The Motley Fool

Stocks to buy: here’s where I’d invest £3k

Image source: Getty Images

If I had to pick a basket of stocks to buy with £3,000, I’d look to invest across different sectors and industries. I’d also focus on companies that may profit from the UK economic recovery over the next few years.

And there are a couple of sectors I’d focus on in particular. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Stocks to buy

The first is the construction sector. There are a couple of individual businesses in this industry I think are prime candidates for inclusion in a £3,000 portfolio right now.

At the top of the list is Morgan Sindall, which provides construction and maintenance services for other businesses, councils and the government across the country.

According to its latest trading update, the company is on track to deliver a full-year performance “significantly ahead” of previous expectations. This reflects the rapidly improving outlook for the UK construction sector. 

Other companies in the sector I’d buy include Marshalls and Kingfisher, which owns B&Q. Marshalls sells paving and landscaping products. As the construction industry is a fairly low-margin, high-risk industry, I’d split my investment between Morgan, Kingfisher and Marshalls.

The latter two businesses sell mainly to the consumer market, which has been more resilient over the past 12 months. Still, the construction industry is highly cyclical. This means it might not be suitable for all investors as profits and sales could slump in another downturn.

Hospitality growth

As well as the construction sector, I think some of the best stocks to buy now are located in the hospitality sector.

However, like construction, this industry might not be suitable for all investors. The crisis has had a severe impact on the hospitality sector, and many companies have had to take on enormous amounts of debt to stay afloat. This could hold back their recovery and even jeopardise their survival. 

I’d spread my investment of £3,000 across a selection of different hospitality businesses to try and reduce overall risk. The companies I’d buy for my portfolio are JD Wetherspoon, Fulham Shore and Marstons

I think the first two have unique competitive advantages that should help them thrive. Wetherspoons is well known for its cheap, no-frills offering. Meanwhile, Fulham Shore owns the Franco Manca pizza brand, which has performed relatively well throughout the crisis. It’s still been able to sell pizzas to stuck-at-home consumers. 

The one company that comes with a bit more risk is Marston’s. This corporation has a lot of debt and doesn’t seem to have a particularly unique competitive advantage. 

Still, the stock is attractive because it looks cheap. If profits return to fiscal 2019 levels, the stock is trading at a P/E ratio of around 10.

I believe this low valuation could offset some of the risk associated with the stock. This is the primary reason why it qualifies for my list of the best shares to buy. 

The high-calibre small-cap stock flying under the City’s radar

Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…

You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.

And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.

Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.

But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!

Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge!

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Marstons. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.