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3 shares to invest in with £3,000

Image: Lloyds

With a few thousand pounds to put into the UK stock market right now, I see plenty of options. Here are three shares to invest in for my portfolio with £3,000.

To reduce my risk through diversification, I’d put £1,000 into each of them.

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Banking giant

I think Lloyds (LSE: LLOY) remains an attractive home for £1,000 even after the share price has risen 49% in the past year.

A FTSE 100 stock selling at penny share prices is a rare thing. But despite its price tag, this isn’t some minnow. Lloyds has a market capitalisation of £33bn. It is one of the biggest banks in the UK, and the leader in the mortgage sector.

I also think the bank is in rude health. Even during the pandemic last year, it managed to turn a post-tax profit of £1.4bn. It has restarted dividends and plans to increase them in future. I think the dividend outlook, profitable business, and strong market position are all plus points for the Lloyds investment case. I see Lloyds as shares to invest in for my portfolio.

One risk, however, is its heavy concentration in a single market. If the UK economy struggles, that will likely hit Lloyds’ revenue and profits.

Growth shares to invest in

Banking is a mature market, so, as well as Lloyds, I’d look for a growth name in which to invest £1,000.

One growth name I would consider is Renalytix (LSE: RENX). Shares in this developer of AI-enhanced kidney diagnostic tools have more than doubled over the past year. But I think there could be further growth ahead.

The company has recruited a new team of experienced executives to help ramp up its sales operations. It has secured agreement to offer its services to large parts of the US government. The company’s diagnostic platform could enable medical professionals to provide a vital service to patients effectively. A clinical study this year confirmed its efficacy.

As a growth stock, though, there are clear risks here. The company has no revenue to speak of so far, so there is a risk that commercialisation could turn out to be slower and less successful than the company hopes.

Tasty opportunity

I think now is a good time to look again at Domino’s Pizza (LSE: DOM). I would consider these as shares to invest in with £1,000 of the £3,000.

The well-known chain of pizza shops has focussed once again on the British Isles after years of trying to crack the European market. Last month it finalised the sale of its Icelandic business. I think that is positive, as it has economies of scale in the UK it lacked elsewhere. Even after lockdown, demand for takeout sales looks set to remain strong. In its first quarter, system sales in the UK and Republic of Ireland grew 18.7%.

The company formula is simple and proven. I think Domino’s could continue to perform well in coming years. But I do think its menu could be a risk, as consumers shift towards a healthier diet and advertising restrictions grow on food stigmatised as unhealthy. That could hurt sales down the line.

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Christopher Ruane owns shares in Lloyds Banking Group and Renalytix AI plc. The Motley Fool UK owns shares of and has recommended Renalytix AI plc. The Motley Fool UK has recommended Dominos Pizza and Lloyds Banking Group. 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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