UK stocks: why I think these 3 could keep flying higher
The Motley Fool
Published Aug 11, 2020 08:06
UK stocks: why I think these 3 could keep flying higher
Despite the stock market crash back in March, some UK stocks have done exceptionally well over the last six months. The rises by both Ocado (LON:OCDO) and AO World highlight the appetite investors have for online only retailers. But I think there are even better companies out there to invest in.
The backer of Tesla and other tech companies One such company is Scottish Mortgage Investment Trust (LSE: SMT). The share price is up 44% over the last six months. This has been driven by its focus on tech, a principal beneficiary of the covid-19 situation.
Its top holding is Tesla. This is followed by holdings in Amazon (NASDAQ:AMZN), Tencent (HK:0700), Illumina and Alibaba (NYSE:BABA). Spotify and Netflix (NASDAQ:NFLX) are also in the top 10 holdings.
The trust, run by Baillie Gifford, is a top performer. The manager though has other strong-performing trusts. This gives me hope the current outperformance isn’t a flash in the pan.
Technology isn’t going away so the trust should keep doing well and the share price might well keep flying upwards. But a word of warning — it’s closely tied to the success of its biggest holding, Tesla.
A UK tech stock riding the 5G wave Spirent Communications (LSE: LON:SPT) is another tech stock that’s making moves upwards. It’s piggybacking on expectations of a 5G revolution. The company provides testing and assurance services to the telecoms industry.
Spirent says that 5G isn’t yet at the end of its journey. There will be a lot more ongoing demand for its services is the key message. Spirent Communications, like Scottish Mortgage, is in the right place at the right time.
The latest results showed the company is making good progress, which should work through to the share price (it’s already nearly double its low during the stock market crash). Spirent saw revenue rise 7% in its first half to $233.7m (£177.53m). On a reported basis, operating profit was up 97% at $35.6m and its profit before tax improved 93% to $36m, while basic earnings per share grew 94% to 5.28 cents.
Devoted fans bring in the profits Games Workshop (LSE: GAW) has been getting a lot of press attention. It’s not hard to see why. The share price has been motoring upwards. The company displays a lot of signs of a quality business. It has repeat, dedicated customers, high margins and the ability to grow sales and profits.
The shares have been hitting new highs recently. The boost has been provided by results last month that showed a 10% jump in profits before tax to £89.4m for the year ending on 31 May. At the same time, cash on hand before paying dividends stood at £70.5m, against £50.7m in the year before.
Get The App
On a more operational level, it’s encouraging to see its roughly 40% jump in user numbers on the Warhammer website to over 8m. This indicates there are a lot of fans out there.
The opportunity to licence itself creates the next big opportunity for Warhammer and as such, I think the shares, though expensive already, could keep moving higher.
The post UK stocks: why I think these 3 could keep flying higher appeared first on The Motley Fool UK.
Andy Ross owns no share 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.
Motley Fool UK 2020
First published on The Motley Fool
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.