Here’s 1 top UK share I’m buying and another I’m adding to!

UK shares have performed relatively well compared with other companies around the world in recent months. Nonetheless, I still think that there are opportunities to pick up stocks at low prices. Let’s take a closer look at two I’ve found.

A household name

Coca-Cola HBC (LSE:CCH) has very solid earnings growth. Between 2017 and 2021, its earnings per share (EPS) rose from ¢117 to ¢150. By my calculation, this results in a compound annual EPS growth rate of just over 5%. This is strong and consistent for this business, which is the Coca-Cola operation in Europe.

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What’s more, pre-tax profit has increased from €565m to €735m over the same time period. In addition, operating cash flow is around $1.14bn, while the debt pile was $2.94bn at the end of March.

The investment bank Jefferies recently upgraded its view on the shares from ‘hold’ to ‘buy’, increasing its target price from 1,800p to 2,000p. At the time of writing, the shares are trading at around 1,800p.

Despite this, the ongoing war in Ukraine has dented some of the company’s operations, because it essentially ceased trading in Russia. This is problematic for the firm, as sales in this area generated around 20% of profits. 

Given the unpredictable nature of the war, it’s not yet known how long this issue might impact the business.

Ready for take off

International Consolidated Airlines Group (LSE:IAG) was hit hard during the pandemic. This was chiefly caused by the grounding of flights across the world. I have owned shares in IAG since 2020. The shares themselves are down 43% in the past year and, in the last month they have fallen by 15%. At the time of writing, they are trading at 110p.

The company – an airline conglomerate that owns brands like British Airways and Aer Lingus – swung to a pre-tax loss of nearly €8bn in 2020. That year, the firm even had to issue new shares to raise funds and bolster the balance sheet. 

By 2021, however, this loss had almost halved as more flights began to take off. In a trading update for the first three months of 2022, the business stated that it expected passenger capacity to hit 85% of 2019 levels this year. 

This is a massive increase from the past two years and could be an indication that the airline industry is returning to some degree of normality. 

Despite this, the company still has some problems to overcome. Jet fuel prices are climbing following surging oil prices, while flight cancellations are becoming common due to staff shortages and strike action. 

Overall, both of these firms will have a place in my portfolio. I think that IAG’s issues are fundamentally short-term in nature and that the shares are trading at very low levels, whereas Coca-Cola HBC demonstrates strong growth and is a household name. I will be buying Coca-Cola HBC, while adding to my existing IAG position soon.  

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