Best shares to buy in the UK

Last updated: 17.01.2022
Dominic Hawker
Dominic Hawker
CFD & Trading
> 30 years

There was a time when it was next to impossible for the average person to be able to buy shares in the UK without being extremely wealthy and having ‘connections’ with a stockbroker.

In modern times, so much has changed in this respect and there are now abundant opportunities for everyone to invest in stocks. Finding the best shares to buy, UK based or global, is no longer an onerous task and there is more than one way to get involved with stock trading.

What we will be covering in this guide:

  • An overview of the different ways to trade stocks
  • A look at how some stocks are performing
  • Tips on how you can trade stocks for free

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  • Stocks and shares
  • Ways to trade stocks
  • A quick guide to brokers
  • Exchanges to note
  • Best shares to buy UK
  • Best stocks to buy UK as CFDs
  • Buying the best shares in the UK

Stocks and shares

If you were to ask a stockbroker that question, he would probably be horrified that you are about to embark on an investment that you do not fully understand.  To avoid that embarrassment, we thought we would start this guide by explaining the subtle difference between the two.

Technically, a share represents a single unit of a company’s total stock offering, although, in modern trading terminology, including that used by brokers, they are interchangeable.

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Ways to trade stocks

Before we move on with how to buy shares UK, it is really important that you fully understand the difference between these two ways to trade stocks.

Real Stocks

When you invest in real stocks, you are buying shares in a business that has been listed on the stock market. You own the shares, together with any entitlements that go with them, such as annual dividend payments or company voting rights.

Stock CFDs

Trading stock CFDs is an entirely different approach. A ‘Contract for Difference’ is a contract (with a broker) that enables you to speculate on whether the price of a given stock will rise or fall, over a certain period of time. CFDs are a derivative product, based on the underlying asset, therefore you do not gain ownership of the stock or any privileges associated with it.

A quick guide to brokers

Traditional stockbroker

You cannot buy stocks without engaging the services of a stockbroker to act as your intermediary. Traditionally, you would pay quarterly or annual fees to your broker and he would do everything on your behalf.

This type of full-service is still available, at a substantial cost, but modern stockbrokers are moving more towards free stock trading UK based and with a self-service online platform. This means you will avoid paying commissions, but there will always be some costs involved, which you need to determine in advance.

CFD provider

Finding a brokerage that offers stock CFDs is a far easier task, but there are a lot to choose from and some are considerably better than others. We always recommend that you opt for a UK-based, FCA (Financial Conduct Authority) regulated broker to give you peace of mind and financial protection.

Exchanges to note

The London Stock Exchange (LSE) is the primary target for most UK stockbrokers and their clients. However, there are certainly opportunities to diversify to European, US or Asian markets if that is your preference and your broker offers them.

The Financial Times Stock Exchange 100 is more commonly known as the FTSE 100 or colloquially, as the ‘Footsie’. It is a stock index comprising the top 100 companies on the London Stock Exchange. The FTSE 100 is considered to benchmark the prosperity of UK-based businesses.

If you were to consult the FTSE 100 today, you would see that the best shares to buy in UK now are those of Unilever (ULVR). This is a UK/Dutch-owned company that has operated from the UK since 1870. Unilever markets around 400 household brands as well as operating a number of scientific research centres scattered across the UK.

Just as a point to note, companies listed on any stock exchange are appointed a ‘ticker symbol’ for global identification purposes, which is basically an abbreviation of the company name and is always portrayed capitalised. For example, Unilever is ULVR, AstraZeneca is AZN and Tesco is TSCO. Not all of them are entirely intuitive, so it does help to know the ticker symbol for any stocks that interest you.

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Best shares to buy UK

Blue Chip companies are the big high street names that we all know and love. The blue-chip tag is derived from poker, where blue chips have the highest denomination. They are typified as well-established and financially sound, with a reputation for consistently high dividend payouts to their investors.

This type of stock is immensely popular with traders, most likely because the companies are familiar territory and often seen in the media. Amazon is a prime example of a blue-chip entity and you will find it listed on the NASDAQ-GS, which is the elite tier with strict financial and liquidity requirements.

On NASDAQ the Amazon stock ticker is AMZN, but if you want to buy Amazon shares, UK brokers are certain to offer them through the London Stock Exchange where they are identified by the ticker 0R1O.

Once you start to analyse the markets and exchanges, you’ll also begin to identify stocks that are performing well – allowing you to track trends and focus on those stocks that you deem notable.

Best stocks to buy UK as CFDs

For those traders without the capital available to invest in real stocks, CFDs provide a realistic and viable alternative. Instead of buying and owning shares, you are instead speculating on whether the share value will rise or fall. This also means that you can profit from either a buy (long) or sell (short) position.

Here is a quick example for you. To buy Apple shares, UK CFD brokers are currently showing the price at $133 per share and you take a long position. If your prediction was correct and the stock goes up to $134 per share, you can close the trade with a profit. Not all CFD brokers use the stock ticker, but for reference, it is featured on NASDAQ as AAPL.

Because you are trading a contract based on the underlying asset, this does mean you will forego the privileges of share ownership like dividend payments. However, trading CFDs requires far less capital to get started and they are available from a vast number of UK brokers.

Another advantage of trading CFDs, rather than investing in the assets themselves, is the availability of leverage, which allows you to enter a trade with a relatively small deposit but take a bigger trading position by ‘borrowing’ capital from your broker.

Stock sectors – the way different types of business are classified on the stock market

The stock market is divided into eleven sectors, which defined under the Global Industry Classification Standard (GICS):

  • Energy
  • Materials
  • Industrials
  • Utilities
  • Health care
  • Financials
  • Consumer discretionary
  • Consumer staples
  • Information technology
  • Communication services
  • Real estate

This makes it easier to compare companies that have the same overall business interests. Within each sector, there are further divisions, which include 24 industry groups, 69 industries, and 158 sub-industries.

Stock market sectors are important because they can give you an overall picture of how certain types of business or specific industries are performing, rather than following just one example. No single sector is better than any other in investment terms and the top five routinely exchange places in the list.

If we take Tesla as an example, it belongs to the consumer discretionary sector, although some experts claim the stock patterns are more akin to the IT sector. Either way, it is an interesting one and if you want to buy Tesla shares, UK brokers will have it listed with the ticker 0R0X on the LSE, but you will also see it on the NASDAQ-GS index with the ticker TSLA.

Buying the best shares in the UK

As you can see, albeit, in a very brief depiction of the UK stock trading marketplace, share trading can be an interesting and rewarding way to add diversity to your portfolio.  Whether you opt for investing in real stocks or choose to go the stock CFD route, getting to know the asset inside out is always the key to successful trading decisions.

If you want to know more, then feel free to look in the trading guides section of our website where you will find guides to all types of trading, and other helpful subjects like selecting a broker, or a trading platform, as well as plenty of in-depth broker reviews.

Best shares to buy UK FAQ

📈 Which is better, buy real stock or trade CFDs?

There is a lot to be said for both, but they are completely different ways of investing or trading, each with advantages and disadvantages. Find out more by reading our trading guides and you are certain to find out which will suit you best.

⭐ What UK shares are best to buy right now?

It isn’t clear whether you mean shares in a UK business, or which shares to buy through a UK broker. To find out exactly which options are available to you, explore our guides to trading in shares along with plenty more valuable trading information.

❓ How do I choose a broker?

There are two different types of broker, depending on how you want to trade stocks. A good starting point is to read our guides which will explain the differences between the two and provide you with all of the information you need.

✅ Is stock trading in the UK legal and safe?

Stock trading is a legitimate form of trading in the UK and if you opt for an FCA-regulated stockbroker, your investment is guaranteed to be kept safe. Some offshore brokers also offer services to UK traders, but if they are not FCA licensed, you will not have the same level of protection. Find out more by reading our guides to stock trading and in-depth broker reviews.

⚡ Which is better Apple or Amazon stock?

If you check out the NASDAQ share prices, you will see that there is a big difference in the value of the shares of these two companies. However, there is far more involved when you decide which shares you want to invest in. Please read our guides to stock trading, where you will find plenty of help with deciding what and how to invest.

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