These UK Shares Are About To Update The Market. I Think They Could Make You Rich
These two top UK shares are set to update the market in January. Here’s why I’d buy them today and hold onto them for years.
Vistry Group is a white-hot — and ultra-cheap — UK stock I’d buy in the coming days. The housebuilder is due to unveil a full-year trading update on Tuesday, January 12. And I’m quite excited to see what it’ll say given its recent history of confounding expectations.
In mid November Vistry said that pre-tax profits in 2020 would be “at the top end” of an estimated £130m to £140m. A few weeks later it followed this up with news that it’ll be reinstating dividends on the back of its brilliant cash generation.
Vistry’s share price has gained around 20% in value since that first statement. The strength of the UK housing market leads me to believe that another positive update is in the offing, too. Average home prices grew at their fastest pace for six years in 2020, according to Nationwide.
Toughening economic conditions in Britain could cause house price growth to cool this year. But market conditions mean that Vistry can look forward to a very-strong 2021. Ultra-low interest rates, along with ongoing government support through Help to Buy savings accounts and equity loans, mean that homes demand should continue to comfortably outstrip supply.
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This is why City analysts reckon Vistry’s annual profits will more than double this year. It leads to the business also trading on a rock-bottom forward P/E ratio of 9 times. Meanwhile, that December decision to resurrect dividends means this UK share sports a meaty 4% dividend yield too.
I already have exposure to the housing sector after buying shares in Barratt Developments and Taylor Wimpey. I believe Vistry is another great buy for any UK stock investor.
Getting exposure to the e-commerce explosion is a brilliant investment idea right now. I recently explained why ASOS — which has fresh trading details primed for release in the coming days — is a great way to play this theme.
I reckon investing in Boohoo Group is another good idea. The internet giant is set to unpack new trading details of its own on Thursday, January 14. And if its most recent update of September is anything to go by it could be a corker. Then the UK share said that revenues had soared 45% between March and August, a result that pushed adjusted pre-tax profit 53% higher.
Sales have powered higher across all of Boohoo’s territories, and its success is down in large part to shrewd acquisitions like PrettyLittleThing and Nasty Gal in recent times. The UK share has remained busy on the M&A trail in recent months, too, and it has plenty of balance sheet strength to keep the run going too. It had net cash of around £345m on its books as of August.
Boohoo’s shares don’t come cheap. Right now the business trades on a forward P/E ratio of 45 times. This is a fair reflection of the retailer’s super-bright earnings outlook in my book, though. Indeed, City analysts reckon the UK share will follow a 38% rise in annual earnings this fiscal year (to February 2021) with a 28% increase next year.
Royston Wild owns shares in Barratt Developments and Taylor Wimpey.