Despite fears of a market crash driven by the Evergrande situation in China, world markets look resilient. The FTSE 100 index rose 2% last week and look to be leaving market crash concerns in the dust. Right now, I’m on the lookout for shares under the spotlight that also offer stable long-term growth. With this investment template in mind, I think these are the three UK shares for me to buy now.
The electric vehicle revolution
It looks to me like the global energy crisis is just getting started. Rising oil prices and coal shortages are a major concern right now in Europe and Asia. One way to drastically reduce the burden on crude oil is the switch to electric vehicles (EV).
I’ve been keen on the EV sector for over a decade and I think now looks like a great time to invest in it. And mining giant Rio Tinto looks set to capitalise. A fall in iron ore prices caused Rio shares to slide 14% in the last six months. But the miner has established itself as a major source of lithium. And lithium is a crucial component in EV batteries.
A further fall in iron ore prices is the biggest concern for me with Rio. Although there are signs of a reversal, there is still a lot of uncertainty. But if the Evergrande situation cools down, there could be a full rebound. And the 5,000p entry point is far from August’s highs of 6,200p, which is why it’s high up on my list of UK shares to buy now.
Two strong performers
Both BAE Systems and Lloyds Banking Group (LSE: LLOY) shares are rising right now. And they both look like great long-term buys for me. Here’s why.
Defence giant BAE’s shares are up 26.4% in the last 12 months and it looks like it could break the 600p barrier soon. Regulatory changes and trade barriers are a concern in the defence sector, of course. Also, analysts predict that the company could trade sideways for a while as investors may look to take profits once it hits the 600p ceiling. But factoring in the £35bn order book for 2022, 4.2% dividend yield and £500m share buyback programme, I think BAE is one of the best UK shares I could buy today.
The final stock on my list, Lloyds Bank, is my momentum pick. The stock has been on a great run lately and the shares are up 10.4% in the last month. The banker has a stable customer base and is the largest home loans provider in the country.
It’s important to note that long-term returns have been poor. A dismal return of -8.2% over the last five does not look good for the banker. But at its current price of 48p, Lloyds is trading on a forward price-to-earnings (P/E) ratio of 7.3x with a cool 2.5% dividend yield. With Q3 2021 results due on 28 October, this yield could increase.
The bank is venturing into housing in a partnership with FTSE 100-listed Barratt Developments, which I think good move in the current housing market. Also, analysts are predicting an interest rate hike in early 2022 which could boost revenue. I think Lloyds shares still have room for growth which is why it is on my buy list.
Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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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