2021 has been an excellent year for many UK stocks and the stock market generally. After a destructive 2020, a large collection of businesses and major indexes have recovered or are recovering from their pandemic lows. But will this momentum continue into 2022?
A new year comes with new opportunities as well as challenges. As an investor, I have prepared my top UK stocks to buy in 2022. With that being said, here are my 2 top UK stocks to buy in 2022 and beyond.
A British leader in aviation
Rolls-Royce’s (LSE:RR) share price is yet to recover to pre-pandemic levels. The reasons for this are pretty clear – despite travel restrictions being lifted, the aerospace industry is still being heavily impacted by Covid-19. Nevertheless, Rolls-Royce makes my top UK stock to own in the coming year for the following reasons.
From a valuation perspective, the firm is trading at an exceptionally low price-to-sales ratio of 3.7. That makes it one of the most undervalued businesses in the FTSE 100. Could this be a value trap? Of course. But I’m optimistic about the group’s future. With demand for its services ramping back up, management has made several encouraging announcements surrounding new partnerships and contracts that will undoubtedly bolster both its aerospace and nuclear divisions.
With the adverse effects of the pandemic waning, I’ve added this business to my top UK stocks list. However, I will admit I could be wrong. In the last five years, the group has struggled to be profitable. It has since undergone some substantial restructuring to resolve this problem. But only time will tell if this was successful.
A giant in the drug development arena
The global healthcare giant GlaxoSmithKline (LSE:GSK) is another top UK stock I’m looking to buy for 2022 and beyond. Year-to-date shares are up nearly 16%. The company has managed to be consistent in surprising the market with its earnings over the years.
So what does GlaxoSmithKline have in its product line? The company operates through its pharmaceutical and vaccine segments. It has a major interest in respiratory & immunodeficiency diseases, vaccines, and oncology, among others. Not to mention the firm has some invested interest in smaller biotech groups researching other forms of treatment. For example, ViiV Healthcare recently made a breakthrough in HIV treatment and prevention. If the product is approved by the FDA, it has the potential of bringing over $2bn in annual sales alone.
With a diversified portfolio of new drugs in the pipeline, this UK stock looks like it’s in a strong position to thrive over the long term. But, like any business, there are risks, especially for a drug developer. Receiving regulatory approval is a complicated and expensive venture. If trials fail to produce satisfactory results or the treatment is too expensive for insurance companies to cover, the firm could suffer a major blow.
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Final thoughts on my top UK stocks to buy in 2022
Both these UK stocks have their risks. But given their potential returns, these are risks I’m willing to take for my portfolio. But they are not the only ones I’ve got my eye on. I’ve also got a few dividend stocks on my radar as well.
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Prosper Ambaka does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned at the time of writing. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.
