How I’d invest £1,500 in UK shares now

If he had £1,500 to invest in UK shares now, our writer explains how and why he would split it across these two companies.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

If I had money to put to work in the market right now, I wouldn’t be able to resist asking myself whether the timing was right. What if there’s a market crash around the corner that would lead to better bargains among UK shares?

But it’s hard — if not impossible — for a private investor like me to time the market. Instead of holding back in fear, I’d do what I always do in any market – look for good value. Here are two shares I’d consider buying today. If I had £1,500 to invest in my portfolio, I’d split it evenly between them.

UK income choice: Imperial Brands

There’s no doubt that tobacco faces risks ahead. Declining cigarette consumption in many markets threatens future revenues and profits, as do regulatory threats. That may make it seem strange that while rivals such as British American Tobacco forge ahead growing their non-combustible business, rival Imperial Brands (LSE: IMB) this year adopted a different strategy.

Imperial is also selling non-combustibles, although it has scaled back its ambitions in that area. It’s focused on trying to make the most of cigarette demand while it lasts, by improving its marketing and sales efforts in key markets. That risks being an overly short-term approach – what happens if overall cigarette volumes continue to decline? A growing share of a declining market will ultimately reach growth limits.

But against that, I think the strategy demonstrates a couple of points about Imperial’s direction of travel. First, the strategy helps buy the company time as the tobacco market evolves. As it hopefully milks its cigarette cash cow while it can, it can also use the funds to help reshape its longer-term vision. Second, it shows a mature approach to tackling the company’s challenges. Previous management raised the dividend steeply even while sales struggled. Today, Imperial looks more prudently run and is tackling the future head on. Meanwhile, it offers a 9% yield. I’d happily buy more of the shares for my portfolio today.

UK shares for growth

I’d allocate my other £750 to a growth choice. Specifically I’d plump for sports retailer JD Sports Fashion (LSE: JD) after its stunning results this week.

Over the past few years, the company has grown revenues and profits in most years – and the share price has risen to boot. The JD Sports share price is 33% higher now than it was a year ago. But I think the best may still be to come from this company.

JD Sports bounce-back

As this week’s results demonstrated, JD’s strategy of international expansion is delivering strong business momentum. The biggest first half of sales it has ever recorded was fuelled by federal stimulus in the US. That helped results across JD brands such as Shoe Palace.

But more than any one market’s contribution, what attracts me to these UK shares is how well JD has bounced back from last year’s trading challenges. Revenue of £3.9bn and pre-tax profit of £365m demonstrate the strength of the business and its continued growth. One risk is that the international expansion could dilute management focus. If that happens it could be bad for the company’s profits.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Christopher Ruane owns shares in British American Tobacco and Imperial Brands. The Motley Fool UK has recommended British American Tobacco and Imperial Brands. 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.

More on Investing Articles

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

How I’d invest my first £20k ISA to target £4,900 a year from dividend shares

Looking for dividend shares in a new Stocks and Shares ISA, and want diversification too? Here's how I'd go about…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »