year is increasing. This means that Keyword Studios could be involved in game production for top companies over the next decade. 

However, the risk of games being shelved during production is high, which could lead to losses for the firm. Also, at 2,368p, its shares are trading at a price-to-earnings ratio of 65 times, which points to it being very overvalued. Any small drop in revenue growth could trigger a big fall.

But the company operates in an exciting industry and has partnerships with global leaders. I would consider an investment in this company if its share price drops to 2,000p. 

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.

Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo, Keywords Studios, and Microsoft. 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

Person holding magnifying glass over important document, reading the small print
Investing Articles

47% below fair value and with an 18% earnings growth forecast, should investors consider this FTSE retail institution now?

This FTSE 100 British retail institution lost its way for a while but has bounced back in recent years, and…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Lloyds share price: up 40% this year, is it time to take profits?

The booming Lloyds share price is up nearly 40% in 2025, outperforming its UK banking peers. Our writer asks whether…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

If the stock market crashes tomorrow, here’s what I’ll do with my portfolio

A stock market crash can feel terrifying. Here’s why staying calm matters – and how this recovering FTSE 100 company…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Prediction: in 12 months the smashed up Diageo share price could transform £10,000 into…

Harvey Jones has taken a big hit on his Diageo shares but forecasts suggest next year may offer something to…

Read more »

Aviva logo on glass meeting room door
Investing Articles

Will the Aviva share price reach £10? Here’s what needs to happen

With profits potentially set to double by the end of 2026, could the Aviva share price do the same and…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

After crashing 60% this FTSE value stock looks filthy cheap with a P/E of just 9.2!

The FTSE's filled with value stocks, but one company in particular is trading at a 50% discount to its historical…

Read more »

Mature black woman at home texting on her cell phone while sitting on the couch
Investing Articles

I expect this stock to grow faster than the Rolls-Royce share price over the next 5 years

The Rolls-Royce share price has surged but I don’t believe it will grow as fast as this FTSE 100 peer…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

3 investments to consider when starting a Stocks & Shares ISA today

The Stocks and Shares ISA is an invaluable tool for investing as it allows us to build wealth and take…

Read more »