Despite everything that’s going on in the world, it’s still possible to find great companies to invest in, and at attractive prices too. In fact, I think I’ve found two of the very best UK shares to buy today.
Draper Esprit (LSE: GROW) is a UK-based venture capital investment company that invests exclusively in European technology companies. The group invests in companies that show high growth potential across four key sectors – consumer tech, enterprise tech, digital health, and deep tech. Draper’s shares are one of the few genuine ways that UK retail investors can gain exposure to the often lucrative world of pre-IPO technology companies.
A potential goldmine
70% of Draper’s core portfolio value comes from just 16 key holdings. Some of these are well-known household names, such as Trustpilot, Revolut, and SportPursuit. The group seems to have an uncanny ability to unearth and invest in companies with huge potential. Since listing, the group has averaged a near three times return on its investments.
Among its other investments is a robotic software provider, a satellite imagery provider, and a menstrual cycle tracker app. Without exception, its investments are geared around the digital world. They tie in with trends that have only been accelerated by Covid-19 and the subsequent lockdown. One of its most interesting investments – in the current climate – is in Push Doctor, an online medical consultation company.
Through its investments in these next-generation technology companies, Draper could be sitting on a goldmine. Its current net asset value of £660m is only marginally below its market capitalisation of £680m. The share price assumes almost no future uplift in the value of its holdings. Judging by its performance to date and the quality of its holdings, I think the stock market has got this one badly wrong.
In my opinion, there could be hundreds of millions of pounds of upside to its net asset value. As long as the underlying companies continue to grow, I think these shares are only going up. Which is why I plan to keep on topping up my own holdings in Draper, in my opinion one of the best UK shares to buy today.
A UK share I’d buy today
Another company that smacks me as being good value is M&G (LSE: MNG). M&G was recently spun out of Prudential, and provides retail and institutional clients with savings and investment services. It’s a real UK heavyweight, with over £330bn in assets under management and serving more than 5m retail customers. If you’ve got a pension, chances are that it’s invested in an M&G fund.
The company is currently completing the acquisition of a UK-based wealth management company, which should provide growth for the next few years. But what really makes these shares attractive is the valuation. M&G currently has a market capitalisation of around £4.6bn. This gives the shares a P/E (price-to-earnings) multiple of just four, using last year’s earnings.
In a resilient first half of the year, M&G reported net profits of £826m and underlying operating profit of £309m. Whichever figure you want to use, these shares look cheap. That’s especially so when you add in the near 7% dividend, and consider the extenuating circumstances. There is also scope for profits to increase further, with management targeting annual cost savings of £145m by 2022.
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Thomas owns shares in Draper Esprit. The Motley Fool UK has recommended Prudential. 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.