Are these the best UK shares to watch in June 2024?

In spring 2024, the UK’s economic landscape continues to deliver a mixed outlook. After the country slipped into a technical recession at the back of end of last year, the UK economy has now bounced back — with GDP rising by 0.6% during the first three months of 2024.

For context, CPI inflation fell to 3.2% in March from 3.4% in February, driven by falling food prices. This is down from a high of 11.1% in October 2022 — and accordingly, the FTSE 100 continues to hit fresh record highs.

All eyes are now on potential rate cuts. The Bank of England retained the base rate at 5.25% in May’s meeting, noting that while indicators of persistent inflation ‘remain elevated,’ inflation could close in on the official 2% target in the near term. Governor Andrew Bailey warned that ‘June is not a fait accompli, but each meeting is a new decision.’

UBS analysts now expect the first cut to come in June 2024, rather than August, and LSEG data suggests markets are pricing in a 48% chance of a rate reduction next month.

Of course, both monetary and fiscal predictions are not guaranteed, especially after the global shocks experienced since 2020. For balance, retail sales in the UK by dropped 4.4% on a like-for-like basis in April from a year ago, far below expectations for a 1.6% growth and the worst reading since November 2019.

Best UK shares to watch

Considering these issues, here are five UK shares we think are worth watching. These shares have been selected for recent market news. Always do your own research. Past performance is not a guide to future performance.

1. IAG
2. ITV
3. BAE Systems
4. BP
5. Anglo American

IAG

International Consolidated Airlines Group — parent of brands including British Airways, Iberia, Aer Lingus, LEVEL and Vueling — recently reported positive Q1 results, with revenue up by 9.2% year-over-year to €6.4 billion. Accordingly, profit operating profit increased from €9 million to €68 million, and IAG’s after tax loss also fell from the €87 million of Q1 2023 to €4 million.

CEO Luis Gallego enthused that ‘Our transformation initiatives and increased demand, including over the Easter holidays, have delivered another very good set of results with improvements to both revenue and operating profit. Investment across the Group in transformation is delivering encouraging improvements in punctuality and customer experience at our airlines.’

Liberum has reiterated its ‘buy’ rating with a 450p target on IAG shares, arguing that revenue had surged above the consensus estimate of €48 million and also the broker’s own forecast for €17 million. Meanwhile, Peel Hunt also reaffirmed its ‘buy’ rating with a target of 230p, noting some potential for consensus upgrades partially because of oil price stability.

ITV

ITV has also reported Q1 results, with the company’s revenue falling by 7% year-over-year to £887 million. This drop was driven by a 16% decrease in ITV Studios’ advertising revenue to £382 million, reflective of US media industry strikes and phasing of deliveries.

However, digital advertising revenue was a bright point, increasing by some 14% — while streaming platform ITVX saw streaming hours rise by 16%.

CEO Carolyn McCall noted that despite the revenue drop, ITV remains on track to deliver £40 million in cost savings during 2024, as ‘as part of our strategic restructuring and efficiency programme.’

She also enthused that the business retains ‘a strong pipeline of programmes, good demand for our quality content as we increasingly diversify our customer base towards streamers and the phasing of deliveries is heavily weighted to the second half of the year, including Hells Kitchen US, The Better Sister, A.C.A.B, Showtrial and Ludwig.’

BAE Systems

BAE Systems recently updated the market with some positive news; the defence business expects to meet market expectations for 2024, noting that momentum should remain strong as defence spending across the western hemisphere continues to rise. 2024 guidance remains for sales to rise by some 12% year-over-year to £25.3 billion, driving profit up by 13% to £2.7 billion.

BAE specifically mentioned the $61 billion aid package from the US to Ukraine, in addition to UK plans to increase defence spending to 2.5% of GDP as two examples of state actions that will boost revenue.

CEO Charles Woodburn advised that the company’s ‘global presence and diverse portfolio of products and services provide high visibility for top-line growth, margin expansion and cash generation in the coming years.’

The company also noted that recent acquisition Ball Aerospace has had a strong start to the year, and that any potential expansion of the AUKUS programme (a pact whereby the US and UK will help Australia acquire nuclear submarines) could improve long-term opportunities.

BP

BP's Q1 results were perhaps mixed. The FTSE 100 oil major saw a profit of $2.3 billion, a sharp decrease compared to the $8.2 billion of Q1 2023. For perspective, this reflected the exceptionally strong gas trading of last year, weaker fuel margins, and production of barrels of oil equivalent falling by 5.7% to 914 million.

On the other hand, the dividend increased from 6.61 cents to 7.27 cents, and the company also announced a $1.75 million share buyback.

CEO Murray Auchincloss notes that BP is also planning to execute $2 billion in savings by the end of 2026 ‘through high grading our portfolio, digital transformation, supply chain efficiencies and global capability hubs.’

In forward guidance, BP expects upstream production to be ‘slightly lower’ through Q2, though should still outperform 2023 for the full year of 2024.

Anglo American

Anglo American has rejected BHP’s revised takeover proposal that valued the company at £34 billion, which could mark the start of a hostile takeover. For context, the new proposal valued Anglo at £27.53 per share, up from £25 per share in the initial bid.

BHP noted that it was ‘disappointed that the Anglo American board has chosen not to engage’ and under takeover rules has until next Wednesday to make a formal offer. The major also noted that it ‘continues to believe that a combination of the two businesses would deliver significant value for all shareholders.’

The driving force behind the takeover is Anglo’s attractive copper portfolio. With Reuters reporting that Glencore may also be in the preliminary stages of mulling a bid, some analysts also consider that Rio Tinto may make its own offer.

How to invest or trade in UK shares with us

1. Learn more about UK shares
2. Open an account with us or practise on a demo
3. Select your opportunity
4. Choose your position size and manage your risk
5. Place your deal and monitor your trade

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Keep in mind, leverage means you can gain or lose money faster than expected. Because your position size is far greater than your deposit, you could lose more money than you put in. Be aware also that past performance is not an indicator of future returns.

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Top shares to watch summed up

The above five companies are just a small selection of top stocks to watch. Remember that any company can also fail and always do your own research.

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*Based on revenue excluding FX (published financial statements, October 2021).