£1,000 to invest? Here’s how I’d hunt the best UK shares to try and double my money

There are lots of different strategies to double our money using UK shares, but Zaven Boyrazian breaks down one of the most tried and tested methods.

| More on:
Black father and two young daughters dancing at home

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.

Finding the best UK shares to own can be an interesting endeavour. Mostly because they often show up in the most unexpected of places.

Gaming-changing artificial intelligence (AI) companies are currently dominating the headlines as the hype surrounding machine learning and generative models reaches its apex. But while most investors are busy chasing the same returns, there are a lot of top-notch companies getting completely ignored. And in my experience, it’s the latter that almost always delivers the greatest returns.

The challenge is finding these companies. So where is the first place investors should start their search?

Loving the unloved

When studying the world’s greatest investors like Warren Buffett, some of their best investments came from businesses that were significantly undervalued. Snapping up terrific companies at dirt cheap prices is a proven method of building wealth. And often these opportunities reside within industries that are out of favour with investors.

With less interest surrounding a particular sector, the market can be slow to correct mispricing. And that creates a window of opportunity for prudent investors to start snapping up bargains. Today, even with inflation coming down, there are plenty of industries out of favour. One obvious example is electronics.

Supply chain disruptions following the pandemic led to a lot of manufacturing businesses to load up on inventory for electronic components. However, with demand for consumer electronics low due to to economic conditions, most of these companies have been burning through their existing stock rather than placing new orders.

That’s a headwind RS Group‘s (LSE:RS1) having to tackle first-hand. And since peaking in late 2021, the stock’s almost halved. But could a rebound be just around the corner?

Delivering long term

We’ve already seen the explosive potential recoveries can deliver to investors’ portfolios. The FTSE 250‘s already up over 25% since October 2023, including dividends. And even among FTSE 100 stocks, there have been some terrific comeback stories of late.

That’s the power of snapping up bargains in the stock market. And it’s possible that RS Group may be able to deliver triple-digit returns as demand returns – something that may already have been happening.

The Purchasing Managers Index (PMI) serves as a handy proxy for determining whether manufacturing in certain regions is expanding or contracting. And since the start of 2024, levels have been on the rise worldwide, with the US in particular already returning to growth.

Providing these trends continue, we could be at or near the bottom of the multi-year cycle within the electronics space. And as demand starts to ramp back up, RS Group’s share price could swiftly follow, rewarding shareholders for buying at the bottom.

Of course, indexes like the PMI are far from perfect. And as a lagging indicator it has its limitations when it comes to making predictions. In other words, the recovery of the electronics sector may be slower than expected, demanding considerably more patience from investors.

Yet, even with that risk in mind, RS Group seems to have ample financial flexibility to weather the storm and deliver in the long run, in my opinion. That’s why if I had £1,000 to invest today, RS Group would be near the top of my list of potentially lucrative investment opportunities for the long run.

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.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Rs 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

2 of the best US growth and dividend stocks to consider!

These heavyweight US stocks have been delivering tasty investor returns for decades. Here's why they could remain great picks for…

Read more »

Investing Articles

I reckon these 2 penny shares are hidden gems worth a closer look!

Some penny shares are well-known, whereas many others go under the radar, but that doesn’t necessarily mean they aren’t potentially…

Read more »

Investing Articles

Just released: our 3 best dividend-focused stocks to buy before August [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

2 FTSE 100 shares with blockbuster yields investors should consider buying

Our writer has noticed that these FTSE 100 shares offer mammoth dividend yields, and reckons investors should take a closer…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Down 36% and yielding 7.8%, is this FTSE 250 share a bargain?

Christopher Ruane looks at a FTSE 250 share with a sizeable dividend yield and a recent record of dividend growth.…

Read more »

Investing Articles

Is Barclays one of the FTSE 100’s best bargain stocks?

Right now, Barclays' shares are cheaper than those of FTSE 100 rival stocks Lloyds and NatWest. So should I buy…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Is a takeover offer about to boost the Rentokil stock price, and should I buy?

The Rentokil share price is up 10% on takeover rumours. Is it a stock to buy or one to be…

Read more »

Investing Articles

Here’s my Rolls-Royce dividend forecast for 2024-27!

Our writer considers whether the Rolls-Royce dividend might be reinstated in coming years, based on financial performance and stated payout…

Read more »