The UK Investor Magazine team has screened the UK equity market, and we highlight five stocks to buy that caught our attention for June 2023.
Remember, these shares are companies our team like the look of and may not be suitable for everyone’s investment strategies. Some included companies have recently presented at UK Investor Magazine Investor Conferences or featured on our Podcast.
Our shares to buy include companies from the FTSE 100, FTSE 250 and FTSE AIM.
IG Group Holdings
IG Group Holdings does well during periods of financial market volatility.
The S&P 500 entered a bull market recently, while many economists predict a US recession later this year. The UK housing market is slowing down, and listed lenders have remained steady. Inflation remains stubbornly high, but further interest rates aren’t fully priced into markets.
These disconnects between the underlying macroeconomic indicators and market pricing could lead to heightened volatility.
IG would benefit.
IG is a leading trading and investment platform, and revenue tends to increase when investors place more trades in periods of volatility.
Companies like IG also tend to win new clients when markets move dramatically as investors open new accounts to capture trading opportunities.
Antofagasta
Miners are on their knees. A spluttering Chinese recovery from the pandemic and concerns about global growth has curtailed demand for natural resources.
Antofagasta is down 5% year-to-date and trades at 23x forward earnings with a 3.3% yield.
Antofagasta offers pure-play exposure to ‘Dr Copper’ and the longer-term global economic recovery. Copper is vital in facilitating economic growth and critical to the green energy revolution.
Antofagasta’s copper production fell 10% in 2022FY due to droughts and reduced concentrate pipeline availability.
Highlighting Anto’s future growth potential, the copper miner’s resources grew by 1bn tonnes to 20.1bn last year.
Several growth projects are due to come online soon and will help expand the topline.
Despite being a FTSE 100 company, this is a volatile stock, not for the faint-hearted.
Antofagasta is a hugely cyclical stock and will do very well on good days and can tank much faster than the broader market on bad days. Antofagasta’s Beta is 1.73 – the 5th highest of FTSE 100 companies.
National Grid
Dull but steady National Grid provides investors with a 5% yield and is trading near key support levels.
National Grid’s operating profits grew 11% in the last full year to £4.6bn and increased their dividend by nearly 9%.
National Grid shares are unlikely to set the world on fire in terms of capital appreciation, but its defensive nature will be an income-bearing pillar of a portfolio.
During the period, National Grid made £7.7bn in capital investments to help bolster the UK and US energy supply and prepare for a cleaner energy future.
The company is an integral part of the energy transition and was awarded additional offshore energy transmission contracts last year by Ofgem.
Tekcapital
Tekcapital shares trade significantly below the company’s NAV. Tekcapital is an investment company with a portfolio of technology companies that can potentially improve millions of people’s lives.
Their portfolio includes AIM-listed Belluscura, NASDAQ-listed Innovative Eyewear, MicroSalt and Guident.
Based on analysis by SP Angel analysts, Tekcapital had a NAV of 30.9p as of 31st May 2023. The current share price of 12p represents a 61% discount to the portfolio’s NAV and offers excellent value as market sentiment improves.
SP Angel analysts said in their note:
“We continue to believe there is significant upside to the current valuations of each of TEK’s portfolio companies, which are not fully reflected in the current share price of TEK”.
Challenger Energy Group
Challenger Energy Group is a high-risk, high-reward energy play for adventurous investors.
Listed on London’s AIM, the company is focused on the exploration and production of oil in the Caribbean and South America. After a quiet transition period, Challenger Energy Group is back with a bang.
Challenger Energy is channelling efforts into their Uruguay offshore OFF-1 asset after a recent study estimated the licence could hold up to 4.9bn barrels of oil in an up-side scenario. This asset could be a company maker.
The OFF-1 license is the only license in the licence block not owned by a major oil company. Shell holds the two licenses adjoined to OFF-1.
Challenger announced they would be bidding on another license in the area, demonstrating their conviction.