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As we draw close to the end of April, I have been thinking about what shares I could add to my portfolio. Even with a spare few hundred pounds, I would consider the following two UK shares to buy now for my portfolio.
Victrex
Victrex (LSE: VCT) may not be well-known, but its customers tend to be large industrial companies. It makes polymers that go in everything from cars to spacecraft.
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There are a couple of things about the business that attract me. The first is that the applications to which its products are put are often mission critical. When safety is a consideration, customers are more likely to focus on quality than on cost alone. That gives UK-based Victrex the ability to compete against producers in lower-cost countries. Secondly, the company is a leader in certain polymer technology and has patents on some products, meaning that competitors cannot make them.
That adds up to a recipe for business profitability and last year, post-tax profits came in at £73m. While that was higher than the year before, it remains well below what the company managed in the years before the pandemic. Ongoing supply disruption remains a challenge for the company, along with cost inflation and soaring energy bills. Those things could help keep the share price depressed in the next couple of years.
That makes me regard it as a good stock to buy now for my portfolio. The long-term prospects for Victrex look sound to me. Over time, I expect supply chain issues to get better and inflation to become more manageable without hurting profit margins. The shares offer me a 3.3% yield and I think there is the prospect for share price growth in coming years.
Victorian Plumbing
Digital bathrooms, kitchens and plumbing merchant Victorian Plumbing (LSE: VIC) has also been suffering from investor concerns about the impact of inflation on its profit margins. Another concern is whether demand will fall, hurting revenues. Whereas Victrex’s customers have little choice as to whether or not they need polymers, Victorian Plumbing is selling what in some cases is a discretionary product. If inflation starts to bite household budgets, many people may put a planned bathroom renovation off for the foreseeable future.
That is weighing heavily on the Victorian Plumbing share price, which has fallen 82% in the past year. Yet like the chief executive, who has been purchasing shares lately, I see this as a buying opportunity for my portfolio. The company is profitable and has expanded its customer base over the past couple of years. Its asset light model means it does not need lots of capital to keep growing.
I see both of these companies as having attractive investment cases. I have added them to my portfolio and am hoping to see possible share price growth from them in the coming years.
With £300, I would put £150 into each, sit back and hope to see the businesses do well.
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