Best UK Shares to Watch in 2023

While most stock markets ended 2022 in the negative, the FTSE 100 stock market index - which measures the value of the largest 100 companies listed on the London Stock Exchange - bucked the trend and ended higher.  

This makes it a good time to investigate what could be the best UK stocks for this year. But how do you find the best UK shares to buy now? An investor can never truly know beforehand but below is a list of UK stocks to watch this year to build your research on.  

It’s worthwhile remembering that past performance is not a reliable indicator of future performance and that all forms of investing involve winning and losing so be sure to exercise proper risk management when building your investing portfolio.

Best UK Stocks to Watch for 2023 List 

1. Rolls Royce Plc (RR)
2. HSBC Plc (HSBA)
3. BP Plc (BP)
4. Vodafone Group Plc (VOD)
5. International Consolidated Airlines Group SA (IAG)

Best UK Shares for 2023 Research & Analysis

Below is more information on each of the UK companies listed above. 

1. Rolls Royce Plc 

Rolls Royce Holdings Plc (RR) is a British aerospace and defence company. From 2000 to 2014 the stock rallied more than 480% to a record of GBX 444.06. However, since then the stock crashed to a low of GBX 34.60 by late 2020.  

At the beginning of 2023, the stock is up around 215% breaking through the psychological price level of GBX 100.00. According to 11 analysts polled by TipRanks the highest Rolls-Royce share price forecast over the next 12 months is GBX 148.68 with the lowest price target at GBX 70.00.  

China’s re-opening in late 2022 is forecasted to help increase international air travel which could help aeroplane engine makers such as Rolls-Royce. The appointment of a new chief executive is sure to share things up as well.  

In the latest Rolls-Royce earnings report, it highlighted that its large engine flying hours were still only 65% of pre-Covid levels but 36% up year to date. This shows there is room to grow for one of the world’s most recognised engine suppliers.  

However, uncertainties around energy prices, a cost of living crisis that could affect airline travel or some factors that could weigh on Rolls-Royce's share price this year. Therefore, tracking macroeconomic developments around these themes will be key to analysing the potential growth in its share price.

2. HSBC Plc 

HSBC Holdings Plc (HSBA) is a British multinational bank that is considered to be the largest in Europe with nearly $3 trillion in assets. During the pandemic, the share price fell to a low of GBX 281.50 by September 2020 – lows not seen since 2009.  

Since then, the HSBC share price has rallied strongly and was trading at GBX 516.30 at the start of 2023, up more than 80% from the pandemic lows. It still has another 60% before it reaches its all-time high price level of GBX 953.40 recorded in January 2001.

Rising interest rates tend to help banking stocks outperform as it means the bank can lend out at a higher interest rate than what they borrow which helps to increase their margins and profitability.  

Last year, the bank reported profits of nearly $14 billion. Some analysts believe this could help the bank’s dividend to return to pre-pandemic levels. Currently, the bank pays a quarterly dividend of GBX 5.42 which is an annual dividend yield of 3.61%.  

One issue to bear in mind is the fact some analysts are forecasting a slower pace of interest rate hikes this year. This may slow down some of the momentum seen in banking stocks over the past several months. Analysing price activity around central bank announcements this year could be key in determining sentiment and portfolio allocation from larger investors.  

3. BP Plc 

BP Plc (BP) is one of the major energy giants in Europe and around the world. The oil company’s share price crashed lower during the pandemic to a low of GBX 188.50 by October 2020 – price levels not seen since before 2000. Since then, the BP share price was up more than 150% at the start of 2023 trading around GBX 474.90.

Oil companies around the world benefited from the surge in oil prices during the pandemic recovery and the Russia-Ukraine war. While European energy giants such as BP and Shell have benefitted from rising oil prices, they are still trading at valuations much lower than their US counterparts such as Chevron and Exxon.   

European energy stocks have held up well even though governments are trying to claw back some of those profits through windfall taxes to help with subsidies and price caps for rising energy bills. These profits are also likely to benefit shareholders due to the potential of stock buybacks and rising dividends.  

However, the interference of governments in forcing through a windfall tax has led to some comments from energy companies that this may result in lower investment in that particular country. While that is likely to affect the country’s economy more than corporate profits it could be cause for concern if the battle escalates. 

4. Vodafone Group Plc 

Vodafone (VOD) is a British multinational telecommunications company providing services in Europe, Asia, Africa and Oceania. At the start of 2023, the Vodafone share price was trading at GBX 84.24 - lows not seen since 2002.  

As the share price is trading at such a low price level it has helped the dividend yield rise to 8.4%. This has led analysts at Bank of America to initiate a buy rating on the stock price forecasting growth of 42% to a price of GBX 131.00.  

The recent change in management could help to revive its fortune in some of its biggest markets, helping to grow its bottom line. The telecommunications company has also offloaded stakes in Vantage Towers and is in talks to sell its stake in Africa’s Vodacom.  

When investing in any stock trading at near-record lows, investors should take a much more longer-term outlook or wait for sentiment and price to improve over several quarters. 

5. International Consolidated Airlines Group SA 

IAG (IAG) is an Anglo-Spanish multinational airline stock which operates airlines such as British Airways, Iberia, Aer Lingus and Vueling among others. IAG’s stock price crashed during the pandemic period due to lower air travel and global lockdowns.  

The reopening of the global economy has helped boost airline share prices with IAG starting 2023 at GBX 126.30, up around 43% from its pandemic low. While most analysts are forecasting airline travel to increase – especially with China reopening its economy – there are still some uncertainties around energy prices and the more lucrative income stream for airlines, business travel.  

A cost of living crisis could also affect consumer spending for airline travel, while IAG’s debt is a key figure to watch if interest rates continue to rise at an aggressive pace. 

How to Buy UK Stocks 

Once you have established the best UK stocks to buy now that are suitable for your own investment portfolio and risk tolerance levels, how do you purchase them? This is where a UK share dealing account comes in handy.  

With the Admirals Invest.MT5 account you can invest in stocks and ETFs (exchange traded funds) from 15 of the largest stock exchanges around the world, including the UK stocks listed above.  

1. Open a live Invest.MT5 UK share dealing account or a practice demo account. 
2. Deposit funds into your live account, or use virtual funds from your demo account.  
3. Click on Trade in the Admirals Trader’s Room to open the Admirals web stock trading software.  
4. Choose from thousands of stocks all around the world to invest in or analyse the price chart further.  
5. Invest. 

With the Admirals Invest.MT5 account you can: 

• Buy UK stocks with a commission of 0.1% of the trade value and a low minimum transaction fee of GBP 1.0.  
• Buy US stocks with a commission of $0.02 per share with a low minimum transaction fee of USD 1.0.  
• Collect dividend payments from companies that pay out dividends.

FAQs on Best UK Stocks to Buy 

  
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