UK shares are a great place for investors to put their money. The stock market has been through a lot in recent times. But with that, I think plenty of shares are undervalued.
If I had a spare £500 today, here’s what I’d do with it.
Burberry
When thinking of UK shares, it doesn’t get much more British than the luxury goods brand Burberry (LSE: BRBY). It’s been a rough 12 months for the stock, falling 27.7% during this time. In the last month alone it’s taken a 12.2% hit. However, I think now could be a smart time to swoop in and buy.
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What I most like about the business is its brand recognition. It’s an iconic name. And across the world, Burberry and its history are renowned.
On top of that, it has a solid balance sheet and high levels of profitability. And with a price-to-earnings ratio of around 13, it looks fairly priced. A 4.2% dividend yield provides me with some passive income too.
There are concerns though. A cost-of-living crisis and the slowdown in global spending to match have impacted Burberry in recent times. After all, the large fall seen in its share price this month was due to it issuing a profit warning for 2023. This may continue in the months ahead.
However, in the long run, I don’t see this being a worry. Recovery in China should help Burberry get back to stronger growth in 2024 and beyond. A growing middle class in Asia, where the brand is extremely popular, should also help it continue to boost sales.
Games Workshop
Another stock I’d focus my attention on is Games Workshop (LSE: GAW). The company is one of the most exciting in the FTSE 250. In the last year, its share price has risen an impressive 42.5%.
In the last eight consecutive years, the business has delivered sales and profit growth. In its latest update, core revenue grew by 14% to £445.4m.
Like Burberry, it also provides an income opportunity. As I write, it yields just over 4%. What’s more, the company only uses “truly surplus cash” to reward shareholders, meaning it should continue to pay out.
The biggest challenge to Games Workshop is competition, I feel. Global powerhouses such as Disney have entered into the frame in an attempt to grab a share of the market. As time goes on, I’m sure more names will follow suit.
However, to combat this, the business has ventured into driving its non-plastic revenue streams. For example, its agreed a deal with Amazon to turn its wargame into a TV series featuring Hollywood star Henry Cavill. This will expose the brand to millions of potential new customers.
What I’d do
With £500, it’s these sorts of shares that I’d be investing in. And I’d put £250 into each. Both offer exciting growth opportunities. And by splitting my money into different sectors, I’d be diversifying my portfolio. The passive income would also be a nice touch. If I had this spare cash today, this is where I’d start.
