The top 10 UK stocks the world’s best managers are buying

Blue-chip mining giant Anglo American (GB:AAL) has roared back into the ranks of the top 10 UK-listed companies based on their popularity with the world’s best-performing investors whose holdings Citywire Elite Companies tracks. A table of the top 10 can be found at the end of this article.

Anglo’s climb into the UK top 10 this month follows rival BHP (AU:BHP) abandoning a $49bn bid for the company.

BHP walked away at the tail end of May after its target denied it more time to firm up an offer. BHP’s move, following its six-week pursuit of its rival, provided a short-term boost to Anglo’s share price, aided by its own restructuring proposals, though the shares have since fallen back.

BHP had been keen to secure access to Anglo’s lucrative copper mining operations. The metal is seen as crucial to the success of the energy transition but there is growing speculation about a supply crunch due to the lack of new mines being developed.

One of the main reasons the companies failed to reach an agreement was that BHP’s proposal meant Anglo would have had to jettison its platinum and iron ore businesses in South Africa.

Anglo and BHP have top AAA Elite Companies ratings based on heavy backing by leading portfolio managers, all of whom are among the best-performing 3% of 10,000 monitored by Citywire. Anglo, meanwhile, ranks eighth among all British companies this month. 

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Elite Investors’ most-favoured UK stock in June is Shell (GB:SHEL). The blue-chip energy group regularly vies with oil and gas rival BP (GB:BP) and pharmaceuticals giant AstraZeneca (GB:AZN) for the number one position on Elite Companies’ UK list.

The most popular holdings in the UK tend to be large-cap businesses, with relatively low valuations and strong profitability (measured by return on equity in the graph below). As a group, they produce attractive cashflows and pay chunky dividends.

As well as Anglo, two other new arrivals in the UK top 10 have been added since May. Standard Chartered (GB:STAN), the London-listed Asia-focused banking group, joins in ninth position after an absence of several months. One of two financial businesses on the list – the other being Barclays (GB:BARC) – it reported better-than-expected first-quarter results at the beginning of May.

The bank, which has been cutting costs and simplifying its structure, performed strongly across its various business lines during the first quarter but did particularly well in wealth management.

In February, Standard Chartered CEO Bill Winter bemoaned the bank’s ‘crap’ share price as he reported soaring profits for the fourth quarter. The shares have since increased in value by just over 15% but still trade on less than six times forecast earnings.

Also new to the top 10 is aerospace and defence group BAE Systems (GB:BA), whose shares have almost trebled over the past three years amid increasing geopolitical hostilities globally.

Over the past two months, the shares have benefited from the declaration in April by UK prime minister Rishi Sunak that a Conservative government would increase spending on defence to 2.5% of GDP by 2030.

Labour leader Kier Starmer later made the same promise, meaning that, whichever of the two main parties wins next week’s general election in the UK, there is a commitment to lift the defence budget.

All 10 companies are rated AAA using Citywire Elite Companies’ groundbreaking ratings methodology.

The UK top 10

The table is ordered by popularity with the world’s best portfolio managers.

Source: FactSet. Forecasts based on next 12 months.