I am on the lookout for the best UK shares for my portfolio. One stock I am currently considering is Marshalls (LSE:MSLH). Should I buy or avoid the shares for my portfolio? Let’s take a look.

Construction and building supplier

Marshalls is one of the UK’s leading landscaping product manufacturers. It manufactures and supplies a multitude of products such as natural stone and concrete for the construction, home improvement, and landscape markets. It has roots stretching back to 1890s.

Marshalls sells its products via three main channels. These are to builders merchants and private builders, large construction firms, and direct to consumers.

As I write, shares in Marshalls are trading for 722p, which is similar to this time a year ago when shares were trading for 721p. In the three months, shares have dropped from 845p to current levels. Is now a good opportunity for me to buy cheap shares in an established company?

Positive performance and outlook

Marshalls’ most recent trading update was a half-year report announced in August, which made for excellent reading. It reported that revenue has surpassed 2020 and pre-pandemic 2019 half-year levels, as did gross profit, which shows strong recovery since the pandemic affected it. Debt levels had decreased from 2020 and pre-pandemic levels, which was due to excellent trading and favourable market conditions. An interim dividend of 4.7p per share was declared. This was the same amount as in 2019. There was no interim dividend in 2020. Many UK shares cancelled dividends in 2020 to conserve cash.

Marshalls has a good track record of performance too. I do understand past performance is not a guarantee of the future but I use it as a gauge nevertheless. Prior to the pandemic-affected 2020 results, revenue and profit grew year on year for three years in a row. I expect the next full-year results to surpass 2019 levels if this half-year report is anything to go by.

The outlook ahead is positive for Marshalls in my opinion. The construction sector is booming right now and the UK government has committed to spending £100bn on projects over the next few years. This could boost Marshalls and it is also taking its own steps to grow further. It has decided to spend £21m in 2021 as capital investment to aid growth plans. This includes a new manufacturing plant in St Ives.

UK shares have risks

Despite my bullish stance, I must note credible risks of investing in Marshalls. It is well known that macroeconomic issues affect the construction industry most of the time. Current supply chain issues as well as rising inflation and costs could affect operations, performance, and the bottom line. This could affect investor returns. Furthermore, the pandemic is not over and any new variants could derail performance, like it did in 2020 at the beginning of the pandemic. Other similar UK shares could be affected by similar issues.

I would buy Marshalls shares. At current levels, I think the shares are a tad expensive with a price-to-earnings ratio of close to 30, so if shares were to cheapen I would be even happier to add them to my portfolio. I’m confident the construction boom will benefit Marshalls, and it has a good position in its market to continue growing, performing well, and providing investor returns.

Jabran Khan 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.

The UK government’s stimulus measures did their job keeping the economy relatively buoyant during the pandemic. And this is evident from the real estate market. The housing market saw a massive boom as people rushed in to make the most of the stamp duty holiday. House builders, as a result, continued to see strong order books.  

Bricakability’s stock is on the rise

Because of this, property and related stocks did well, like Brickability (LSE: BRCK), the concrete blocks and bricks manufacturer. Its share price is 104p as I write, close to its highest ever levels. The stock, which was publicly listed on AIM in 2019, has been a penny stock all along, and it is only in August this year that it rose above that level. It has stayed above 100p ever since. Let me put it another way. The stock has moved way past its pre-pandemic levels, which I often use as a guiding point to understand a stock’s progress since the pandemic. 

Solid results

And I reckon that there could be more growth in store for Brickability. Consider its latest results. The company reported a huge 197% increase in revenue for the six months ended 30 September 2021 compared to the same six months in 2020. Its pre-tax profits have also seen an impressive rise of 120%. 

These results have received a huge bump-up from its acquisition of Taylor Maxwell earlier this year, which adds to its portfolio of services that now include timber cladding. However, the company’s like-for-like revenue growth, which is adjusted for the impact of acquisitions, has also been robust at around 54% as well. I also like that it has made the acquisition without taking on a whole lot of debt. Its debt levels have barely budged from last year, because it was funded through an equity raise.

Positive outlook for the near-penny stock 

Brickability’s outlook is positive too. It expects that its full-year performance will be “at least” in line with what the market expects. I read that to mean that there is a good chance that it could actually be higher. It is also on an acquisition drive, which could see it expanding fast in the coming years. 

What I’d do now

With this strong showing, the stock does look somewhat pricey right now. Its price-to-earnings (P/E) ratio is 25 times, but it could well be the premium that investors are willing to pay for a high growth stock. I reckon that if the economy goes into a tailspin because of coronavirus or inflation or any other threat we can think of, a stock like Brickability could be impacted. And then buying at the present price might not seem like such a good idea. 

But going by both its profit-making capacity in the past and with a view to its future, I think it does look like a good stock for me to buy. Penny stock or not, this is one I like.  

Manika Premsingh has no position in any of the shares mentioned. 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.

Babcock International (BAB) has had its problems in recent times. Today’s half-year results announcement could show if recent major changes at the company have benefitted it and if the shares could be a good investment for my portfolio.

As I write, shares are trading for 309p. A year ago shares were trading 1% higher at 314p. The shares did rally earlier this morning to 321p after its report was released.

Aerospace, defence, and security

Babcock is an UK-based international aerospace, defence, and security business and operates marine, naval, land, and aviation divisions. It has a footprint in Canada, Australasia, and South Africa, as well as other key markets.

Aviation and defence spending is a lucrative market. Many governments can often continue spending on such things even in times of austerity. Babcock shares have unfortunately fallen out of favour with investors recently. Accounting problems and leadership issues have led to a loss of investor confidence. Since these challenges arose, a change in leadership and a thorough accounting review could mean a recovery is underway. 

Recent performance and outlook ahead

Babcock’s strategy has refocused the business under new leadership. This has resulted in the sale of some of its business to streamline operations as well as the accounting review mentioned, which saw some past results restated. 

So has this change in tack benefitted Babcock? Based on HY results announced today, it seems to be the case so far. It reported revenue had increased from £2054m in the same period last year (although these figures were restated after the accounting review) to £2,223m. Losses reported last year turned into an underlying profit of £115.3m this year. Net debt had also decreased, which is always positive.

Babcock pointed to a strong contract backlog worth over £10bn, especially linked to its maritime division. It recently signed an agreement with the UK’s Ministry of Defence worth £3.5bn. In addition, the ongoing sale of smaller businesses will continue to help it save money and streamline operations. Additional positives from the report were further contract wins worth over £700m in the half-year period.

Babcock shares have risks

Babcock’s results are positive but there are still credible risks worth noting before I invest. Firstly, it notes supply chain issues and rising inflation as potential threats to achieving forecasted full-year results. These are common macroeconomic pressures a lot of firms are experiencing issues with right now. Furthermore, Babcock seems to be on the right track once more but there is still lots of work to do to streamline operations and continue growth and winning new business. History teaches me this can be a long and tedious task, which could affect performance as well as investor sentiment and returns.

I think Babcock shares remain a risky prospect, so I would not buy shares for my portfolio at the moment. It seems the new leadership team has got its house in order but there is a long way to go and macroeconomic issues to contend with too. Right now, I will sit on the sidelines and keep an eye on developments.

Jabran Khan 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.

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Over the past year, many stocks have rallied. However, stock market buoyancy has taken a hit in the past few months. While many stocks have still maintained some gains, only a few have managed to almost double their share price from last year. This FTSE 250 stock is one of them.

Media company Future (LSE: FUTR) has seen a 97% increase in its share price over the past year. And if that’s not impressive enough, over the last three years, it has seen a huge 540% increase in its share price. This is an extremely promising place for me to start figuring out whether it would make a good buy for me even now. 

Strong results for Future

Its latest financial results would certainly suggest so. The publisher of brands like The Week and MoneyWeek reported a fine set of numbers last week for its financial year ended 30 September 2021. Its revenues grew by a significant 79% compared to the year before, its pre-tax profits were up 107% and cash generated from operations increased by 117%. 

These latest figures only add to its consistent growth over the years. It also expects this growth to continue in the next year. In its outlook, the Future Group says that growth could accelerate in the second half of financial year 2022. It has also upgraded its expectations and now believes its adjusted numbers for next year will be “materially above current expectations”. 

Analysts optimistic about the FTSE 250 stock

It is little wonder then,  that analysts’ estimates compiled by the Financial Times expect its share price to rise by around 33% in the next 12 months. The more optimistic ones expected that it could rise by another 56%. However, not everyone is equally bullish. There are some analysts who expect a price fall by 37% as well. 

What could go wrong

Immediately, I can see at least one reason why this is the case. In relative terms, the stock is super-expensive. At 56 times, its price-to-earnings (P/E) ratio is far higher than that for many other FTSE 250 stocks. Of course there is a reason for this: it has done quite well, even at a time when many other companies have languished. So clearly, investors are willing to pay a premium for it. Additionally, its outlook continues to make the stock look promising. 

However, I think that if we finally put the pandemic behind us in the near future, it might look less attractive as an investment candidate for my portfolio. Stocks that are still struggling today might be more attractive — and affordable — investment options at that point.

My takeaway

On the whole though, I like the stock for its long-term potential. If I am willing to hold it for the next five years, for instance, there is a good chance that it will be a rewarding one to buy. Keeping this in mind, it is on my list of stocks to buy in 2022. It might not double my money next year, but I am hopeful it will do so over time.

Manika Premsingh has no position in any of the shares mentioned. 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.