I’m always on the lookout for UK shares. One I’m watching at the moment is Just Group (LSE: JUST). The FTSE 250 firm specialises in insurance for the retirement market, for both pension schemes and individuals. It takes the insurance premiums it receives and invests them in bonds and mortgage portfolios.
In 2020, new business sales rose 12% to £2.1bn. This was largely on the back of a buoyant defined-benefit market, where transaction volumes were near all-time highs. The group also reduced its exposure to the UK property market and to lifetime mortgages in particular.
Just Group hasn’t yet released profit figures for the full year. But first-half profits were £245m, up from £102m 12 months before. That’s only 19% below the £302m profit for the whole of the prior year. The current share price means the market cap of the company is less than three times last year’s profit. With this year’s earnings looking likely to exceed 2019’s, Just Group shares looks cheap to me. That’s especially the case as it’s trading at a 60%+ discount to its net asset value.
Part of the recent surge in profits comes from uplifts in its financial holdings, in response to lower interest rates. When interest rates eventually rise, some of that gain will be lost. Just Group also remains exposed to the UK property market, which could still suffer due to Covid-19 and subsequent economic hardship.
But I still think underlying earnings are strong enough to justify me buying this UK share.
Adding to my holdings of this UK share
One of my favourite shares is IG Group (LSE: IGG). The firm — which provides its customers with access to trade the financial markets — announced impressive results for the six months to the end of November. Its record performance saw revenue and after-tax profits rising 67% and 127% respectively, from a strong period the year before. The number of active clients rose 55% to 238,000.
Even before these results, I thought IG shares looked cheap. They currently trade at a P/E (price-to-earnings ratio) of around 12. But after a stellar H1 performance, they look even more attractive to me.
The unpredictable events of 2020 created a tailwind for the group, with financial market volatility attracting more customers to its platform. A return to normal levels of volatility would no doubt take some of the shine off. But I still think it remains a great UK share for me to buy.
International expansion
The group is growing globally and its international growth looks set to continue, with IG recently announcing an acquisition of US-based Tastytrade, an online brokerage and trading education platform. Tastytrade has registered impressive growth since its inception, and now boasts over 105k active clients.
The acquisition significantly expands IG’s presence in the US, the world’s largest trading market and also among the fastest growing. This acquisition provides product, geographic and regulatory diversification for IG.
There are concerns from some investors that IG has overpaid. On top of that, just as national governments have increased their regulation of the betting industry, they could also turn their attention to spread-betting products. For IG Group, this is a key risk, and it’s one that could impact profits.
