What would I buy if starting out afresh in investing? With an initial £5,000, I think the following could be among the best shares for me to buy.
A growth stock
My first pick is FTSE 250 growth stock Oxford Biomedica. The company specialises in gene-based medicine. And, I think it offers safety when compared to companies at the leading edge of drug development. That’s because Oxford Biomedica’s big product is its drug delivery platform, LentiVector. Other companies pay to use it, and Oxford Biomedica gets drug royalties on top.
There’s risk that the technology will be overtaken. And highly valued tech stocks can be volatile too. But the share price has fallen since October, and I smell a buying opportunity.
A dividend stock
When I think dividends, I think FTSE 100. And right now, I like the look of Taylor Wimpey. Housebuilders can be cyclical, and the Taylor Wimpey share price has had a volatile year. The shares had a poor start to 2022, on top of a mere 1.5% gain over the past 12 months. But that helps push the dividend yield up.
Analysts are forecasting a yield of 7.5% in 2022. Now, the risk is that dividends will fall in the future, and I fully expect them to be up and down. But the UK’s chronic housing shortage convinces me this is among the best shares to buy for long-term income.
A penny share
I see plenty of bargains around priced at under £1. And I’m in the FTSE 250 again, with Mitie Group. At 62p as I write, Mitie shares are down 40% over five years. And the company has suffered several years of falling earnings.
Mitie provides building maintenance, management, and improvement services. And that sector has been hit by the Covid-19 pandemic. But it’s getting better. My Motley Fool colleague Manika Premsingh has examined the firm’s latest trading update, which looks positive. I see a risk that the firm’s expectations are already factored into the share price. But I like Mitie as a long-term prospect.
A US stock
I’ve always considered financial services among the best shares. And right now, Western Union looks good value. As the developed world moves even further towards online money transfer services, Western Union will face risks. But a large part of the developing world still relies on remittances sent via the global network of WU agents. And I really do see that continuing.
The WU share price has dipped 15% in the past 12 months. But that drops its trailing price-to-earnings down below 10. Despite the growing competition from higher-tech alternatives, I see it as good value even with the risks.
Best share for diversification?
My final pick is one I already own, City of London Investment Trust. Starting any new portfolio, I’d include a diversified UK-focused investment trust. With just five slots in a £5,000 portfolio, it’s hard to get any meaningful diversification any other way.
Additionally, City of London has been paying dividends of 4%-5%. And it has raised its dividend every year for 55 years in a row. There’s a danger the share price could tank should that run come to an end. But I do think it’s one of the best shares I could buy if starting out.
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Alan Oscroft owns City of London Inv Trust. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
