Top 5 UK Stocks To Buy In December2024

These 5 stocks are our top Pro Picks for this month, taken from FTSE 250-listed companies that have garnered high InvestingPro health ratings (benchmarked against more than 100 financial factors and indicators from companies in the same sector), as well as from among those trading well under our proprietary fair value estimates (based on 5 overlaid investing models) and analyst assessments.

All of these names have earned InvestingPro health scores of well above 3.00, which for the last 7 years has indicated outperformance vs. the FTSE 250. A score this high points to a mix of first-rate financials: excellent earnings, cash flow, and growth vs. peers in its sector.

Importantly, all of these stocks are also currently undervalued per InvestingPro’s fair value calculations and favoured by Wall Street analysts polled by InvestingPro. They’re also sitting with a current potential upside of more than 20%. So if you’re eager to bulk up your portfolio, these overlooked powerhouse plays are all worth serious consideration.

• InvestingPro health score: 3.55 / 5.00
• InvestingPro average fair value: £37.65 / 59.5% upside
• Fair value confidence: Medium
• Industry: Capital Markets

Herald Investment Trust (HRI) continues as this month’s choice for investors seeking exposure to small-cap technology, media, and telecommunications companies in the UK market. As of October 30th, HRI boasts a market capitalisation of GBP 1.23 billion, signalling its robust footprint in the investment arena.

HRI’s financial profile draws interest with a notable Price-to-Earnings (P/E) ratio of 6.5, suggesting a reasonable valuation relative to its earnings potential, particularly for a trust focused on smaller tech entities. While it currently does not offer dividends, the trust emphasises capital growth, which could be appealing for long-term investors prioritising asset appreciation over immediate income.

In terms of debt, Herald Investment Trust maintains a conservative approach, ensuring robust financial health and reducing exposure to fiscal vulnerabilities. This discipline enables it to manage portfolio volatility, although, naturally, the small-cap focus can entail higher market fluctuations.

Analysts point to a substantial upside potential for HRI of almost 60%, thanks to rapid advancements and innovations within the technology and communications sectors, where the trust is strategically positioned. Prospective investors should consider that the allure of this trust lies in its potential for high returns driven by tech sector dynamism, balanced with the inherent risk factors tied to smaller company investments.

Overall, Herald Investment Trust presents an intriguing prospect for investors seeking to capitalise on technological growth with a preference for growth over immediate yield.

• InvestingPro health score: 3.08 / 5.00
• InvestingPro average fair value: £18.65 / 37.5% upside
• Fair value confidence: High
• Industry: Healthcare / Pharmaceuticals

GlaxoSmithKline (GSK), a stalwart in pharmaceuticals and healthcare, takes second place on our list for December. As of the latest quarter reports, GSK boasts a market capitalisation of £54.74 billion, underscoring its robust position in the industry. With a price-to-earnings (P/E) ratio of 21.8, GSK presents a competitive valuation, thereby offering potential value for discerning investors. One of GSK’s appealing attributes is its reliable dividend yield of 4.5%, providing a steady income stream for shareholders amid market fluctuations. The company has a manageable debt profile, ensuring it remains financially healthy to capitalise on growth opportunities.

Analysts identify a potential upside in GSK stock, predicting up to a 37.2% increase in share price driven by strong performance across its core pharmaceuticals and vaccine divisions. Despite a historically steady stock performance, investors should be aware of moderate volatility inherent to the sector due to regulatory climates and competitive pressures. GSK’s strategic pipeline advancements, particularly in its oncology and HIV treatments, offer a compelling growth narrative.

For investors seeking stable growth and consistent dividends, GSK’s blend of innovation and financial prudence positions it as an attractive option in today’s market landscape.

• InvestingPro health score: 3.43 / 5.00
• InvestingPro average fair value: £57.45 / 13.3% upside
• Fair value confidence: High
• Industry: Media

4imprint Group (FOUR), a leading marketer of promotional products, has gained enough traction to continue as a top stock pick for December 2024. As of the latest quarter, the company boasts a market capitalisation of approximately £1.42 billion, underscoring its strong position in the marketing and advertising sector.

The P/E ratio stands at a solid 16.2, suggesting an attractive valuation given the company’s consistent earnings growth. With a low debt level, 4imprint Group maintains a robust financial health that mitigates risks associated with leverage. This positions the company well to capitalise on emerging opportunities within its industry.

For investors seeking income, 4imprint offers a notable dividend yield of around 3.5%, reflecting its commitment to shareholder returns. This dividend provides a reliable income stream, which is particularly appealing in the current market environment. Analysts have identified a potential upside for the stock of 13.3%, bolstered by the firm’s strong performance metrics and strategic initiatives aimed at expanding its market reach.

Overall, 4imprint Group’s sound financial metrics, consistent dividend, and promising growth prospects make it an attractive opportunity for both conservative and growth-oriented investors.

• InvestingPro health score: 3.06 / 5.00
• InvestingPro average fair value: £26.32 / 16.4% upside
• Fair value confidence: High
• Industry: Consumer Staples / Food Products

Associated British Foods (ABF), a diversified international food, ingredients, and retail group, stands out as one of the top stock picks for December 2024. As of the latest quarter, ABF has a market capitalisation of approximately £16.41 billion, cementing its prominent position in the consumer goods sector.

The company sports a Price-to-Earnings (P/E) ratio of 11.3, suggesting that it is trading at a reasonable valuation given its stable earnings growth. ABF has maintained a prudent approach to debt, with a modest level that ensures financial stability and operational flexibility. This strategy is particularly advantageous given the volatile nature of the global markets.

Income-seeking investors will be pleased to note that ABF offers a competitive dividend yield of around 4.0%, demonstrating its commitment to delivering shareholder returns. Analysts see potential upside in the stock, driven by the company’s diversified business model, including its resilient food and ingredients divisions and the ever-popular Primark retail chain.

While the stock does exhibit some volatility, ABF’s diversified revenue streams, robust financial health, and strategic growth initiatives provide a solid foundation for long-term performance. Investors looking to balance growth and income in their portfolios should find ABF an intriguing option.

• InvestingPro health score: 3.62 / 5.00
• InvestingPro average fair value: £48.47 / 29.0% upside
• Fair value confidence: Medium
• Industry: Financials / Capital Markets

3i Group (III), a prominent British multinational private equity and venture capital firm, is our final top stock pick for December 2024. As of the latest quarter, 3i Group boasts a market capitalisation of approximately £35.93 billion, marking it as a heavyweight in the financial services sector.

The company’s Price-to-Earnings (P/E) ratio currently stands at a robust 8.5, indicating that it may be undervalued compared to its earnings. 3i Group maintains a prudent level of debt, which ensures financial stability and provides flexibility for future investment opportunities. This disciplined approach to leverage is crucial, especially in the volatile financial markets.

For income-focused investors, 3i Group offers a compelling dividend yield of around 1.7%, affirming its commitment to returning value to shareholders. Analysts foresee potential upside for the stock of almost 28.9%, buoyed by the firm’s diverse investment portfolio that spans various industries, including healthcare, consumer goods, and business services. This diversification strategy not only mitigates risk but also positions the company for sustained growth.

3i Group’s consistent track record of strong financial performance and strategic investments make it a compelling choice for investors. Its solid market fundamentals and growth prospects offer a balanced mix of income and capital appreciation.

If you’re looking for more great opportunities, here is a list of our top stock picks for previous months.