UK shares have been dipping and rising with a confusing amount of inconsistency this year. At times, some shares seem on track to make gains, only to fall to new lows the following week.
The frustration has led me to look deeper for tangible reasons why certain shares might have more long-term potential than others. In my research, I’ve uncovered three that I believe could net me consistent returns in 2024 and beyond.
Driving the digital revolution
BT Group (LSE:BT.A), the UK’s largest telecoms company, started 2023 with a bang but hit a snag in May. It’s been struggling since, with the share price now the lowest it’s been since October 2020.
So why am I hopeful?
The reason BT’s revenue and profits are down is likely due to large investments into its infrastructure arm Openreach. This would be in preparation for the UK’s switch to a fully digital telecoms network in 2025.
It seems logical that profits are in decline due to the cost of installing the new digital hardware. Once everything is in place though, the resulting windfall means BT profits could soar.
Getting in while the shares are cheap could net me some decent returns. The risk is that if things don’t pan out as planned, BT will need to do some emergency damage control.
Naturally, that would affect the share price.
But it’s a risk I’m prepared to take, so BT will be on the list during my next shopping spree.
The high-end supermarket fave
Marks & Spencer (LSE:MKS) was crowned the nation’s favourite supermarket for the third time this February. The high-quality retailer’s share price dipped in 2022 as the economy tightened but began to make a marked recovery in 2023.
While shares increased 48% over the past 12 months, they’ve fallen 13% this year after disappointing Christmas sales figures. However, if M&S can deliver positive full year results in May, the upward momentum should return. That would make the current 239p price a good entry point.
The risk remains that the UK economy isn’t fully out of the woods yet. If things turn bad and interest rates increase again, higher-end supermarket chains like M&S could take the brunt.
Economic uncertainty is likely to be a persistent theme in 2024, influencing many investment decisions. I’m not 100% confident in a recovery just yet, but I’ll keep an eye on M&S and gauge its long-term potential.
Getting priorities right
The Tesco (LSE:TSCO) share price has been trading relatively sideways for the past year, up only 6.5% since last March. The stock has a moderate price-to-earnings (P/E) ratio of 14, a figure suggesting adequate earnings and a fair share price.
The wishy-washy performance means analysts are on the fence about Tesco shares, with an equal mix of buy and sell ratings. At best, they predict an average price increase of only 18% in the coming 12 months.
So why am I optimistic?
The popular supermarket recently announced a 9.1% pay rise for staff. I believe the move could boost productivity and improve customer satisfaction. The investment is also indicative of a company operating with good cash flow and a healthy balance sheet.
Most importantly, Tesco isn’t a company I’d consider high-risk, so I plan to buy shares even if short-term gains aren’t immediately apparent.
