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£1k to invest? 2 UK shares I’d buy in an ISA today

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If you have a lump sum of £1,000, or any other amount to invest, I think it could be sensible to buy UK shares in an ISA. With that in mind, here are two companies I’ve got my eye on today. 

UK shares to buy

Hikma Pharmaceuticals (LSE: HIK) has been one of the best-performing stocks on the London market this year. Investor sentiment towards the pharmaceutical group has improved because it supplies several of the drugs required to treat coronavirus

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Thanks for the growing demand for these drugs, City analysts are expecting the company to report earnings per share for the year of $1.70. That’s up from $1.50 at the beginning of the year. 

There are other reasons why I think Hikma could be one of the best UK shares to buy today. The demand for healthcare around the world is only growing, and the company is one of the largest producers of low-cost generic treatments.

For emerging and developing economies, these low-cost products are vital. As such, Hikma has a very defensive nature and is likely to continue to produce steady returns for investors for many decades to come. 

Over the past five-years, Hikma’s bottom line has doubled, thanks to the growing demand for pharmaceutical products around the world. The company’s own research and development efforts have helped improve growth. With profits surging, Hikma has become a dividend champion. Its payout has grown at a compound annual rate of 17% since 2014. Today, the stock supports a dividend yield of 1.5%.

In my opinion, this income potential, as well as the company’s long-term growth outlook, is highly exciting. These qualities are relatively unique among UK shares. 

Rentokil Initial

Pest control business Rentokil Initial (LSE: RTO) has achieved a similar rate of growth to Hikma over the past five years. The company’s long-term outlook is also extremely attractive.

The company is potentially one of the best-known pest control businesses in the UK. Demand for its services is only growing. Scientists believe climate change is contributing to rising pest levels. That’s terrible news for the planet, but potentially good news for pest control businesses.

On top of this organic growth, Rentokil has a strong track record of buying up smaller competitors and integrating them into the wider business. As the company grows, it looks as if this trend will continue. The pest control market is large but highly fragmented. Rentokil is one of the few businesses that has the size and skill to acquire smaller competitors

As such, I think it may be worth acquiring the stock as part of an ISA portfolio of UK shares. The company has significant growth potential in the years ahead, which could lead to large total returns for investors. Even if the stock does look expensive at current levels, I think it’s a price worth paying to buy this UK growth champion.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Hikma Pharmaceuticals. 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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