I’ve been looking for investment opportunities among UK shares for my ISA this year. And here are three I’d add more of to my portfolio right now if I had the cash.
#1 Fintech’s on the march!
I first invested in Alpha Group International (LSE:ALPH) in 2020. What started out as an affordable currency-risk management service for small- and medium-sized businesses has evolved into a full-on alternative banking platform.
The group now supports a vast array of services, from international payments to alternative investment management. And this business success has also translated into jaw-dropping share price returns, making it one of my largest portfolio positions today.
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Recent macroeconomic headwinds have proven challenging as they’ve wreaked havoc on Alpha’s customers. The business has managed to maintain double-digit growth in spite of these headwinds. But it’s been considerably slower than its usual rate of expansion. And continued uncertainty within the financial markets could handicap growth and boost competitors.
Fortunately, the latest results revealed encouraging trends, with July and August showing signs of improvement. And with the shares taking a recent tumble, I may think about buying more.
#2 An ad surge is coming
Following the boom of e-commerce activity after Covid-19, digital advertisers have been stuck in a long winter of customer budget cuts. With high inflation sending discretionary spending into the gutter, firms like dotDigital (LSE:DOTD) haven’t had a fun time of late.
The company runs a digital advertising automation platform where businesses can manage existing and convert potential customers. The client base is largely made up of online retailers, which makes dotDigital highly susceptible to the e-commerce cycle. Growth evaporated once the axe came for marketing budgets.
However, economic conditions have improved this year. And companies have slowly started resuming marketing campaigns, thawing the advertising winter. This is evident when looking at dotDigital’s financials, with double-digit growth already making a comeback.
Yet the share price is basically flat over the last 12 months. Looking at other marketing-based enterprises, it seems to be a recurring story suggesting that investors are still out of love with the sector. But in my experience, investing in unpopular high-quality stocks can be quite lucrative in the long run, even with the added risks of cyclicality.
#3 Infrastructure projects set to explode in 2025
Somero Enterprises (LSE:SOM) has some incredibly lumpy earnings. Unlike most businesses that tend to achieve relatively smooth results, a quick glance at Somero shows revenue, profits, and cash flows have been all over the place.
But such is the nature of operating within the construction industry. As a manufacturer of laser-guided concrete screed machines, management’s a long history of successfully navigating market downturns. And the effects of prudent capital allocation are clear when looking at the last 15 years, with shares climbing more than 1,350%.
With the bulk of its business dependent on construction, project delays due to higher interest rates have been quite a headache for shareholders. And it’s why the shares have tumbled 50% since the start of 2022.
But now rates are starting to fall, the backlog of construction projects is expected to start clearing next year. So a surge in demand could be on the horizon. Obviously, there are no guarantees. But at a price-to-earnings ratio of 8.6, it’s a risk I’d be comfortable taking.
