If I had £2,000 to invest today, I would focus on buying top UK stocks. Indeed, rather than spreading my money between a range of investments, I would zero in on what I believe to be the market’s best companies with the brightest prospects.
Top UK stocks
I do not think any list of the best shares to buy now would be complete without listing some of the best technology companies available for investors to buy today.
The first company is the IT infrastructure provider, Computacenter. This enterprise has delivered 16 years of continual growth, and its development has only accelerated in the pandemic.
According to a recent trading update, the firm now believes adjusted pre-tax profits for the six months to the end of June will rise 50% year-on-year.
As well as this growth star, I would also buy software company Kainos for my basket of top UK stocks. This technology enterprise is also expecting to report better than expected results for its current financial year. It has cited rising demand for digital services across the public, commercial and healthcare sectors as the main reason why growth is surging ahead. Management is using these windfall profits to fund acquisitions. These deals should help drive growth in the long run.
While I think the outlook for both of these companies is bright, I am wary that this sector is highly competitive. Both of these UK firms are up against American giants, which have deeper pockets. They could find themselves struggling to compete if the Americans decide to fight them for market share.
Quality over quantity
As well as the two companies outlined above, I would also add Games Workshop and Watches of Switzerland to my basket of top UK stocks.
What I like about these companies is that they both focus on specialist markets. Games Workshop sells to a niche audience of tabletop gamers, while Watches of Switerzland’s primary customer is willing to spend several thousand pounds on a watch.
In both of these markets, customers are willing to pay a high price for quality. This gives these companies an edge because they can charge relatively high prices, and earn large profit margins. Management can then either reinvest these profits back into growth or return the cash to investors.
Over the past five years, both of these companies have been investing for growth. As a result of this spending, Games Workshop’s profits have jumped 10-fold in six years. Watches of Switzerland’s sales have doubled since 2017.
Of course, this growth should not be taken for granted. The retail industry is fiercely competitive. These companies cannot take their market share for granted. They need to keep investing in new products and services to keep customers coming back year after year and paying their high prices. If they do not, growth may grind to a halt.
Despite this risk, I would buy both of these top UK stocks for my £2,000 portfolio.
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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Games Workshop. The Motley Fool UK has recommended Kainos. 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.