Are these the best UK shares to watch in March 2024?
A selection of some of the best UK stocks to watch next month. These companies have been selected for recent market news.
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Moving in the late Q1 2024, the UK’s economic landscape continues to deliver a mixed outlook. While the country recently slipped into a technical recession, Bank of England Governor Andrew Bailey considers that ‘the economy is already actually showing distinct signs of an upturn.’
With many economists arguing the recession may already be over, thoughts are now turning to the budget, scheduled for 6 March. ONS data for January 2024 saw total government tax receipts hit a record £90.8 billion as tax remains at a post-WWII high — perhaps giving Chancellor Jeremy Hunt a little more wiggle room for tax cuts. While the UK remains a large net borrower, it is an election year.
In further good news, CPI inflation is expected to continue to fall through 2024, with Deutsche Bank analysts even arguing it could hit the target by as soon as April. Accordingly, consensus is that the UK will soon see rate cuts from the present 5.25%. For context, retail sales increased by 3.4% month-on-month in January, far above the 1.5% forecast.
Of course, both monetary and fiscal predictions are not guaranteed, especially after the global shocks experienced since 2020.
Best UK shares to watch
These shares have been selected for recent market news.
BAE Systems' recent results saw the FTSE 100 defence company saw sales for the past year rise by 9% to £25.3 billion, driven by growth in the United States. Accordingly, underlying profits before interest and tax hit £2.7 billion.
Shares in most weapons manufacturers have risen over the past two years, driven by Russia’s invasion of Ukraine which has seen political priorities surrounding defence spending shift rapidly. This has been compounded by the Israel-Hamas War, and subsequent surge of hostility in the Red Sea.
CEO Charles Woodburn expects ‘sustained growth in the coming years’ and argues that ‘instability in Europe, the Middle East and other parts of the world brings into sharp focus the vital role that we play in protecting national security.’
Currys recently rejected an unsolicited £700 million takeover offer from the UK arm of US-based activist investment firm Elliott Advisors. In good news for shareholders, Chinese online retail titan JD.com is now also ‘in the very preliminary stages’ of weighing up a counterbid.
Of course, Frasers Group’s Mike Ashley has also been speculated as a potential bidder should a takeover battle emerge, as the group has built up a 6% stake in the retailer. Elliott offered 62p per share, but Currys rejected the bid as ‘significantly undervalued.’
Peel Hunt analysts think that no offer under 80p per share — or a £900 million market capitalisation — would be seriously entertained. The bigger story, of course, is that after Mars’ takeover of Hotel Chocolat, other UK retailers may become buyout targets in the near future.
AstraZeneca shares rose sharply recently after potential blockbuster new drug Tagrisso (osimertinib), with the addition of chemotherapy, was approved in the US for non-small cell lung cancer. This followed successful clinical trials where patients who received the combination saw their risk of death or disease progression from non-small cell lung cancer fall by 38% per cent compared to people who just took Tagrisso.
Tagrisso sales increased by 9% at constant exchange rates last year to $5.8billion due to strong growth across the US and emerging markets. Indeed, it was AstraZeneca's highest-selling product behind Farxiga in 2023.
This development may secure long-term revenues for the drug developer.
NatWest recently posted record profits at £6.2 billion, a 20% increase year-over-year. It also confirmed Paul Thwaite, a long-time employee, as permanent CEO — a decision Shore Capital noted removed ‘a key uncertainty’ from the stock.
On the other hand, NatWest changed its medium term guidance for return on tangible equity to just 12.4% in 2024 and 13.2% by 2026 — down from between 14% and 16% previously.
However, the government has also sold a further 1.4% of the bank’s shares, taking its stake down to 33.56%. With a full sale to the public perhaps coming as early as June, the stock may soon rise to accommodate.
Centrica's results saw adjusted operating profit fall by 17% year-over-year to £2.75 billion, which excludes the disposed Spirit Energy Norway assets in 2023, and the impact of unrealised hedging losses in 2022.
Positively, Centrica still generated free cash flow of £2.2 billion, and this included £200 million in working capital inflow compared to the £700 million outflow of 2022.
It also now boasts a strengthened balance sheet compared to last year — with a closing net balance of £2.7 billion, some £1.5 billion more than in 2022. And the full year dividend was hiked by 33% to 4p per share, while the £1 billion share buyback programme is expected to run until July 2024.
However, there may be some political risk as its British Gas division saw profits rise tenfold to £751 million, with some of this profit derived from government support for bills. In an election year, the company may feel like a politically easy target.
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