Top UK shares to buy

Top UK shares to buy
Here’s a rundown of some top UK stocks and shares on the Freetrade platform that users have been looking to buy and invest in throughout 2021 and 2022. 
George Sweeney
Published
June 22, 2022

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Now is a great time to take a deeper look into what UK shares, and the best of British companies, can offer investors looking to buy stocks. 

There are plenty of UK stocks available right now offering some interesting investment opportunities. 

The wider themes we’ve been seeing for the past decade of low interest rates and subdued inflation served as an excellent catalyst for growth stocks to shine. That environment served certain US stocks extremely well. But now it looks like UK shares may start stealing the limelight.

Why invest in the UK stock market

For years, market commentators have been screaming from the rooftops that British stocks and shares are old-hat. Some even dubbing, the types of businesses making up most of the UK market as ‘dinosaurs’. 

Part of this was probably justified. It’s hard not to look across the pond and think the grass is always greener. Especially as US tech stocks took off, and have been on an absolute tear for the last 10 years. 

UK markets sat relatively flat while growth in America boomed. There has been some progression, but the value of major indices have remained fairly rangebound when compared to some international markets. 

This lack of significant momentum led many investors astray, searching for higher returns elsewhere. As a result, huge droves went looking to buy US shares in the UK

But now it appears the tables have turned. And, the previously unfashionable British shares are becoming some of the stocks to watch in the current climate. 

This is due to a number of factors working simultaneously in favour of UK stocks. Here are a few of the tailwinds making many British shares appear to be more attractive buying opportunities:

  • Rising interest rates
  • Higher levels of inflation
  • The energy and commodity supply squeeze 

These factors have led to a large number of the UK’s unloved defensive and dividend stocks growing in popularity.

2022 outlook for UK shares

Although the global economic outlook is a bit different  compared to a few years ago, the current situation doesn’t necessarily mean dire straits for many UK firms. 

The UK stock market is made up of huge firms in the following sectors:

  • Energy 
  • Commodities
  • Financial services and major banks
  • Consumer staples
  • Retail

Plenty of the companies within these sectors have pricing power, or can somewhat benefit from rising interest rates. 

Along with being well-suited to an inflationary environment with rising rates, some UK shares have another trick up their sleeve. 

The lack of growth-heavy companies in the UK has bemoaned investors previously. But now, the perception of the UK’s ‘boring’ shares has been flipped on its head. 

The reason being, many UK stocks are making money and generating positive cash flows, which tends to become more attractive during times of inflation. Forget about breaking even in five years’ time, these firms have earnings today. 

And, when inflation is devaluing potential profits in future, these sturdy shares can appear more enticing to investors. Especially those searching for solid dividend stocks to provide income.

Top UK stocks on the Freetrade platform

To get a better grasp on the current state of affairs for UK stocks, we’re going to take a look into some of the most popular options from the most-bought shares on Freetrade. 

Plenty of new international markets and new stocks are continually being added to Freetrade, but that’s no reason not to look a bit closer to home too.

High dividend UK stocks

Rewarding shareholders with a dividend payout isn’t just for Monopoly ‘Chance’ cards. We’re a nation that typically has a lot of income-generating shares.

A heavy focus on dividends is something major UK firms have been doing for centuries. So, when investors are hunting for dividend stocks, UK markets are often the first port of call.

Before we jump into some of these UK stocks, it’s important to highlight that this is a wrap-up, not a suggestion or recommendation that you buy or sell any of the securities mentioned.

Remember everyone has their own goals and unique financial circumstances. These, along with your tolerance for investment risk and time horizon, should inform the mix of assets in your portfolio.

Our resource hub for investing in the stock market might be able to help make that blend a bit clearer for you and our guide on how to invest in stocks is a great start for first-time investors. And if you are still unsure of how to pick investments, speak to a qualified financial advisor. 

Rio Tinto (RIO)

This is the world’s second-biggest mining and metals company, and the 14th most purchased UK share on Freetrade last year. 

Historically, it’s also paid a high dividend compared to other major UK stocks. As of June 2022 the dividend yield is roughly 11%. 

This isn’t a reason to go out and buy shares as that can change. But, with a potential commodity boom over the next few years on the cards, RIO could be in a good position to continue its commitment to high dividends. 

Persimmon (PSN)

Another high-yielding dividend stock, Persimmon was within the most bought 30 UK shares on Freetrade last year. 

This UK home-building holding company is involved in a number of property-related businesses. And, high dividends have been a top priority for the firm over the years. 

UK penny stocks to watch

Finding penny stocks to buy can be a tricky landscape to navigate. There’s plenty of volatile junk you have to get past to find those cheap diamonds in the rough.

You’ll find that the majority of UK penny stocks are listed on the Alternative Investment Market (AIM) branch of the London Stock Exchange (LSE).

It’s important to remember not to judge shares purely on the share price. Because, it doesn’t really tell you anything about the business or the underlying financial fundamentals. 

That means not all penny shares are actually ‘cheap’, you need to take a look at the full financial picture of a company to know if you’re getting good value. Only then can you attempt to determine if the shares are cheap or expensive. 

Argo Blockchain (ARB)

ARB was the fifth most-popular UK stock on Freetrade in 2021.

After a surging price during the cryptocurrency boom, this digital mining enterprise was actually outside of penny stock territory for much of 2021, with shares priced at over £1. 

But, since the end of last year, it’s firmly back within penny prices. Time will tell if it becomes a mainstay for UK investors looking for cryptocurrency exposure through companies instead of holding the underlying digital assets. 

Kanabo Group (KNB)

Cannabis stocks were another hot trend coming through 2021. Falling just outside the top 20 most popular UK shares on Freetrade in 2021, this medical cannabis company sits firmly within penny stock territory based on its current share price. 

Since its IPO (initial public offering) early in 2021, the share price has been on a steady decline. However, this could be a UK stock to keep an eye on as the legal cannabis industry develops.

Renewable UK energy stocks

The green transformation means that a lot of money is being pumped into renewable energy stocks in the UK. 

Investors are looking for more sustainable ways to invest in energy firms outside the usual suspects. 

Interest in this sector from both public and private money has led to numerous innovative businesses prospering within the UK.

Ceres Power Holdings (CWR)

Number 16 in terms of popularity amongst Freetrade’s UK shares, this renewable energy stock focuses its energy on fuel cell technology and green engineering. 

The company has been innovating within this space well before it was trendy. Before it was cool to dabble in greener tech, the firm was pioneering lithium batteries as its flagship technology. 

The renewed interest in energy storage has led to increased attention on CWR’s shares. But, there are an increasing number of competitors and there’s still a long way to go for the company to claw its way back to former share price highs.

Pineapple Power Corporation (PNPL)

If we’re judging UK shares based on the best names, PNPL might just take the cake. 

Aside from a juicy name, this stock just managed to sneak into the top 20 most popular shares on Freetrade last year. 

This UK stock is a little bit different because it’s actually a SPAC (special purpose acquisition company) that looks to invest in companies or assets within the renewable energy space. SPAC stocks come with their own unique risks, so it’s important you understand what investing in a SPAC entails. 

In essence, you’re investing in a company that will use its funds to acquire another company. That makes it an inherently riskier investment because you won’t know what that acquired company is until the SPAC decides.

UK hydrogen stocks

Sitting alongside green energy, hydrogen stocks form another popular branch within the renewable sector. 

ITM Power (ITM)

This Sheffield firm looks to innovate clean fuel and energy storage. To do this, its main focus is to manufacture hydrogen energy solutions. Technology that’s way above my pay grade.

A leading UK hydrogen stock, ITM was a popular buy for investors last year, reaching number seven in the most-bought UK shares on Freetrade. 

After a flat few years for the share price, it took off in early 2020. Excitement has since waned, but the company is on a mission to prove its clean hydrogen technology is not all hype.

UK tech stocks

Although the UK tech stock scene may not hold a candle to the US market, we still have some compelling businesses capturing the attention of investors. 

Wise (WISE)

Formerly known as TransferWise, WISE was another 2021 IPO with plenty of surrounding buzz. Although the company is originally from Estonia, in the UK we like to take listing credit wherever possible. 

Sport is a good example. When Andy Murray wins he’s British. And when he loses, Scottish. 

It’s a credit to WISE that UK investors like to boast about the fact this innovative firm is based and listed in London. 

The payments company was number six in terms of popularity on Freetrade last year. A mean feat considering it only went public halfway through 2021. This UK tech stock is continually expanding its services and is perhaps one to keep an eye on. 

Though its share price is now well below its IPO price, with a much trimmer market cap to boot.

Darktrace (DARK)

With a name that should’ve been copyrighted for a supervillain lair, DARK was another UK tech stock making waves last year. 

As cybersecurity becomes an expenditure companies are increasingly forced to spend money on, the groundwork was laid for Darktrace’s UK tech IPO in 2021. After going public in Q2 of 2021, Darktrace went on to become the 10th most popular UK share on Freetrade. 

Although the share price has fallen from highs, similarly to plenty of tech stocks across the world which have seen values crashing significantly, the stock is now looking relatively stable near its IPO price. 

Bank shares UK investors were buying

London was the most important financial hub on the planet, and it still remains a major financial player on the world stage. 

A big reason for this is due to highly established banks based here in the UK. Buying shares in banks has been a popular option for investors looking for both dividends and steady long-term growth. 

Lloyds Banking Group (LLOY)

As the UK’s largest mortgage lender, Lloyds should be poised to do well in an economic environment of higher interest rates. 

It’s a consistently popular choice for investors looking for bank shares to buy and it was the most popular UK share on Freetrade in 2021. 

However, popularity isn’t everything. Being a popular UK stock and being the best bank stock to invest in are two different things. 

After a tough 2020, LLOY shares appear to be in a stronger position, though if the UK housing market takes a turn, conditions could change for Lloyds too given it’s the UK’s largest mortgage provider.

Barclays Bank (BARC)

Another household name, this is a bank whose shares were extremely popular among UK investors last year. 

A frequent choice for retail investors looking to buy shares in a financial firm, it was the second-most bought UK bank and 15th overall for British stocks on Freetrade in 2021. The bank resumed its dividend last year after a Covid pause to payouts, though its share buyback programme has been delayed after a hefty fine from the Securities and Exchange Commission (SEC).

Popular UK oil share buys

For years, stocks and shares related to oil seem to have fallen out of favour with the masses. But, these companies still play an undeniable role in our industries and day-to-day lives.

And many have turned back to these stocks, which tend to have reliable profitability and dividend payments for shareholders. . Ongoing geopolitical instability and Russia’s invasion of Ukraine have also re-highlighted these stocks for some investors.

BP (BP)

When it comes to UK shares, this was second-most popular on the platform in 2021. It’s also a perennial contender as one of the most traded shares on Freetrade.

As a big-name fossil fuel stock, BP shares have suffered in the court of public opinion. But some investors are opting for oil stocks amid this period of high inflation and market volatility.

Transitioning to a greener energy industry won’t happen overnight, and in the meantime, the global BP operations remain crucial to the oil and gas industry.

Shell (SHEL)

Previously Royal Dutch Shell, this has been a British stock market mainstay for a long time with a past dual-listing in the Netherlands. 

Falling under the category of ‘Big Oil’ this firm sits among a handful of supermajors that control much of the exploration, production, and refining of natural gas and oil. 

It fell outside of the top 20 UK shares on Freetrade last year. But, its popularity might rise this year given it’s had a very strong 2022 so far. In the firm’s latest quarterly results, its revenue grew by 297.7% to $19.3bn. 

Only time will tell if Shell’s performance has legs or if it's a temporary condition due to issues around energy supplies.

Why are UK shares so cheap?

This is largely because many UK shares aren’t considered growth stocks, meaning they likely don’t hold the same potential promise for future growth that some younger international companies could have. 

The majority of the biggest UK firms have been around for a long time and tend to be thought of as businesses of the past. 

But, with some markets looking quite frothy and overvalued for some time, the UK has slowly become a more popular place to pick up comparatively cheaper shares trading at more reasonable valuations. 

If you’d like a deeper dive into investment valuations, make sure you check out our in-depth guide on how to value stocks.

Best undervalued UK stocks to watch

Here’s a rundown of some popular UK stocks that are currently sitting below what some deem to be their fair value estimate (FVE). A stock’s FVE is a broad way of looking at the company’s assets and liabilities to measure how much it’s worth. 

ASOS (ASC)

The 20th most popular UK share on Freetrade in 2021, this consumer retail giant has seen its share price slide fairly consistently over the past year. It has now reached a level that some analysts might think is lower than it reasonably should be. 

That said, it’s important to remember that even if an analyst thinks a company is undervalued, or a ‘buy’, that actually tends to be the case for most stocks. ‘Buy’ ratings usually represent 50% of the split (compared to ‘hold’ or ‘sell’), simply because the stock market and its constituents tend to rise more than fall over time. 

So just because an analyst thinks the stock is undervalued relative to the market doesn’t mean that stock is in and of itself a good investment. 

We’ve written all about analyst ratings and how to use them, and the feature is currently rolling out to Freetrade Plus members.

Deliveroo (ROO)

A much-hyped 2021 IPO, Deliveroo went on to become the 23rd most popular UK share on Freetrade last year. Sadly, a return to normality and fewer food deliveries squashed some of the massive growth the firm had seen. 

After peaking at share price highs last year, ROO shares have had a tough time since. But, it could now be the case that the share price has slid past a point that now puts the stock within undervalued territory. Again, keep in mind that just because shares are considered undervalued doesn’t guarantee they’ll ever reach a ‘fair’ valuation. And sometimes, as tempting as it is to think you’re getting a bargain with a cheap share, you may just be getting what you pay for.

Most popular UK shares on Freetrade in 2021

Here is some visual stimulation to show you all the popular UK stocks mentioned and where the shares ranked. 

Before you open an investment account and begin to buy UK shares, remember that lots of buying interest doesn’t mean these are the best shares to invest in. But, it might give you some useful insights to work with. 

Most popular UK shares on Freetrade in 2021
UK share Sector Popularity ranking
Lloyds Banking Group (LLOY) Banking & Finance 1
BP (BP) Oil & Gas 2
Argo Blockchain (ARB) Cryptocurrency 5
Wise (WISE) Payments 6
ITM Power (ITM) Hydrogen Energy 7
Darktrace (DARK) Cybersecurity 10
Rio Tinto (RIO) Mining & Metals 14
Barclays Bank (BARC) Banking & Finance 15
Ceres Power Holdings (CWR) Renewable Energy 16
Pineapple Power Corporation (PNPL) Renewable Energy SPAC 19
ASOS (ASC) Consumer Retail 20
Kanabo Group (KNB) Medical Cannabis 21
Shell (SHEL) Oil & Gas 22
Deliveroo (ROO) Food Delivery 23
Persimmon (PSN) Home Building 29
Join the discussion BHP Group, Persimmon, Just Eat, UK Inflation

Freetrade is on a mission to get everyone investing. Our stock trading app makes it easy to buy and sell a wide range of investments, including stocks, ETFs, investment trusts, REITs, SPACs and even newly launched IPOs. Take a look at the most traded shares on the platform to see what retail investors buy and sell weekly.

Important Information

This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice.

When you invest, your capital is at risk. The value of your portfolio, and any income you receive, can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future results.

Eligibility to invest into an ISA and the value of tax savings depends on personal circumstances and all tax rules may change.

Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales (no. 09797821).

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