I think 2022 could be a great year for investing in shares. The end of 2021 has been challenging, especially for smaller-cap stocks. But that does create opportunities to pick up great companies cheaply. These five UK shares are stocks I already own and will be prioritising adding more of, hopefully to accelerate the growth of my portfolio and help me achieve my investment goals.

The 2021 losers

First up let’s start with the losers. These are gambling group Flutter Entertainment and spread-better CMC Markets. The former I’ve held for a while and it’s well down. I’m happy to ‘average down’, that is, buy the shares despite the price having fallen because in the long term, I’m optimistic about its growth prospects in the US. Management has done a great job getting market share there and making smart acquisitions. That’s why I’d invest in Flutter. The main risks are regulatory, plus the fact that the shares are quite highly valued at the moment.

Shares in CMC Markets fell by around 40%. I’ve recently explained what went wrong and why I think it’ll be a good share again in 2022. The company is founder-led, has plans to evolve and become a UK stockbroker, and the shares are cheap. The P/E is around four, which to me screams undervalued. But the shares don’t have momentum and I feel they could fall further. The UK stockbroking service may also not perform as expected.

More top UK shares

I’m confident Diageo can keep growing and indeed its management has recently laid out new medium-term forecasts, with annual organic sales growth of between 5% and 7% for the 2022/23, 2023/24 and 2024/25 financial years, compared with 4% to 6% from 2017 to 2019. Demand for drinks isn’t going to disappear and its strong brands mean Diageo should have pricing power and be able to keep sales growing. I think it’s a top stock, although it must be said the shares are quite expensive.

Next up is boutique asset manager, Polar Capital. I believe the group has opportunities to grow internationally and add new investment teams and funds to its roster. Plus it already has high margins. The stock combines a dividend yield of 5% with the potential for the share price to grow dramatically.

Of course, there are risks. If its funds start to underperform, Polar Capital shares could suffer as investors pull out money.

Last but by no means least is South African and UK homewares supplier Norcros. It combines a cheap share price with a forward P/E of eight and a decent dividend yield of nearing 3%. With housebuilding continuing to do well, there will be demand for showers and tiles and the other products the group supplies. That should keep sales up. A collapse in housebuilding, perhaps as a result of interest rate rises is one of the main risks it faces, along with possibly any instability in South Africa.

All five of these shares are among my most promising holdings. They had a mixed performance in 2021, but I back them to do well in 2022 and beyond.

Andy Ross owns shares in Flutter Entertainment, CMC Markets, Diageo, Polar Capital Holdings and Norcros. The Motley Fool UK has recommended Diageo, Norcros, and Polar Capital Holdings. 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.

WPP’s (LSE: WPP) reconstruction in the post-Martin Sorrell era has been pretty impressive, so far. Soaring advertising spending in 2021 following last year’s washout has, of course, helped. But news coming out of the FTSE 100 ad agency shows it has beaten expectations by a long chalk. Latest financials showed like-for-like revenues up 15.7% between July and September, much better than an anticipated sub-10% increase.

I’ve always liked WPP because of its huge geographic footprint and its excellent relationship with global blue-chip companies. And I’m encouraged by the agency’s drive to boost its position in the fast-growing digital advertising arena. WPP’s strong balance sheet means it has the firepower to realise its goals too. Earlier this month, it sealed a deal to bring branding and design agency Made Thought into its stable.

Too cheap to miss?

Today, WPP trades on a forward price-to-earnings growth (PEG) ratio of 0.9. This is inside the widely-regarded benchmark of 1 and suggests a stock could be undervalued. Okay, the FTSE 100 firm’s profits would take a hit if the global economy dives and advertising and marketing go for a bath.

However, for the moment, the outlook for ad-related expenditure looks rock solid. And although WPP’s ultra-low valuation reflects the possibility that earnings forecasts might disappoint, I’d happily buy it today.

A FTSE 100 hero I already own

I already own Ashtead Group (LSE: AHT) shares in my investment portfolio. At current prices, I’m thinking of loading up on some more. Today, the rental equipment play trades on a PEG ratio of just 0.6 for this fiscal year (to April 2022).

Profits at Ashtead have roared back into life this year as the construction industry has picked itself up off the floor. Fresh financials this month showed rental revenues leap 20% in the six months to October, much higher than City analysts had been predicting. Like WPP, Ashtead lifted its full-year expectations in response.

The best blue-chip of the 2010s

I’ve long been a fan of Ashtead and its acquisition-led strategy which has made its Sunbelt brand an industry titan in the US. So has the broader market, which is why Ashtead was the best-performing FTSE 100 stock of the 2010s. According to Refinitiv, someone who invested £1,000 in the business at the start of 2010 would have made a fatty £35,611 by December 2020.

So as an investor myself I’m pleased Ashtead is showing no signs of slowing on the acquisitions front. The rental giant’s spent $748m on M&A since the start of May, with an outlay of $320m in the current quarter alone. The company’s robust balance sheet means it’s been able to invest heavily in its existing operations too. Capital expenditure has totalled around $1.2bn in the financial year to date.

Profits at Ashtead could suffer if President Biden fails to get his infrastructure bill in the US passed. They could also take a hit if supply chain issues persist. Still, all things considered, I think this remains a top FTSE 100 share to buy right now.

Royston Wild owns Ashtead Group. 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.

I’ve been looking at potential metaverse stocks recently as there’s a lot of excitement about this sector right now. It could be the start of a new age, just as when the internet exploded at the turn of this century.

I think the potential is huge for the metaverse, or a fully digital world. This won’t be just for gaming, but for remote working and the wider entertainment sector too. With this in mind, there will be many opportunities for me to buy metaverse stocks. Here are a few I’ve been looking at.

What’s all the excitement about?

The buzz kicked up a gear in October when Meta (previously Facebook) said it would focus on bringing the metaverse to life. Meta is the first company I’d consider for my portfolio as I look to increase exposure to this sector. It says the metaverse will unlock new opportunities, and will “help people connect, find communities and grow businesses”.

The potential for video gaming is already well known due to augmented reality/virtual reality (AR/VR) technology. However, a metaverse has the potential to take this further by extending the real world into a digital counterpart. Users will have their own avatar (a digital version of themselves) that will be able to attend meetings, virtual events, and interact with others, all from their own homes.

I view the recent work-from-home culture as another catalyst for the growing metaverse. Companies like Zoom benefited from video meetings during the pandemic. I don’t think it’ll be long before employees (represented by avatars) are attending meetings virtually.

VR headsets will be critical for the metaverse. According to IDC, the forecast for the five-year compound growth rate in VR headset shipments is 41.4%. Meta is leading this charge with its Oculus brand of headsets.

Top metaverse stocks

There are other companies that I think will benefit from a growing digital world. The first is Nvidia, an advanced computer chip designer that focuses on graphics processing units (or GPUs). The company is building an Omniverse platform of its own. But beyond the Omniverse, Nvidia’s GPUs are going to be required to run the advanced graphics in any metaverse.

The next company is Roblox. It’s a development platform that allows its users to create their own online games and applications for others to use and play. The company is expanding its platform capabilities into the metaverse, and has partnered with some big brands to do so.

For example, Nike has used Roblox’s platform to create Nikeland. This is a virtual world dedicated to the brand that includes mini-games, and even a showroom where fans can get digital versions of Nike’s products for their avatars. There is huge potential here, in my view. More companies like Nike can leverage Roblox’s expertise and bring their brands into the metaverse.

I really do think the metaverse will offer significant opportunities for my portfolio. There are always risks to consider though, and there’s no guarantee Nvidia, Meta, or Roblox will be successful. It will take significant investment for these companies to keep innovating in this expanding sector. Were I a risk-averse investor, I might be better suited to investing in a technology-based ETF to diversify my exposure to any potential metaverse. Nevertheless, I’m excited by the prospects for these companies. They’re buys for my portfolio.

Dan Appleby owns shares of Meta and Nvidia. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Zoom Video Communications. 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.

We’re now only a few days away from cheering in the New Year. Yet just because we like to mentally start afresh and turn a page, doesn’t mean we can. The stock market carries over everything from 2021. With wobbles being seen last week in the market, I think that there are valid concerns for Q1 2022 around a potential stock market crash. If one happens, here are a few of the stock that I’ll be buying at cheaper prices.

Scooping up potential bargains

I imagine that concerns around Covid-19 disruption will be the main driver behind any potential stock market crash. With that in mind, I have a fair idea of the companies that could be hardest hit: airline stocks like IAG, engine manufacturers like Rolls-Royce and luxury brands such as Burberry.

A key point here is that most of these stocks (with the exception of Burberry) have struggled to receiver from the previous crash in 2020. This means that another crash would possibly push some to such low levels that they could become bargain buys.

I’ve steered clear of IAG shares this year as the price has fallen by 17%. Yet I would consider buying if a stock market crash pushed the price down by another 10%-20% and below 100p. Fundamentally, I’m trying to have a long-term view here. As long as I don’t think the company will go bust, I feel the share price should be higher when looking out several years.

If I want to take slightly less risk, then buying a stock like Burberry could be a good option. It has a strong online presence, which should help to offset lost revenue from store closures. 

Thinking about retaining value

Another angle I’m considering is looking less at stocks that could fall and more at those that could hold value better. For example, Kingfisher. The DIY retailer performed well during 2020, despite the stock market crash. Revenue actually rose, as people at home spent more time fixing things and starting DIY projects.

If any crash in 2022 is lockdown-related, then I think Kingfisher could be a good buy. Even if the crash isn’t related to Covid-19, I wouldn’t mind holding it in my portfolio. The products sold are essential goods, so I don’t envisage a period anytime soon when hammers and screws go out of fashion!

Other stock market crash options

Finally, it’s worth me thinking about other causes of a market crash. This is tough because one of the elements associated with a crash is surprise. If they knew what was coming, people wouldn’t suddenly be rushing to sell stocks. However, a potential cause could be around the political situation. The resignation of the Prime Minister or another upheaval in government could make waves. Or we could see problems with China really blow up next year.

In these scenarios, I would need to be reactive and understand the situation at the time before making a call. Ultimately, whatever the reason for a crash, I can use it to my advantage to find long-term value in stocks that have been oversold in the near term.

Jon Smith has no position in any share mentioned. The Motley Fool UK has recommended Burberry. 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.

A stock market crash can happen at any time. Looking ahead into 2022 and the Omicron strain of Covid poses a risk to stock markets. Michael Burry of ‘The Big Short’ also says there’s more speculation and overvaluation today than at other times when markets crashed.

I have to understand these risks as an investor. But a stock market crash may also be an opportune time to buy shares that have become cheaper.

With this in mind, here are two high-quality stocks I’d buy if a crash does happen.

A UK stock to buy

The first company I’d look to buy is Future (LSE: FUTR). It’s a digital publisher focused on areas such as games, film and technology. The company owns brands such as PC Gamer and Digital Camera, among others.

The share price has had a stellar run over the past 12 months as it’s surged 111% as I write today. Looking back even further and the share price was around 100p in 2016, compared to 3,698p now. This is an incredible return, so I question whether this can continue.

But if a stock market crash happens, I may be able to pick up some Future shares at a cheaper price. The stock fell significantly during the first Covid-related sell-off in March 2020, after all. However, as the company is an online media publisher, another lockdown should not impact the business. In fact, revenue increased by 53% in the company’s fiscal year 2020 (the 12 months to September 2020), and a further 79% in fiscal year 2021. Not only this, but Future has been able to steadily increase its operating margin over recent years. This says to me that the profitability of the company should remain high going forward.

There are certainly risks to consider, regardless of whether the shares become cheaper in a stock market crash. For example, Future is highly acquisitive. Any new acquisition will have to be integrated well to ensure business continuity.

A US stock to buy

The next stock I’d consider buying is Microsoft (NASDAQ: MSFT). It’s a member of the Big Tech group of companies in the US. I’m sure most people will have heard about Microsoft today as its software is used throughout homes and workplaces. The company has also been growing its cloud computing service, Microsoft Azure, which I view as an exciting prospect today.

I think this is a quality company, and it shows the characteristics I look for when buying shares. It achieves sky-high operating margins, and double-digit returns on its capital. Microsoft also generates significant levels of free cash flow, which is the cash left over after capital expenditures. This leaves room for the company to increase the dividend, or buy back its shares, which is great to see as a potential shareholder.

The reason I’d look to buy the shares in a stock market crash is due to the current valuation. The forward price-to-earnings (P/E) ratio is over 36 as I write today. This is quite high in my view. But if the shares became cheaper I’d snap them up for my portfolio.

I’d have to keep in mind that Big Tech companies are vulnerable to greater levels of regulation. This is a growing risk in the US right now and may impact Microsoft’s business going forward.

Dan Appleby has no position in any of the shares mentioned. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Microsoft. 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.

Although there’s still a few days left of trading in 2021, I think now’s a great time to review the performance of my top stock for 2021 — FTSE 100 beverage behemoth Diageo (LSE: DGE).

FTSE 100 beater

Despite the stop-start pandemic, supply chain disruption and rising inflation, Diageo investors have had a great year. At the close of play on Christmas Eve, its shares had climbed 36% in value during 2021.

This gain compares very favourably to the index in which Diageo features. Year-to-date, the FTSE 100 has increased 12% in value. That’s certainly not a bad result for those invested in funds tracking the market return. However, it’s yet more evidence that carefully selected shares (combined with a fair dollop of luck) can prove far more lucrative.

Is the FTSE 100 the best benchmark to use though? Given the dearth of companies similar to Diageo in the UK market, one needs to look abroad. In Europe, Pernod Ricard is up by 33% but Heineken Holdings has climbed just 4% in value. In the US, Brown-Forman has fallen almost 8%.

Given this, I think it’s hard to see Diageo’s performance as anything but stellar. In fact, the stock is now at an all-time high.

Why has Diageo done so well?

A good portion of Diageo’s success can be put down to the fact that cashed-up consumers have treated themselves to premium drinks brands to get them through lockdowns. Another reason has been the company’s decision to continue growing its cash payouts.

Investors have also lapped up the bullish outlook put out by CEO Ivan Menezes. Back in November, Diageo announced that it expected organic sales growth to come in between 5% and 7% from 2023 to 2025. As a comparison, growth of 4% to 6% was achieved from 2017 to 2019. 

Still a buy?

Following this year’s solid gains, Diageo’s shares now trade at 30 times earnings. That’s certainly not cheap relative to some shares in the FTSE 100. In fact, it’s far above the company’s own five-year average price-to-earnings (P/E) ratio of just below 24. So, is this stock still worth me buying today?

While I’m not convinced that Covid-19 will disappear in a puff of smoke, a relaxation of restrictions will undoubtedly be good news for the company. Sales at pubs and bars will recover. Investment bank Société Generale believes the company’s growth in the US can continue too. Its price target of 4,500p is 12% up from where we are now. 

Naturally, the bear case is very much the opposite of what I’ve just said: the pandemic drags on and savings start to dwindle without the support of a furlough scheme. In such a scenario — and considering the aforementioned valuation — the recent share price action could reverse. Earlier this month, broker RBC set a price target of 3,100p based on its belief that earnings momentum might be slowing amid low consumer sentiment in the US.

My verdict

Would I buy Diageo’s stock now? I’m not completely against it. I still consider it one of the best in the UK’s top tier, even if the shares do give up some of their gains in 2022. 

That said, I do think there’s potentially better value elsewhere in the market, particularly if I were also looking to build a diversified portfolio that could withstand whatever 2022 throws at it. 

Diageo isn’t my top stock to buy for 2022 but these are. 

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo. 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 Royal Mail (LSE: RMG) share price soared around 50% in 2021, making it one of the top performers in the FTSE 100. This was partly due to the boom in online shopping deliveries over the past year. As such, on the back of an excellent 2021, can the shares rise further in 2022, or will they see a decline?

Tremendous recent performance

In the first half of its FY21/22 financial year, Royal Mail’s performance has been excellent. Indeed, while revenues only rose 7% year-on-year, operating profits reached £311m. This is compared to an operating loss of £20m the year before, which was caused by restructuring charges and negative impacts from the pandemic. As such, the company’s recovery has clearly been very strong.

This has also allowed it to return a significant amount of money to shareholders, including an interim dividend of 6.7p and a special dividend of 20p per share. The firm also announced a share buyback programme of £200m, demonstrating its strong financial position. As such, the recent rise in the Royal Mail share price seems justified to me. A similar performance next year could see it rise even further.

Is the share price undervalued?

From a purely valuation perspective, the Royal Mail share price does look fairly cheap. Indeed, the group reported basic earnings per share of 27p in the first half of the year, and if it can perform in a similar way in the second half of the year, this would give the shares a price-to-earnings ratio of under 10. This illustrates that they may be too cheap and have space to rise in 2021.

It’s also important to consider GLS, Royal Mail’s subsidiary, when valuing the company. This is the company’s international business, which covers both North Europe and North America. While GLS produces far less revenue than Royal Mail, its profitability is around the same. The company also estimates that GLS operating profits will total around €500m in FY24/25. As such, this business could be a key driving factor for the Royal Mail share price.

Nonetheless, there are some factors that may hold the shares back. For one, wage inflation is a very large problem for Royal Mail, because around half the company’s operating costs are staff costs. There are also some barriers to its modernisation programme. This is due to pressure from trade unions, which have in the past blocked Royal Mail from cutting costs. This included preventing the company from making any compulsory redundancies. These factors may see operating profits decrease over the next few years.

What am I doing?

Despite these risks, I still believe that the Royal Mail share price has upside potential heading into 2022. The pandemic seems to have quickened the transition into e-commerce, and this should benefit Royal Mail and other delivery companies.

Despite the hurdles posed by trade unions, a modernisation programme is still in process. This is expected to lead to around £100m in annual savings. This should help offset any additional costs caused by wage inflation. Therefore, while I don’t think the company can replicate its 2021 performance, there still seems to be space to rise next year. Therefore, I may buy some Royal Mail shares.

Stuart Blair 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.

Regarding stocks and shares, two general themes fill the headlines as we leave 2021. The first is the exponential growth of the Omicron variant of Covid-19. And the second is the rise of general price inflation.

2021’s correction by stealth

But stock markets look ahead. So both those known factors are likely to be already baked into stock prices. And we’ve seen quite a large correction in many share prices during 2021. There hasn’t been a crash in the main indices, such as the FTSE 100. But some investors will have seen one in their own stock portfolios.

In many cases, 2021 has been characterised by plunging share prices. And that’s a striking difference compared to the way stocks roared upwards in 2020 from the bottom of the spring coronavirus crash. And that’s why some people have labelled the recent action a stealth correction — index watchers might have missed it.

For 2022, in terms of stocks, I’m not stressing too much about Omicron. I reckon science will likely prevail over the disease and its variants in the end. Vaccines and treatments keep evolving and they keep coming. And it’s difficult for me to imagine Covid-19 ever causing a lockdown of economic activity with the severity of the first one we had in 2020. However I could, of course, be wrong in my assessment of the situation.

The inflation problem is tricky. I’m not hearing the word ‘transient’ much these days. And the problem looks like it will be with us for some time. So it’s tempting to allow my mind to spin-off into all kinds of scary thoughts about rampant 70s-style price increases and exploding interest rates.

Many businesses can thrive, despite inflation

But the economic framework of the 2020s is unlike that of the 1970s. The UK’s base bank interest rate is at 0.25%, as I write — not far up from its 0.1% nadir and the lowest it has ever been. And the base rate is one of the main tools the UK government can use to try to control inflation. Raising it tends to affect how much people spend and therefore how much things cost because of the laws of supply and demand. In other words, if demand is suppressed, prices tend to fall to attract it back. And that process tends to reduce inflation.

Meanwhile, the government aims to keep inflation at 2% rather than November’s Consumer Prices Index (CPI) figure near 5%. And many observers expect the Bank of England to raise the base rate further to help fight inflation if it persists.

But many businesses can continue to thrive despite higher inflation. Warren Buffett said the most important qualities they need are pricing power and low capital intensity. So I’m watching defensive stocks rather than cyclicals for 2022.

My list has names such as Unilever, Diageo, Imperial Brands, British American Tobacco, Britvic, Sage, GlaxoSmithKline, AstraZeneca and others. However, positive investment outcomes aren’t certain just because I like them now. All shares carry risks.

Nevertheless, I’m watching them and poised to buy the stocks at opportune moments. They are some of my best share ideas for 2022 and beyond.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco, Britvic, Diageo, GlaxoSmithKline, Imperial Brands, Sage Group, and Unilever. 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.

Inflation is a huge problem for UK savers right now. Here in the UK, inflation hit a 10-year high of 5.1% in November. That means money sitting in the bank earning 1% is losing its value fast.

The good news is there are ways we can protect ourselves against inflation. Investing some of our money (money we can afford to put away for the long term) in shares is one way as shares tend to rise more than inflation over the long run. With that in mind, here’s a look at three UK shares I’d buy for 2022 to protect myself against inflation.

UK shares to beat inflation

One group of stocks that typically does quite well when inflation is high is real estate investment trusts (REITs). That’s because real estate prices tend to rise alongside inflation. Additionally, landlords can put their rents up.

In the UK, there are a number of good REITs in the FTSE 350. One of my favorites is Tritax Big Box (LSE: BBOX). It owns and manages a portfolio of large-scale ‘big box’ warehouses let out to major retailers such as Amazon and Tesco.

There are a number of things I like about BBOX from an inflation-protection perspective. Firstly, around half of its rent reviews are linked to consumer price increases. This means it should be able to raise rents if inflation stays high. Secondly, the strong growth of the e-commerce industry is supporting real estate prices.

There are risks here, of course. One is that the company sometimes needs to raise money from shareholders to fund its growth. This can impact the share price in the short term. I’m comfortable with this risk as I think the company’s long-term prospects are excellent.

Inflation protection

Another stock I believe could offer protection against inflation is Rightmove (LSE:RMV). It operates the UK’s largest property website.

There are two main reasons I like RMV in the current environment. The first is that it has a very dominant market position. This means it should have the ability to raise its prices.

Secondly, it’s business model is well suited to a high-inflation environment. As an internet company, it doesn’t need to worry about things like raw materials or transport costs like many ‘old-economy’ companies do.

One risk here is further lockdowns. If we see these return in 2022, RMV’s revenues may fall.

Overall however, I think the risk/reward proposition is attractive. The forward-looking P/E ratio of 32 seems reasonable to me.

Long-term growth story 

Finally, I also like Prudential (LSE: PRU) for inflation protection. It’s a leading insurance company that’s focused on Asia and Africa.

The reason I like PRU is that when inflation is high, interest rates tend to rise. This is good for insurers because they can earn a higher level of income on their investments.

I also like the fact that the company is focused on Asia and Africa. These are untapped markets from a financial services perspective, meaning the long-term potential here is significant.

A risk to consider here is that insurance stocks can be volatile. When markets wobble, these stocks can fall further than the market as a whole.

I’m not put off by this risk however. I think Prudential has the potential to deliver attractive returns in the years ahead.

Edward Sheldon owns Prudential, Rightmove, and Tritax Big Box REIT. The Motley Fool UK has recommended Prudential, Rightmove, and Tritax Big Box REIT. 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.

I’m searching for the best cheap UK shares to buy for my investment portfolio in 2022. Even though the economic outlook is fraught with danger I think these top stocks could still deliver delicious near-term returns.

Riding the cycling revolution

The last couple of years have been bittersweet for car parts and bicycle retailer Halfords Group (LSE: HFD). Sales of its bikes rocketed as Covid-19 gym lockdowns prompted people to find other ways to get fit. However, severe supply chain problems meant the business hasn’t been able to capitalise on this trend to its fullest. This is an obstacle that looks set to continue too.

As a long-term investor, I’m tempted to buy Halfords shares. Britain has fallen back in love with cycling and rising investment in cycle infrastructure should continue supporting strong demand for the retailer’s products. Rising environmental awareness should also help sales as more people are expected to hop on their bikes and leave the car at home. Today, this UK share trades on a forward price-to-earnings (P/E) ratio of 10.4 times.

Lok’N load

The self-storage market in the UK is booming. It’s why analysts think earnings at Lok’N Store Group (LSE: LOK) will rocket 188% in this financial year (to June 2022). Demand for space is rising for a number of factors, such as large numbers of people moving house and embarking on home renovations. The growth of e-commerce is fuelling occupancy rates too, as well as supply chain issues encouraging retailers to boost their stock levels.

Based on current earnings forecasts Lok’N Store trades on a forward price-to-earnings growth (PEG) ratio of 0.2. This is comfortably below the benchmark of 1 that suggests a stock could be undervalued. I’d buy the business at these levels even though demand for its storage units could suffer if consumer spending power slips in 2022.

Head to the Kape!

I’d also buy Kape Technologies (LSE: KAPE) to try and make a stack of cash as the cybercrime problems grow. This UK share creates products that keep users’ data secure and private such as VPN software and antivirus programmes. This is a highly competitive environment and success is by no means guaranteed. However, I’m impressed by the breakneck progress Kape’s making in an industry dominated by big hitters like Avast and McAfee.

In its latest financial update, Kape said it expects full-year revenues for 2021 to hit “the upper end” of a forecasted range of $197m-$202m. By comparison, the tech titan punched sales of $122.2m in 2020 and $66.1m the year before that.

Kape’s progress is probably no surprise given the rate at which the cybersecurity market is growing. Researchers at Mordor Intelligence think the industry will be worth $352.5bn by 2026. That compares with the $156.2bn it was valued at last year. I don’t think Kape Technologies’ low PEG ratio of 0.2 reflects its exceptional growth opportunities this decade.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Avast Plc. 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.