What are the best UK shares to buy in July for growth and passive income?

Stephen Wright thinks falling prices present opportunities to buy FTSE 100 shares. Three in particular stand out to him in July. 

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 For a lot of investors, a new month brings a new opportunity to buy shares. And right now there are some interesting opportunities in the stock market, especially in the UK.

Over the last month or so, a few stocks have fallen significantly. But I think this makes them very attractive both in terms of growth and for investors looking for dividend income.

Admiral

The Admiral (LSE:ADM) share price fell 4.5% in June. A price-to-earnings (P/E) ratio of 23 reflects the fact this is a quality company, but I think investors are overlooking something.

Last month, inflation reached the Bank of England’s 2% target. That looks like a good thing to me – less expensive repairs should help the company’s underwriting margins. 

The risk is that it might cause a cut in interest rates. This could reduce the returns Admiral generates by investing the premiums it collects, lowering profits in this part of the business.

On balance, though, I see the falling share price as an opportunity. The company’s real advantage is in its underwriting and I think lower inflation could enhance this strength.

B&M European Value

An 18% decline made B&M European Value (LSE:BME) the worst-performing FTSE 100 stock during June. That’s sent the P/E ratio down to around 12, which I think is a bargain.

Of course, there are risks. The main one is the company competes in an industry where switching costs are non-existent, meaning it has to compete constantly to keep prices down.

B&M has some good advantages in this area, though. It imports directly from the Far East, keeps its range of products low, and focuses on branded goods to differentiate itself. 

On top of this, it has big growth plans that should boost both earnings and dividends. I think taking advantage of a short-term weakness in the stock could be a great move.

GSK

Shares in GSK (LSE:GSK) fell around 12% in June. This was largely brought on by news that US regulators plan to restrict the use of its respiratory syncytial virus (RSV) vaccine.

This neatly illustrates one of the biggest risks with investing in this type of stock. Regulation is a key part of the pharmaceutical industry and there’s not much businesses can do about it.

GSK does some important advantages that help it in this environment, though. Its size and scale allow it to invest heavily and distribute effectively, boosting its chances of success. 

Overall, I think a dividend yield closing in 4% goes some way to offsetting the risks with the stock. That’s why I see the decline as an opportunity.

Opportunistic investing

Charlie Munger used to say investing well is about making the most of opportunities when they present themselves. I think that’s the case with Admiral, B&M, and GSK right now.

Each has had some negative news over the last month, but in each case the stock has fallen further than I believe it should have. That’s why they’re on my list of stocks to buy in July.

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.

Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended Admiral Group Plc, B&M European Value, and GSK. 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.

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