The London Stock Exchange is proving to be a marvellous fishing pond for investors looking for stocks to buy in 2023. With inflation dropping from 8.7% to 7.9% in June, a new wave of optimism is flooding the stock market. And many of the depressed valuations within the UK’s flagship index are starting to rise.
Analysts from The Economy Forecast Agency have even updated their predictions that the FTSE 100 could hit as high as 9,395 points by May next year! Compared to today’s level, if accurate, this forecast would indicate some massive double-digit growth is on the horizon.
It’s important to remember that such predictions can change like the wind. So they need to be taken with a pinch of salt. But let’s assume it’s an accurate assessment. What are the best stocks to buy before this surge?
Fixing the world’s supply chains
Over the last decade, the increased functionality and complexity of equipment and devices have been creating supply chain nightmares for manufacturers. Sourcing thousands of unique components is a logistical nightmare that RS Group (LSE:RS1) helps to solve.
The firm is a one-stop shop solution for manufacturers, keeping an in-house stock of over 750,000 components provided by a network of more than 2,500 suppliers.
Therefore, businesses can find most, if not all, of their raw materials from RS Group, drastically simplifying their own supply chains and saving time and money. And with revenue, earnings, and dividends sitting comfortably in double-digit territory, I think it’s fair to say the group is proving immensely popular among its customers.
The slowdown in the industrial sector does pose a significant threat. As does the firm’s recent leadership change with the CEO and CFO recently stepping down. However, as previously highlighted, macroeconomic conditions are improving. And, so far, the shake-up in the executive suite hasn’t had any noticeable negative impact on performance.
That’s why, at a P/E ratio of just 12.7, I think RS Group could be one of the best stocks to buy now.
Everyone wants a new car
Considering the UK is still in a cost-of-living crisis, buying a new car doesn’t sound like it would be at the top of most families’ shopping lists. Yet, new car registrations are up by 18.4% in the first half of 2023, with used car sales also rising. And that’s terrific news for Auto Trader (LSE:AUTO)
As a quick reminder, the company operates the UK’s largest online automotive platform. The group charges individuals and businesses alike to list their vehicles online for others to find and purchase. And while inflation has caused some headaches, the rising cost and demand for cars have created a surprising tailwind.
Average revenue per retailer grew by around 10%, reaching £2,437, with management confident that this trend will repeat itself in 2024. And when paired with 60% operating margins, it looks like a top-notch stock to buy for my portfolio this year.
Of course, there are some risks on the horizon. The UK’s looming ban on new combustion vehicle sales in 2030 could disrupt the group’s long-term success. Nevertheless, management is already ramping up its presence within the EV market to tackle this threat head-on. Therefore, I remain confident about the long-term potential of this enterprise.
