UK investors have a variety of shares to choose from on the FTSE 100. Growth shares promise high returns, dividend shares pay regular income and value shares appreciate over time. And don’t forget defensive shares, providing a buffer when the economy goes loopy!
By constructing a well-balanced portfolio of different shares, investors can reduce risk and aim for stable growth over time.
I’m always on the lookout for new and promising shares to spice up my portfolio. So here are three I plan to buy in October.
Should you invest £1,000 in HSBC right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if HSBC made the list?
Growth
I considered buying JD Sports Fashion (LSE: JD.) shares earlier this year but decided against it. Soon after, the company issued a profit warning and the price spiralled! The warning was due to significantly lower spending in 2023 due to inflation.
Sports and fashion are both areas consumers tend to reduce spending on when money’s tight. Things are improving now but another upset could hurt the company’s profits again.
So with the price up by 50% since February, is now the time to buy? Goldman Sachs thinks so — the broker put in a Buy rating on the stock last month.
Its metrics look good too. The price-to-earnings (P/E) ratio’s 15.4 and the price-to-sales (P/S) ratio is 0.8. It’s also trading at 32% below fair value, based on future cash flow estimates.
That all suggests strong growth potential, in my opinion.
Dividends
Rio Tinto‘s (LSE: RIO) a UK-based mining conglomerate with operations in Africa and Australia. It’s a 151-year-old company with an £80bn market-cap, so it’s fairly well-established. That makes it a more reliable choice for long-term dividends.
At 6.8%, it has the ninth highest yield on the FTSE 100. Dividends have increased at an average rate of 14.62% a year for the past 15 years.
But while the dividends look good, price growth could be at risk. With 60% of the company’s revenue coming from China, the stifled Asian economy there could hurt its profits. This has been noted by analysts, who forecast earnings per share (EPS) to decline at a rate of 0.8% a year.
If that gets worse it could threaten future dividends but, for now, it looks like a great earner to me.
Defensive
AstraZeneca‘s (LSE: AZN) the largest company on the Footsie with a market-cap of £185bn. The pharma giant has a very stable price with minimal volatility during economic crises. It also has comparatively slow growth, increasing at an annualised rate of 5% a year since 2014. Those are both common attributes of a defensive share.
Patent expiry’s a common risk with pharmaceutical companies and can lead to revenue loss. AstraZeneca has poured money into R&D to mitigate this risk but it’s ever-present.
In July, it posted moderate Q2 results with a 13% increase in revenue and 6% earnings growth. Earnings-per-share (EPS) came in slightly below analyst expectations and profit margins fell by 1%. But as a defensive share, I don’t expect spectacular growth from AstraZeneca — only that its stable price allows me calm and restful sleep patterns.
