I’ve been analysing investing data from Hargreaves Lansdown to see which UK shares are most popular right now. As is usual, companies from the FTSE 100 leading index of shares continue to dominate the ‘most bought’ lists.
Sitting at the top of the tree is pharmaceuticals giant GSK (LSE:GSK). It was responsible for 4.8% of all buy orders on Hargreaves Lansdown’s platform in the seven days to Wednesday. Diageo (LSE:DGE) was in second place and attracted 3.05% of buy instructions during the week.
Here’s why I’d buy both shares for my portfolio.
GSK
Pharmaceuticals development is expensive and unpredictable business. Trouble at the lab bench can be common and cost a fortune in unexpected costs and lost revenues.
But I still believe GSK is a rock-solid investment. Despite concerns over the strength of its product pipeline, I think a forward price-to-earnings (P/E) ratio of 9.3 times is far too cheap. By comparison, FTSE peer AstraZeneca trades on a far meatier multiple of 17.2 times.
The London company has the wind in its sails right now and recently hiked its full-year guidance. This was thanks to accelerating growth in the third quarter, a period when underlying sales jumped 10% to £8.1bn.
GSK now expects sales to improve 12% to 13% in 2023, a hefty upgrade from prior estimates of 8% to 10%. Adjusted operating profit is also now tipped to rise between 13% and 15%. That’s up from previous guidance for growth of 11% to 13%.
I’m particularly excited by ongoing progress at the firm’s Vaccines division (sales here rose 33% in quarter three). It’s blockbuster Shingrix shingles treatment continues to perform strongly, while its Arexvy vaccine (which treats respiratory infections) has shot out of the blocks since it was launched earlier this year.
Medicines demand is tipped to soar as global healthcare investment and the world’s population rise. I think GSK will be in a strong place to capitalise on this.
Diageo
Drinks company Diageo hasnt performed as resolutely as GSK of late. In fact the Guinness manufacturer has just cut its sales and profits guidance due to troubles in its Latin and Caribbean region.
Diageo may remain under pressure for a little longer. But I still expect the company to deliver solid earnings growth over the long term. It’s why I’m looking to increase my own exposure when I next have cash to invest.
I’m a huge fan because of its portfolio of 200-plus beloved beer and spirits labels. This gives the company considerable pricing power and helps it to grow earnings even if demand in one or two product segments splutters. I also like Diageo because of its vast exposure to developed and emerging markets (it has operations in 180 countries).
Combined, these qualities have laid the foundations for strong earnings and dividend growth for decades. And I’m confident it will remain an impressive share for years to come.
Today Diageo shares trade on a forward P/E ratio of 18.2 times. This makes it cheaper than many of its rivals, including Constellation Brands (which boasts an earnings multiple of 22 times). I think now is a good time to dip buy the FTSE company.
