As we head into the second half of 2023, the UK stock market is still growing strong, offering a wide range of investment opportunities for savvy investors.
Millions of investors ended the year 2022 on a bearish note. 2023 is here now, and market analysts have conducted in-depth research to handpick the best UK stocks in 2023 with the highest potential for long-term growth, so we do not end this year on the same note as last year.
We know that there are different types of investors with different risk tolerances and investment goals. That’s why we’ve put together this guide to recommend the best UK stocks in 2023 for all types of investors.
In this guide, we will give you a rundown of stocks that all financial experts are excited about. All of the stocks listed here are currently doing well, and are expected to remain successful in the coming months (and longer).
What Are the Best UK Stocks?
Every investor falls into one of the categories we have outlined in this article. Regardless of which category you fall into, you’ll surely find the best options for you.
Pro tip: Before you invest money into any of the following recommendations, be sure to do your research, understand the returns, and also confirm whether or not your selected option can give you the returns you desire.
If you’re new to the world of investing and with little or no experience, here are some of the best options for you to consider:
|COMPANY NAME||INDUSTRY||PRICE (£)||DIVIDEND YIELD (%)||RISK RATING|
|Standard Life Aberdeen (SLAB)||Finance||296.60||2.20||Medium|
|L & G||Legal and General||24.84||4.65||Low|
|British American Tobacco||Consumer Staples||3,553.00||4.50||Low|
|Johnson and Johnson||Healthcare||178.65||2.57||Low|
For Long-term Investors
When we talk about long-term investors, we refer to stockholders that are willing to hold their investments for an extended period, even through short-term market volatility.
If you belong to this group, here is a table of stocks that are perfect for long-term investors in the UK, according to Forbes.
|S/N||STOCK||SHARE PRICE (£)||MARKET CAP (£)||5-YEAR RETURN(%)|
|2||INTUIT INC. (INTU)||396.96||112 billion||201|
|5||KB Financial Group (105560: Korea SE)||37.55||14.4 billion||0.75|
|6||Intertek Group (ITRK)||43||7 billion||-4.7|
|7||MARKEL (MKL)||1090||18.9 billion||41.8|
|9||LVMH Moët Hennessy Louis Vuitton (LVMH)||693.17||345 billion||244|
For Active Investors
Active investors who are constantly monitoring their investments and making trades will benefit from investing in stocks that are volatile and have the potential for significant growth.
The FTSE has some of the most volatile stocks that are suitable for active investors. Here are the top choices:
|Company||Symbol||1-year volatility (%)|
For Passive investors
Some investors are more hands-off with their investments and typically invest in index funds or other low-maintenance products- Here are the most suitable options for investors in this category:
|NAME||PRICE(£)||YIELD (%)||BETA (VOLATILITY)||RISK RATING|
|Standard Life UK Top 50 Index Trust||122.20||1.80||8.70||Low|
|Vanguard Global Bond Index Fund||101.57||2.30||4.50||Low|
|HSBC UK Dividend Index Fund||106.50||2.20||8.40||Low|
|iShares Core MSCI UK UCITS ETF||116.89||2.10||8.80||Low|
|Vanguard FTSE 100 ETF||130.92||2.20||8.70||Low|
|Vanguard FTSE 250 ETF||98.47||2.00||9.30||Low|
|Fidelity Index UK Gilts||113.02||2.40||4.20||Low|
For Value Investors
The Stocks listed here are ideal for those looking for undervalued securities:
|Company Name||Price (£)||Book Value(£)||Price-to-Book Ratio:||Dividend Yield (%)||Return on Equity (%)|
For Growth investors
These are the best UK stocks that are most suitable for those who are looking for companies that are growing rapidly:
|Company Name||Price (£)||Market Cap||5-Year Revenue Growth (%)||5-Year EPS Growth (%)||PEG Ratio|
|The Hut Group||3.10||6.70||50.00||25.00||1.24|
|Domino’s Pizza Group||349.00||5.40||15.00||8.00||1.87|
|Just Eat Takeaway.com||52.60||8.13||17.00||4.00||1.31|
For Income Investors
The stocks in this section are tailored for investors looking for investments that generate regular income:
|Company||Price(£)||Dividend Yield (%)||Payout Ratio(%)||Dividend Growth Rate (%)||Volatility (Beta)|
How to buy stocks in the UK
Compared to other parts of the world, stock buying in the UK is quite easy, and straightforward. The research part is the most tasking part of the process, once that is out of the way, the rest of the steps will be a breeze.
If you’re a beginner, you would be especially interested in our technical analysis guide for beginners to help you with stock analysis.
Factors to consider
Here are some of the factors both beginner and experienced traders must consider before settling on the most suitable stock options to put their money on:
- Your expected return
Your expected return refers to the possible gains or losses you’ll accrue at the end of your investment period.
When you factor out the expected return, you will be able to determine if all the hassles associated with your chosen stock are worth it in the long run.
Most people use an investment return calculator to compute this figure. However, you could use this manual formula to arrive at the result:
Expected return = (Return A x probability A) + (Return B x probability B)
- Risk-return analysis
In simple terms, the risk-return of an investment compares the ratio of risks involved, to the potential returns. The higher the risk, the higher the potential return (and loss).
Diversifying your portfolio is one of the surest ways to reduce investment risks. It’s not a safe option to put all your eggs in one basket. One single misstep can trump all your money and overturn your efforts.
Your safest bet would be to spread your money across different assets. Shares, being the most profitable investment, could carry a larger percentage while you share the rest of the funds over bonds, real estate, or other commodities that tickle your fancy.
Capital budgeting keeps you safe and accountable to yourself. Accountability and measurability are important metrics in capital budgeting, especially when investing in UK stocks.
There are several money management strategies that can help you create a safety net to keep yourself safe from bankruptcy.
Researching the stocks
You don’t have to be a financial guru to research a stock. All you have to do is follow the right procedures to gather and analyse the right data that’ll help you decipher whether your chosen stock is worth your money.
- Learn about the company’s financials
Warren Buffet told us never to invest in a company we do not understand. As a stock owner, you are a part of the company, so it only makes sense for you to familiarise yourself with the nature and dynamics of every sector in the business.
The financial sector is the most important of them. Make it a priority to thoroughly scrutinize the balance sheet, income statement, and cash flow statement. Also, When considering the best stocks in the UK, a thorough analysis of stock valuation becomes essential, allowing investors to assess the intrinsic worth of these companies and make informed decisions.
- Review their SEC filings
The SEC filings contain important information about the company’s operations and financial performance. One section of the SEC has the primary obligation of protecting investors. Furthermore, the SEC filings of a company help investors.
- Analyse their competitors
Compare the performance of your chosen company to that of its peers. The comparison metrics should be financial performance, market share, and growth prospects.
You do not want to put your money on stocks that are at the bottom of the barrel. This comparison can lead you to discover better stock investment options.
- Talk to your financial analyst
Discuss all your options and considerations with your equity analysts. Equity analysts are the financial gurus that can help you identify potential goldmines. They can also give you firsthand information on the financial ratios that most investors are likely to ignore during stock trading.
They perform independent research on stocks for a living. They are the right guys to go to for stock investment advice.
Buying the stocks
Now, the part we’ve been waiting for all along. As we mentioned earlier, Buying stocks in the UK is easy, hassle-free, and straightforward. Here are the steps to follow to become part of the UK stock market:
- First, you need to create a brokerage account. The creation and funding of this account should take you about 10-15 minutes.
- Research the stocks you’re interested in. The tips listed earlier should give you a good headstart.
- Next, your budgeting comes into play. Decide what percentage of your earnings you’d like to use to purchase the stocks.
- Place an order for the stocks in your brokerage account.
- Repeat the process until your portfolio is well diversified.
What Are the Best UK Brokers to invest with?
With a ton of brokers in the UK, it can be overwhelming as a newbie trying to decide on the most suitable option broker for beginners.
Here is the list of the most trusted UK brokers that can help you make the safest investment:
- Interactive Brokers
- Fineco Bank
- Saxo Bank
- CMC Markets
As the UK continues to recover from the pandemic, these top-performing stocks are showing their resilience, growth potential, and innovation. Investors who are looking to capitalise on this market momentum should take a peek at the promising stocks listed in this article.
This year has seen some amazing stocks emerge, all with impressive growth potential and solid performance.
However, aside from stocks, there are several other options that you can invest in to secure your financial future. If you’re interested in ETFs, check out this article on the best ETFs of 2023.
What is the largest stock in the UK market?
The LSE (London Stock Exchange) is the UK’s largest stock market. It’s also the world’s sixth-largest stock market. The only other market that ties with the LSE in terms of market capitalization, trade volume, and trade liquidity is the New York Stock Exchange.
Why should I invest in UK stocks?
Along with the affordable rates of stocks, you are guaranteed high yields in the long run. There are millions of opportunities in the UK stock market for all types of investors.
Are there tax implications for investing in UK stocks?
There are. If you’re buying stocks worth more than £1,000, you’ll be charged 0.5% of your investment. When the profits roll in eventually, instead of CGT, you’ll have to pay income tax.
How can I research a stock before buying it?
Before you buy a stock, check out the company’s financials, SEC filings, and news. There’s no surefire guarantee that any stock you invest in will go up in value. But if you do your research and invest in a company that you believe in, you’ll be more likely to make a profit.