I think there are currently plenty of options on the market for investors who follow a UK stock investing strategy.
In particular, I believe growth companies look incredibly attractive right now.
UK stock investing: growth options
In my opinion, one of the most attractive looking growth stocks on the market at the moment is information and analytics business Relx (LSE: REL).
Demand for this company’s services has boomed over the past 12 months. As such, analysts forecast a near 36% increase in earnings for the organisation this year. Of course, these projections can change based on future developments, and there’s no guarantee they will turn out to be correct.
Relx also offers a dividend yield of 2.6% at present. Once again, this distribution is by no means guaranteed. If the company’s earnings fall substantially, management may have to reduce the distribution to preserve cash. For the time being, I think it looks attractive considering the organisation’s growth outlook. That’s why I would buy the stock for my portfolio today.
UK stock investing can be challenging. Even the professionals struggle to pick the right investments. That’s why I like to stick with companies I know well, such as IG (LSE: IGG).
This financial services group offers products such as share dealing and spread betting in the UK. But there is far more to this business than its UK operations.
The group recently acquired a US peer to boost its operations across the pond. It also has a strong presence in Europe and Asia. With a market capitalisation of just under £3bn, IG is still relatively small compared to many of its financial sector peers. As such, I think the company has a long runway for growth ahead of it.
That’s why I would buy the stock today, although this UK stock investing business isn’t without its risks. The company has come under fire from regulators in the past. Regulations introduced to protect non-professional investors have hurt its bottom line, and regulatory costs have weighed on profit margins. Another regulatory clampdown could have a significant detrimental impact on IG, so that’s something I’ll be keeping an eye out for going forward.
Dunelm (LSE: DNLM) is, in my opinion, one of the most successful UK retailers of the past decade. As its competitors have struggled, Dunelm has pushed them aside, enticing customers with its broad offering and low costs.
The company is set to benefit from the housing market boom that has taken place over the past year. Analysts have pencilled in earnings growth of 13% for the group this year, followed by growth of 23% in 2022. I think those projections are incredibly impressive, considering the state of the UK retail sector in general. That’s why I would buy the stock for my portfolio.
These are only projections at present. They do not guarantee earnings growth. Indeed, we are only two months into 2021, and there’s still a lot that could go wrong for Dunelm. So, these numbers should be taken with a large pinch of salt.
What’s more, as is the case with all stock investing, past performance should never be used as a guide to future potential. Just because Dunelm has outperformed in the past, does not mean that it will continue to do so in the future.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended RELX. 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.