AJ Bell investors are buying these UK stocks! Should I join in?

These FTSE 100 stocks have proven extremely popular with retail investors of late. Should I buy these UK stocks for my own shares 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.

Front view photo of a woman using digital tablet in London

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.

The panic engulfing global stock markets continues to grow. Yet some UK stocks continue to attract lots of attention from bargain hunters.

Here are two London Stock Exchange companies that AJ Bell customers have been buying. Should I snap them up myself?

Lloyds Banking Group

There’s a lot to like about Lloyds Bank (LSE:LLOY) on paper. The business trades on a forward price-to-earnings (P/E) ratio of seven times. It also carries a 5.8% dividend yield.

This perhaps explains why the FTSE 100 bank is the second-most popular among AJ Bell investors in the seven days to 15 March. It’s accounted for 8.1% of all buy orders in that time.

I’m not tempted to buy Lloyds despite its cheap share price, though. And it’s not just because fears are rising over a meltdown in the entire banking industry. In fact this bank’s low exposure to riskier assets assuages my fears of a crisis here.

I’ve long fretted about the company’s lack of exposure to overseas markets. With the British economy facing a prolonged period of weak growth, Lloyds could struggle to generate decent long-term earnings.

I also worry about the impact of rising competition from challenger banks. The likes of Starling Bank and Monzo are rapidly eating into the market shares of the high street banks with their better savings and loans rates and superior online platforms.

Higher interest rates could continue to boost Lloyds’ bottom line. Bank of England policy tightening pushed Lloyds’ underlying net interest income an impressive 18% higher in 2022, to £13.2bn. But on balance I think there are better UK stocks to buy right now.

SSE

I would, for example prefer to snap up shares in green power producer SSE (LSE:SSE) today. Even if the global economy falls off a cliff, this UK stock can expect earnings to remain broadly stable. This explains why its share price has also remained stable despite the broader market carnage of recent days.

Demand for electricity remains basically unchanged during economic upturns and downturns, after all. But this isn’t the only reason I’d buy it today. As a long-term investor I’m drawn by the huge growth potential of renewable energy providers like this.

Wind energy providers like SSE will play an important role in helping the UK hit its net zero emissions targets. This means that, even if adverse weather conditions damage profits now and again, over a longer time horizon earnings here could balloon.

I like this FTSE 100 operator too as it speeds up investment in its green operations. It has plans to increase its renewable energy output by five times by the end of the decade. Its ability to hit this target is boosted following Ofgem’s decision in December, too, to accelerate linking up offshore wind assets to the country’s electricity grid.

SSE shares accounted for 7.5% of all buy orders made via AJ Bell in the past seven days. I think its bright long-term outlook — allied with its chunky 5.5% forward dividend yield — makes it a top buy right now.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group Plc. 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

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

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

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

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

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »