Are these the best UK shares to buy in August 2023?

If there were only one word to describe investing in 2023, many might choose ‘uncertainty.’

UK investors entered the year with double-digit inflation, horror forecasts from every public body from the Office for Budgetary Responsibility to the International Monetary Fund, and the Bank of England warning that the country faced a two-year-long recession.

Mid-way through Q3 2023, and the silver linings are starting to shine through the clouds. CPI inflation remains elevated at 7.9%, though many analysts consider that this crucial figure will continue to fall. The base rate stands at 5.25%, but again, analysts who had speculated the base rate could reach as high as 7% now think that it will peak at 5.75%.

Of course, these estimates have changed multiple times throughout the year, highlighting the complexity of monetary and fiscal policy projections. Inflation is still higher than in March 2022, and tightening monetary policy is causing structural issues, especially with inflated real estate alongside equity prices in certain sectors.

Former Bank of England Governor Mervyn King still believes that rate rises will tip the UK into a recession, a view shared by Legal & General chief investment officer Sonja Laud.

And in terms of fiscal policy, the tax burden is now at its highest level since World War II. Corporation tax has risen for larger companies from 19% to 25% and the popular super-deduction benefit has ceased, causing AstraZeneca’s to build its new state-of-the-art factory in Ireland.

Larger companies including CRH, Flutter, ARM, Shell, Ferguson, and BHP have either left London already or are considering it — with Legal & General CEO Nigel Wilson recently referring to the UK as a 'low growth, low productivity, low wage economy.'

This all makes selecting the best UK shares to buy in August somewhat of a challenge — but where there’s doubt, there’s often opportunity.

Best UK shares to watch

1. Begbies Traynor (LON: BEG)

In the background of the UK economy, a small business collapse may be brewing. Begbies Traynor Executive Chairman Ric Traynor considers that the country’s ‘zombie’ companies, which have thus far survived through the aberration of low interest rates, will ‘over the next 18 months...we’ll see virtually all of them finally come to an end.’

Not good news for SME operators, but bankruptcies are already close to their Global Financial Crisis peak. And what is bad news for some businesses is good news for Begbies Traynor — in recent full-year results, it saw another ‘successful year of continued growth with results ahead of original market expectations.’

Revenue grew by 11% year-over-year, free cash flow hit £14.1 million, the dividend increased by 9% to 3.8p for the year, the sixth year of increases in a row, and it noted confidence of ‘a further year of growth in line with market expectations...strong order book of insolvency revenue (up 19% in the year), driven by continued increase in insolvency market volumes.’

Traynor enthused that ‘we have a proven growth strategy which, over the five year period between 2019 and 2023, has doubled revenue and tripled adjusted profit before tax, from a combination of organic growth and acquisitions.’

Begbies Traynor shares have fallen by 10.3% year-to-date to 130p, though the FTSE 250 company has risen by 85.7% over the past five years. August could be a buying opportunity.

2. Card Factory (LON: CARD)

While the headlines may be bad news for the UK high street, it remains the case that capable operators are still doing well, regardless of their target market on the value scale.

Greggs, JD Wetherspoon, Next, and Marks & Spencer are all enjoying a superlative 2023 — and Card Factory has been another solid riser. Perhaps there’s a lesson for the CEOs continually blaming market conditions for poor performance.

On 7 August, the company issued a trading update concerning the first half to 31 July — announcing that ‘the positive start to the financial period, highlighted at the preliminary results, has continued. Trading in the first six months was materially ahead of the Board's expectations.’

While it acknowledged that the macro backdrop remains uncertain, Card Factory now ‘expects the full year outturn to be materially ahead of its previous expectations.’

For context, the retailer — which relies on high street footfall — was hit hard by the pandemic lockdowns, and even had to warn investors that it might not be able to meet debt commitments as recently as early 2021. However, it managed to agree a £225 million refinancing deal, and value shoppers have returned in their droves. Perhaps they are buying commiseration cards for SME directors.

It helps that its upmarket competitors are struggling; Paperchase’s brand and IP was bought out by Tesco, but the shops were left to close, while Clintons is considering shutting down a fifth of its shops to stave off bankruptcy in the face of ‘acute financial distress.’

Card Factory shares are up by 97.7% over the past year to 103p.

3. easyJet (LON: EZJ)

easyJet's recent Q3 results have put the budget airline back on solid footing after the lockdowns of the pandemic.

Profit before tax came in at £203 million, £317 million more than in the same quarter last year. It also saw 7% growth in passenger numbers and a sizeable 23% increase in revenue per seat. Additionally, ancillary yield per passenger rose by 20%, representing an impressive growth of 87% compared to Q3 FY19.

easyJet holidays contributed significantly to the turnaround, delivering £49 million in profit before tax, compared to just £16 million in Q3 2022. And while CPI inflation remains elevated, easyJet anticipates that the headline cost per seat excluding fuel for H2 2023 will remain broadly flat compared to H2 2022.

Looking ahead, the company has had to cancel 1,700 flights from Gatwick over the summer due to constrained airspace over Europe and ongoing air traffic control difficulties. It’s also had to cope with strikes, but notes that Q1 2024 is expected to see 15% year-on-year capacity growth.

CEO Johan Lundgren enthuses that ‘our Q3 performance has been underpinned by strong passenger demand for easyJet’s network and services...we continue to see good momentum as we move into Q4 where we will be operating over 160,000 flights and expect to deliver another record PBT performance.’

easyJet shares have risen by 37.2% year-to-date to 453p, but they could fly higher still.