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The panic engulfing world stock markets continues to grow. However, some UK stocks continue to attract the attention of bargain hunters.
here are two London Stock Exchange companies that aj bell customers have been buying. Should I take them myself?
Lloyds Banking Group
There’s a lot to like about lloyds bank (LSE:LLOY) on paper. The business is trading at a forward price-earnings (P/E) ratio of seven times. It also has a dividend yield of 5.8%.
This perhaps explains why the FTSE 100 The bank is the second most popular among AJ Bell investors in the seven days to March 15. It has accounted for 8.1% of all buy orders at the time.
However, I am not tempted to buy Lloyds despite its low share price. And it’s not just because fears are mounting about a collapse across the banking industry. In fact, this bank’s low exposure to riskier assets allays my fears of a crisis here.
I have long worried about the company’s lack of exposure to foreign markets. With the UK economy facing a prolonged period of weak growth, Lloyds could find it difficult to turn a decent profit in the long run.
I am also concerned about the impact of increased competition from challenger banks. Companies like Starling Bank and Monzo are fast eating away at the market shares of major banks with their better savings and loan rates and superior online platforms.
Higher interest rates could continue to boost Lloyds results. The Bank of England’s tightening of policy boosted Lloyds’ underlying net interest income an impressive 18% rise in 2022, to £13.2bn. But overall, I think there are better UK stocks to buy at the moment.
SSE
I would prefer, for example, to buy shares in the green energy producer SSE (LSE:SSE) today. Even if the global economy falls off a cliff, this UK stock can expect earnings to hold broadly flat. This explains why its share price has also held steady despite the broader market carnage of recent days.
Electricity demand remains basically unchanged during economic improvements and recessions, after all. But this is not the only reason why I would buy it today. As a long-term investor, I am drawn to the enormous growth potential of renewable energy providers like this.
Wind energy providers such as SSE will play an important role in helping the UK achieve its net zero emissions targets. This means that even if adverse weather conditions hurt profits from time to time, over a longer time horizon profits here could skyrocket.
I also like this FTSE 100 trader as it speeds up investment in their green trades. It has plans to increase its production of renewable energy five times by the end of the decade. Its ability to achieve this goal is bolstered by Ofgem’s decision in December, too, to speed up the connection of offshore wind assets to the country’s electricity grid.
SSE shares accounted for 7.5% of all buy orders placed through AJ Bell in the past seven days. I think its bright long-term outlook, coupled with its great forward dividend yield of 5.5%, makes it a strong buy right now.
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