£4,000 would be a handy sum to invest in my portfolio right now. It’s enough that I could reduce my risk by diversifying across companies. Putting £1,000 in each of four companies would give me diversification. Here are four names on my list of UK shares to buy now that I would consider purchasing with £4,000.
Industrial moat
Victrex (LSE: VCT) manufactures polymers, which have a wide range of industrial uses.
Some of Victrex’s polymer technology is proprietary. The importance of their applications in industries such as aerospace and automotive means that customers are willing to pay for high-quality products. That helps to protect the company from lower cost competition.
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After a challenging 2020, last month’s interim results were mixed. Sales volume rose 5% versus the prior year period, but revenue slipped slightly. Reported pre-tax profit fell 7%. So, why do I see these as UK shares to buy now?
The company restored its dividend and reported a strong pipeline of “mega programmes”, which could boost sales. With its specialist focus, Victrex has the sort of competitive moat investor Warren Buffett reckons can help generate profits for decades.
But with a new plant due to open in China next year, the company’s risk profile has changed. Any teething problems at the factory as it starts operations could bring additional costs, reducing profits.
B&M
The discount retail chain B&M saw sales surge during the pandemic. Revenues last year rose 26%. Pre-tax profits rose 109%. Those strong figures might not be repeated in future. But I continue to see B&M as a UK stock to buy now for my portfolio.
B&M’s retail formula attracts customers with branded products at competitive prices. By rotating stock regularly, it motivates customers to come back frequently. As the profits surge last year proved, management runs a tight ship. It knows how to make lots of money piling things high and selling them cheap.
I think the company’s growth could continue for some years. But one risk is what the company describes as “highly competitive retail markets” both in the UK and France, where it also operates. That could squeeze profit margins.
UK shares to buy now: Galliford Try
The construction group Galliford Try is a smaller version of its former self. It now has a sharper focus on public construction projects. Its disciplined approach to bidding for work will hopefully support attractive profit margins in future.
Galliford Try also has the appeal of being cash rich. Its half-year results in March revealed a net cash position of £211m. That is higher than today’s market cap of £153m.
Risks include any shifts in public spending priorities away from infrastructure projects, which could reduce work available to Galliford Try.
Johnnie Walker owner
My final £1,000 would go into drinks maker Diageo.
I see these as UK shares to buy now because Diageo’s range of premium brands, including Johnnie Walker and Smirnoff, gives it pricing power. That could help keep profits buoyant. I’m also a fan of the company’s record of raising dividends each year across more than three decades.
But dividends are never guaranteed. As its acquisition of non-alcoholic drinks brand Seedlip suggests, Diageo risks falling profits due to the rising popularity of non-alcoholic beverages.
