I am currently looking for UK shares to buy for my portfolio in 2022. I am concentrating on finding businesses with an upcoming growth catalyst. This could take many different forms. From companies that may experience a recovery next year to those that could capitalise on a significant economic tailwind.
With that in mind, here are the five stocks I would be happy to add to my portfolio today, considering their potential next year.
Shares to buy
The first couple of companies I would buy ahead of 2022 are recovery stocks. The pandemic has decimated the public transport sector, but I am excited by the long-term potential for this industry. To get cars off the road, policymakers will have to encourage consumers to use public transport, which suggests demand for these services will only increase.
That is why I would buy public transport operators FirstGroup and Stagecoach. I would buy both because they operate in different sectors of the industry.
As such, I believe a portfolio containing both would be a way for me to build diversified exposure to the sector.
Hospitality recovery
The other recovery plays that interest me are JD Wetherspoon and IWG. Like the rest of the hospitality industry, Wetherspoons has suffered during the pandemic. However, I think it can capitalise on the economic recovery over the next few years. The company’s low-cost offer should appeal to consumers, especially in an inflationary environment when costs are rising across the board.
Meanwhile, serviced office provider IWG is already reporting an uptick in demand. The pandemic has changed how companies and workers view employment. Flexible working patterns are now becoming the norm, and this is leading employers to adopt more flexible office solutions.
IWG has one of the largest global portfolios of flexible office space. Its flagship Regus brand has a global presence. I think this gives the company a competitive advantage to gain an edge over peers in economic recovery.
I am interested in these recovery plays because I believe the economy will continue to rebound in 2022. Unfortunately, there is no guarantee this will happen. Further disruption from the pandemic, or an economic recession caused by higher interest rates, could delay the recovery. These headwinds could hold back the recoveries at the companies outlined above.
UK shares for volatility
Global fintech firm Plus500 has performed relatively well throughout the pandemic. Volatile financial markets led to a surge in trading activity on its platforms last year. Many of the consumers that joined the group in 2020 have continued to trade in 2021.
I think this trend may persist into 2022. And if there is another pandemic-related sell-off, Plus500 has the potential to capitalise on this activity, just as it did in 2020.
Despite these qualities, the group does face some challenges in the form of competition and regulations, which could reduce profitability and increase group costs.
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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