Like many investors, I have a watch list of shares I’d like to buy but haven’t (yet). Today I want to look at three of these UK shares that I’d like to buy now.
A UK industrial heavyweight
IMI (LSE: IMI) may not be a company you’re familiar with. This £3bn FTSE 250 engineering firm specialises in “products that control the precise movement of fluids” and has clients in most major industrial sectors.
Trading has been good this year, with weakness in sectors such as oil and gas being offset by gains from the group’s medical division, whose products include ventilators. I’d guess this will be a one-off boost, but even so, I’m pleased to see that profits are expected to rise slightly this year and be stable in 2021.
I don’t know what the future holds for the world economy. But IMI has a track record of double-digit profit margins and strong cash generation. With the stock trading on 15 times earnings and offering a forecast dividend yield of 2.1%, I would feel confident buying this UK share today.
An overlooked FTSE 100 star?
FTSE 100 firm DCC (LSE: DCC) is an Irish energy group. It owns a range of businesses, including LPG and heating oil suppliers and fuel stations in a number of countries. DCC also has businesses distributing technology and healthcare products to trade customers.
DCC looks well run to me, with stable profit margins and comfortable levels of debt. One attraction for me is the dividend, which has doubled since 2013. Although the current dividend yield is only 2.7%, I’m happy to accept a lower upfront yield when buying shares with a strong track record of income growth.
The shares currently trade on about 16 times forecast earnings. I think this could be a useful addition to my portfolio. I’d be happy to buy the stock today.
A UK share I’d buy for income
My final pick is Telecom Plus (LSE: TEP). This is a utility share with a much stronger record of growth than most its rivals. The reason for this is that the group is a reseller that bulk-buys gas, electric, mobile, and broadband then resells these services through its Utility Warehouse business.
Telecom Plus is still chaired by Charles Wigoder, who joined the company in 1998 and has built it into a £1.1bn FTSE 250 business. Mr Wigoder owns about 12% of the group’s shares. This suggests to me that his interests should be well-aligned with those of shareholders.
I like to see owner-management at companies, because in my experience it often results in reliable long-term returns. That’s the case here, in my view. The Telecom Plus share price has risen by 270% over the last 10 years. The dividend has doubled since 2012.
Last week’s half-year results showed profits up slightly, despite the disruption caused by the spring lockdown. CEO Andrew Lindsay expects the number of customers and services sold to increase modestly over the full year.
This UK share is up by more than 50% from the lows seen during the March stock market crash. Despite this, Telecom Plus still looks reasonably valued to me, with a forecast dividend yield of 3.9%. Given the group’s track record of growth, I’d be happy to buy the shares at this level.
Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended IMI. 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.