I think 2022 could be a great year for investing in shares. The end of 2021 has been challenging, especially for smaller-cap stocks. But that does create opportunities to pick up great companies cheaply. These five UK shares are stocks I already own and will be prioritising adding more of, hopefully to accelerate the growth of my portfolio and help me achieve my investment goals.
The 2021 losers
First up let’s start with the losers. These are gambling group Flutter Entertainment and spread-better CMC Markets. The former I’ve held for a while and it’s well down. I’m happy to ‘average down’, that is, buy the shares despite the price having fallen because in the long term, I’m optimistic about its growth prospects in the US. Management has done a great job getting market share there and making smart acquisitions. That’s why I’d invest in Flutter. The main risks are regulatory, plus the fact that the shares are quite highly valued at the moment.
Shares in CMC Markets fell by around 40%. I’ve recently explained what went wrong and why I think it’ll be a good share again in 2022. The company is founder-led, has plans to evolve and become a UK stockbroker, and the shares are cheap. The P/E is around four, which to me screams undervalued. But the shares don’t have momentum and I feel they could fall further. The UK stockbroking service may also not perform as expected.
More top UK shares
I’m confident Diageo can keep growing and indeed its management has recently laid out new medium-term forecasts, with annual organic sales growth of between 5% and 7% for the 2022/23, 2023/24 and 2024/25 financial years, compared with 4% to 6% from 2017 to 2019. Demand for drinks isn’t going to disappear and its strong brands mean Diageo should have pricing power and be able to keep sales growing. I think it’s a top stock, although it must be said the shares are quite expensive.
Next up is boutique asset manager, Polar Capital. I believe the group has opportunities to grow internationally and add new investment teams and funds to its roster. Plus it already has high margins. The stock combines a dividend yield of 5% with the potential for the share price to grow dramatically.
Of course, there are risks. If its funds start to underperform, Polar Capital shares could suffer as investors pull out money.
Last but by no means least is South African and UK homewares supplier Norcros. It combines a cheap share price with a forward P/E of eight and a decent dividend yield of nearing 3%. With housebuilding continuing to do well, there will be demand for showers and tiles and the other products the group supplies. That should keep sales up. A collapse in housebuilding, perhaps as a result of interest rate rises is one of the main risks it faces, along with possibly any instability in South Africa.
All five of these shares are among my most promising holdings. They had a mixed performance in 2021, but I back them to do well in 2022 and beyond.
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Andy Ross owns shares in Flutter Entertainment, CMC Markets, Diageo, Polar Capital Holdings and Norcros. The Motley Fool UK has recommended Diageo, Norcros, and Polar Capital Holdings. 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.