For me, Hays (LSE:HAS) and HSBC (LSE:HSBA) represent two of the top UK shares to buy and hold right now. I think both these stocks have great upside potential, having fallen in recent months and they remain far below pre-pandemic levels.
Hays
Recruitment firms are hugely sensitive to economic fluctuations and the current inflationary pressure appears to be pushing the Hays share price downwards. It’s currently trading at 120p a share – that’s a third off its year high of 181p.
However, the labour market is currently very strong, particularly in the UK, which is a core market for Hays. Job vacancies in the British economy recently hit a record high with 1,318,000 positions advertised.
A Totaljobs survey also suggested that two in five Britons were considering changing to a better paying job as the cost of living crisis puts pressure on households. It has been reported that 2022 would also see recruiters benefit from pent-up demand for their services as millions of workers delayed job switches during the pandemic.
In February, the firm raised its profit guidance following a stellar six months. In the six months to the end of December, pre-tax profit surged 363% to £97.7m. Hays hailed the “excellent” performance in all regions. It added that it expects full-year profits to be between £210m and £215m. The figures are broadly in line with pre-pandemic performance.
I already hold shares in Hays, but I’ll be adding more at the current price as I think there’s long-term potential here. It’s worth noting that firm’s 1% dividend isn’t overly attractive.
HSBC
HSBC is one of my favourite blue-chip stocks. While the London-headquartered bank is trading at a sizeable discount versus pre-pandemic levels, I think its got great long-term growth potential, which I why I hold this stock.
Today HSBC is trading at 524p a share, down from 567p in February. Despite 24% growth over the past year, the stock is still 17% down over three years, and nearly 20% down over five years. The Russian invasion of Ukraine, inflationary data, and Chinese real estate challenges have all weighed on this FTSE 100 giant over the past year.
However, HSBC’s share price belies some positive performance data. The bank’s pre-tax profits of $18.9bn in 2021 trumped its performance in 2019 and 2017. HSBC’s price-to-earnings ratio currently sits around 11, suggesting the stock could be considered relatively undervalued if recent performance continues.
Following the 2008 financial crash, HSBC consolidated its strategy by focusing on the UK and China. But the bank recently announced that it would be accelerating its ‘pivot to Asia’ plan which will see it increase its operations in higher growth markets.
In the short term, the current economic fallout from Covid in China could hamper progress, but in the long term, I’m confident on HSBC. I hold stocks in HSBC and will be buying more at the current prices.
