All this has put me on the lookout for some outstanding UK shares to buy on their way up. With £1,000 to invest in June, here are two companies I have identified for my portfolio showing signs of explosive growth over the next decade. 

Top UK share to buy in the energy sector

Multinational energy firm SSE (LSE:SSE) has been on a solid run in the market. Since the Russian invasion of Ukraine, renewable energy sources in the EU have gained significant prominence. And the SSE share price has jumped nearly 20% since. One-year returns stand at 16.8% and the share has gone up nearly 10% in 2022 alone.

After the recently released results, I think this UK share looks very attractive. For the financial year 2021-22 (ended 31 March 2022), the company recorded a 23% jump to £1.16bn in pre-tax profits from the year before. This jump allowed the board to roll out a £12.5bn investment plan to grow offshore wind assets by 2026.

SSE’s full-year dividend stands at 85.6p per share, which brings the current yield to 4.7%. And given the growing retail price of energy, the board expects a 5% year-on-year dividend until 2026.

While these are great indicators of financial strength, there are a few concerns to address as well. The company has a net debt of £8.59bn, which could affect future revenue. Also, given the increased interest in the field, better alternatives could become prominent over the next decade, which could force a restructure. 

However, the energy sector is growing fast. And SSE’s impressive recent financials and above-average yield makes it one of the top UK shares to buy right now for my long-term growth portfolio. I’d be tempted to make a £1,000 investment if the share price falls below 1,750p in June.

Global consumer goods giant

Unilever (LSE:ULVR) is a fast-moving consumer goods company present in over 100 countries with 400 popular brands in its portfolio.

With a turnover of over €1bn in 2021, the company retained a lot of the customers it gained during the pandemic-driven hygiene products boom. Customer surveys show that the demand for anti-bacterial cleaning products will remain high across the next decade. The average consumer cares a lot more about personal hygiene after the pandemic, which is great news for Unilever. 

Its significant debt of €25.5bn is a concern. And given the inflationary pressure in the UK right now, profit margins could take a hit affecting future revenue. But I think the company has a robust supply chain, product demand and pricing power to overcome this. And given the current volatile market conditions, I think my portfolio is screaming for a fundamentally strong company with a global presence right now. If Unilever’s share price falls below 3,500p, I would happily make a £1,000 investment this year.

The post 2 top UK shares to buy now with a £1,000 lump sum appeared first on The Twelfth Magpie.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended Unilever. 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.

Going its own way

2015 has been a year of frenetic mergers and eye-watering acquisitions in the healthcare industry. GSK has been the rare big pharma member that hasn’t dived head first into this game during 2015. Management has purposefully charted the company on a different route than competitors, easing back from chasing blockbuster drugs in order to focus on more high-volume, low-cost products such as vaccines marketed towards the emerging middle classes of the developing world.

The theory is that as developing world governments increasingly talk about reining-in high healthcare expenditures, it makes little sense to invest billions in a drug that may only treat a few thousand people a year. While this thesis has yet to play out, it may make GSK an appealing option for investors seeking both a safe 6% dividend and stable play as it won’t be reliant on shelling out billions for possible blockbuster drugs each time its pipeline looks relatively shallow.

Volatility to continue

Meanwhile, AstraZeneca has doubled-down on the traditional approach by spending, or planning to spend, billions in just the past quarter purchasing respiratory treatments and a developmental leukaemia drug, among others. AstraZeneca has been forced into this as it sees the ending of highly-profitable US patents on Nexium and Crestor this year and next, which together accounted for nearly 35% of 2014 revenue.

Increased outlays on acquisitions have been one of the major reasons why AstraZeneca’s earnings have not covered dividend payments for the past two years. With share prices nearly £12 shy of Pfizer’s £55 per share offer in 2014 and revenues set to decrease with the loss of blockbuster drugs’ patents, I would be wary of buying into AstraZeneca now when there are more stable options available.

High price, high value

Just as people will always spend money on pharmaceuticals, they’ll also need soap, deodorant and chocolates. For that reason consumer goods giant Unilever is always a popular defensive play for investors seeking a safe dividend come bull and bear markets alike.

While revenue has grown 9% over the past five years, management has increased operating margins from 13.6% to 14.5% over the same period to account for a whopping 23.5% rise in net income since 2010. The company is also well diversified, with 57% of revenues coming from developing countries, markets that will be buying more of Unilever’s goods as the middle classes grow further in the years to come.

Management’s focus on a profitable and lean organisation, a 3% dividend yield well covered by earnings, and good growth prospects mean that Unilever is not a cheap stock. It currently trades at 23 times earnings. But quality has never come cheap in the market and I believe investors looking for a safe dividend and solid growth would do well to consider Unilever even at this price.

The post Is GlaxoSmithKline Plc, Unilever Plc Or AstraZeneca Plc The Best Dividend Play? appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended AstraZeneca and GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Buffett himself rarely invests outside of the United States, but there are non-US companies out there that easily conform to all of his criteria. Indeed, Unilever (LSE: ULVR) has all the qualities Buffett usually looks for in a prospective investment. 

Power brands

Unilever’s moat is wide and deep. The company makes and sells products under more than 400 brand names worldwide with two billion people using its products on any given day. Several of the company’s power brands generate more than £1 billion in sales annually. It takes years to build up the brand portfolio and loyalty Unilever now commands. And, as almost all of Unilever’s brands are everyday items that have become an essential part of consumers’ lifestyles, the company has a reliable income stream, with sales also subject to positive cyclical factors.

Between 2005 and 2014, Unilever’s sales grew at a rate of 2.9% and 7.4% annually – a period when many other businesses were struggling with the effects of the financial crisis. This steady growth, through both the good times and the bad, has translated into outstanding returns for shareholders. Since 2005, Unilever’s shares have returned an impressive 10.8% per annum excluding dividends, more than double the return of the FTSE 100 over the same period. Including dividends, Unilever’s total return for each of the past 10 years has been somewhere in the region of 13% to 16%.

Power performance

These figures are all highly impressive, but what really makes Unilever stand out from the crowd is the company’s return on capital employed, or ROCE for short. ROCE is a telling and straightforward gauge for comparing the relative profitability levels of companies. The ratio measures how much money is coming out of a business, relative to how much is going in and is an excellent way to measure business success. 

Company ROCE figures can vary dramatically from year to year, but if you can find a company with stable ROCE that’s higher than the market average, you’re onto a winner. According to my figures, only one-third of the world’s 8,000 largest companies managed to achieve ROCE of greater than 10% last year. However, over the past 10 years Unilever’s average annual ROCE has been in the region of 22%. 

It’s usually worth paying a premium for a company such as Unilever with a high, stable ROCE and wide moat. But right now Unilever is only trading at a forward P/E of 21, which means that the company’s shares are around 10% cheaper than those of international peers P&G and Colgate-Palmolive. 

The post Is Unilever plc The Only UK Stock Warren Buffett Would Buy? appeared first on The Twelfth Magpie.

More reading

• 3,566 shares in this FTSE 100 stalwart earns a £1,443 second income
• 2 FTSE shares for beginners starting an ISA
• Is this former stock market hero now the ultimate FTSE 100 buy and hold?

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.