Two top UK shares I believe investors should consider buying are Bakkavor Group (LSE: BAKK) and Pets At Home Group (LSR: PETS). Here’s why.
Bakkavor Group is a leading provider of fresh prepared food in the UK. It’s also increasing its presence in the US and China.
Many UK shares have struggled due to soaring inflation and rising interest rates causing market volatility. As I write, Bakkavor shares are trading for 96p, which is exactly the same price as this time last year. However, since the volatility impacted markets in February, the shares are down 20% from 121p to current levels.
I like Bakkavor shares because the business possesses defensive traits. Let’s face it, everyone has to eat. As lives seem busier than ever, fresh prepared options are a quick and easy go-to for many people. To add to this, Bakkavor’s increasing presence in lucrative international markets could propel the business to new heights.
Next, Bakkavor has a good track record of performance, although past performance is not a guarantee of the future. Looking back, the business has increased revenue and profit for the past three years. A half-year report released in September for the current year was positive too. Revenue, profit, and dividend per share all rose, as did cash generation.
Speaking of returns, Bakkavor shares would boost my passive income with a current dividend yield of over 7%. However, dividends are never guaranteed.
I must note that Bakkavor is at the mercy of soaring inflation, like lots of UK shares. Food inflation has been one of the highest risers in recent months. Increased costs of ingredients as well as rising prices could put pressure on profit margins and cause customers to move to alternatives.
Pets at Home
Pets At Home is a specialist pet retailer with retail outlets, online store, and grooming salons and veterinary services.
As I write, Pets shares are trading for 321p. This is an 18% increase over a 12-month period as the shares were trading for 270p at this time last year.
From a bullish perspective, Pets has a dominant market position in a burgeoning sector. This is because pet ownership, at least in the UK, is only rising and is actually at all-time highs. Our pets need and deserve the same love and attention we do, including healthcare, food, clothing, and more. I can see the business growing due to the rising pet ownership numbers.
One major risk that could hamper Pets is the fact that the current cost-of-living crisis may mean that owners aren’t splashing out on extras. They may only keep up with the necessities.
Pets’ passive income opportunity looks enticing, with a yield of close to 4%. Furthermore, analysts reckon this will only grow in line with the business.
Finally, Pets has an excellent track record of performance. It has increased revenue and profit for the past four years.
To conclude, these two UK shares look like great opportunities with great growth and passive income prospects.