TOP UK STOCKS AND SHARES

BHP Group PLC (BLT)

BHP is the largest mining company in the world, with a market value as of October 2019 of $118 billion. While the primary listing is in London, the company is actually headquartered in Melbourne, Australia.

BHP is a continually evolving company and its product mix changes as it buys and sells assets. Currently, most of its revenue comes from iron ore, copper and coal, as well as petroleum. It’s safe to say that the world will never stop consuming iron ore or copper and BHP is the world’s largest producer of both.

BHP gives you exposure to economic growth and several commodities with one share. BHP has a return of equity of 15% and a dividend yield of 5%. The stock trades on a PE of 15, though commodity stocks have more to do with commodity prices than valuations.

GlaxoSmithKline PLC (GSK)

GlaxoSmithKline is the world’s sixth-largest pharmaceutical company when ranked by revenue. When ranked by market value, it comes in at number nine which already suggests a potential opportunity. Glaxo manufactures and distributes many well-known pharma brands including Sensodyne, Voltaren, Panadol, and Theraflu.

The company is valued at $110 billion and has annual sales of $40 billion. Glaxo is a very profitable company with a gross margin of 68% and an operating margin of 20%.  It also has a generous dividend yield of 4%. The current price multiple of 19 is a little high, but market volatility may create a better opportunity at some point.

London Stock Exchange Group PLC (LSE)

The LSE Group owns and operates the London Stock Exchange. The stock is not cheap and has already returned 66% for the year. However, there is a reason to consider the share for 2020. When Brexit is finally resolved, there will be more certainty about the UK economy’s future. This is likely to result in investment portfolios being repositioned, and increased trading volumes for the LSE.

LSE Group is valued at $31 billion with annual revenue of $2.7 billion – and growing rapidly. Earnings have grown at 22% for the last three years, hence the price multiple of 51. The gross margin of 89% and the operating margin of 35% have also driven the share price.

Next PLC (NXT)

Next PLC is a retailer based in the UK with 500 stores. The company sells clothing, footwear and home products. Retailers have had a tough time lately and Next’s growth has been flat for the last 5 years. This is a share to consider if economic growth begins to improve after the UK leaves Europe.

The company has a market cap of $11 billion and revenue of around $5 billion. Although growth is slow, the company is very profitable with an ROE of 16% and an operating margin of 19%. It trades on a PE of 14 and pays a dividend of 3.4%.

Unilever PLC (ULV)

Unilever is an FMCG company producing personal care products, foods, home care products, and refreshments. Well known brands include Axe, Dove, Knorr, Lipton, and Hellmann’s. Unilever operates around the world and is well diversified by region and product category. Unilever is one of the most defensive companies in the UK with sales that are less sensitive to economic cycles.  

Unilever has a market capitalization of $159 billion and annual sales $64 billion. The ROE is 15% and the operating margin is 25%. It trades on a PE of 24, which is about fair considering the growth and the margins. The dividend yield of 3% is generous considering the relatively low volatility.

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