No stocks on London’s markets have experienced markedly different fortunes since the start of 2021 but, overall, the FTSE 100 index has risen by more than 11 per cent in the past year, while the FTSE 250 has jumped by more than 12 per cent. Some experts think such gains could moderate over the next year.

FTSE 100-listed firms will shell out £76.9bn in dividends this year, up £15.2bn on levels seen in 2020. Experts at AJ Bell are forecasting a more modest £2.9bn, or 4 per cent, annual increase in 2022. The outlook for individual stocks is uncertain, and it is unclear whether the economic recovery will continue at pace, or if new Covid variants will plunge the nation back into a major healthcare crisis. Whatever happens, there will be winners and losers on the stock market.

i asked experts from 10 brokers and investing platforms to give their single top UK stock pick for 2022. AJ Bell’s chief executive, Andy Bell, has also revealed which stock he has his eye on as we head into the new year.

Croda

Ticker: CRDA; Share price: 9,974.00p

One company I believe could do well in 2022 is Croda, which is a global manufacturer of ingredients for fast-growing, niche consumer markets and specialist industrial markets.

The company has been able to flex its financial muscles through the pandemic, relative to its peers, by investing in new technologies and through the acquisition of Iberchem to strengthen its core offering. I believe Croda is a quality company and investors could continue to be rewarded over the coming years.

Zoe Gillespie, investment manager at Brewin Dolphin

Ashtead

Ticker: AHT; Share price: 6,372.81p

It has been a good year for much of the FTSE 100, but international equipment rental company Ashtead continues to be a star performer. The sell-off caused by Covid in 2020 prompted only a brief interruption in the long-term rise of this strong performer, when others have struggled to recoup their previous bullish form. Its focus on the US economy continues to provide reason for optimism and, even with the outlook weakening, at present the shares look well-placed to benefit from continued fiscal stimulus and the overall strength of the US economy.

Chris Beauchamp, chief market analyst at IG

easyJet

Ticker: EZJ; Share price: 553.33p

Travel stocks have been battered during the pandemic and have struggled since the Omicron variant was discovered. The expectations for airlines are particularly low and so their valuation reflects that.

While Omicron is causing panic among governments and scientists, we don’t see a return to strict travel restrictions at this stage, particularly in Europe, where easyJet operates. Before Covid, you would have had to go back to 2012 to get easyJet this cheap. The pandemic will pass and, at this price, you can argue the risk-reward is there for easyJet.

Adam Vettese, analyst at eToro

AJ Bell boss Andy Bell 

easyJet

The travel sector continues to suffer Covid-related setbacks, but longer-term demand for a week in the sun is unlikely to be diminished by the pandemic. If you can hold your nerve, one of the best times to invest is when share prices are weak, and easyJet certainly fits the bill.

It offers good value for money and a better flying experience than rivals like Ryanair. In October the airline said bookings were picking up and chief executive Johan Lundgren declared: “it is clear recovery is underway”.

The company received a takeover offer in 2021, rumoured to be from Wizz Air, and another bid wouldn’t be a surprise if the share price stays low. International Consolidated Airlines is keen to do more in the low-cost market and buying easyJet would be a quick way to do it.

easyJet founder Stelios Haji-Ioannou didn’t take part in the airline’s recent £1.2billion fundraise which means his stake in the business has been diluted. He is now unable to veto key decisions by the board that require the support of three quarters of shareholders. That effectively makes it easier for someone to come along and try to buy the business.

Fuller, Smith & Turner

Ticker: FSTA; Share price: 674.00p

It might seem like looking for trouble by selecting pubs-to-hotel group Fuller, Smith and Turner at a time when a new Covid-19 variant is prompting fresh debate over the merits of socialising in groups. But the best investment decisions are often the ones that make you feel most uncomfortable. If the Omicron scare passes quickly, then the Chiswick firm should be well placed to benefit from rising footfall in commuter hubs, high streets and tourist hotspots.

If it does not, we have some downside protection. Net debt is low and the £416m market capitalisation compares to a conservative valuation of the firm’s net assets of £441m, so the shares are trading below book value. That already prices in a lot of bad news.

Russ Mould, investment director at AJ Bell

Future

Ticker: FUTR; Share price: 3,468.00p

There’s a certain irony in a firm called Future selling print magazines. But that’s why its transition towards a digital-led model is so appealing. So far, the strategy has been to snap up popular titles like FourFourTwo and widen the company’s overall readership to increase advertising revenues. Stumping up around £600m to buy comparison site GoCompare adds to the ability to lead readers straight from article to price comparison to sale.

A massive jump in underlying operating profit and operating margins of 32 per cent are not to be sniffed at. Next year will be all about maintaining a cadence of high-quality acquisitions and using even greater scale to get eyeballs reading, comparing and boosting revenues.

Dan Lane, senior analyst at Freetrade

Halma

Ticker: HLMA; Share price: 3,083.00p

Halma’s growth has been nothing short of spectacular. Since listing in 1988, it has grown to more than £11bn in size, producing some of the most impressive returns on the London Stock Exchange. Its management’s ability to grow the business, both through acquisitions and organic growth, has led to impressive long-term growth.

And, while shares consistently trade at a premium to the market, we believe that this is more than warranted given its lengthy track record and ability to consistently grow both revenues and profits at impressive rates.

Ben Staniforth, research analyst at Redmayne Bentley

International Consolidated Airlines Group

Ticker: IAG; Share price: 141.42p

Travel company shares were pummelled by the pandemic and have only recovered some of their losses in the market rally.

However, International Consolidated Airlines Group (IAG) shares remain a long way off from their pre-pandemic levels. Chief executive Luis Gallego Martín has confirmed that there are no plans to follow easyJet’s lead and go cap in hand to shareholders to ask for extra cash via a rights issue, so dilution of existing shareholders now looks less likely. Of course, the path of the pandemic will be a significant driver of returns. Once the global economy normalises, IAG’s shares could really fly.

Garry White, chief investment commentator at Charles Stanley

Saietta Group

Ticker: SED; Share price: 260.00p

Saietta has developed a highly efficient and affordable axial flux electric motor. The International Energy Agency estimates that 45 per cent of all electrical energy flows through electric motors globally. And with Saietta claiming that its motor is up to 10 per cent more efficient than conventional radial flux motors, the potential is significant, which is why we’re invested in it ourselves. Auto manufacturers Daimler and Renault have acquired other axial flux manufacturers, demonstrating the utility of this technology. Saietta is the only pure play for investors looking to play this trend.

Leigh Himsworth, portfolio manager at Fidelity UK Opportunities

Tesco

Ticker: TSCO; Share price: 283.75p

Tesco has largely shrugged off the supply chain crisis, partly due to its enormous scale and the indications are that it will continue to do this even as price pressures ramp up. The advanced, deeply rooted nature of its supply relationships has been a real benefit in enabling the supermarket giant to keep its shelves well stocked. The huge scale of its distribution also gives the group added flexibility to deliver goods, despite ongoing challenges in the broader logistics space.

It’s managing to outshine its competitors in the process, which is particularly good timing given the reinvigorated competition expected following the acquisitions of Asda and, most recently, Morrisons.

Susannah Streeter (left), senior investment and markets analyst at Hargreaves Lansdown

Whitbread

Ticker: WTB; Share price: 2,974.00p

The expected staycation rise in the UK due to restrictions on overseas travel played into hotel and restaurant group Whitbread’s hands. Also, the balance sheet is in good shape, which puts Whitbread in the enviable position of being able to continue to invest in the business at a time when some of its smaller competitors are hamstrung due to a lack of finance, or even face the prospect of going to the wall.

The company is showing no signs of slowing down strategically, with an aim for 110,000 rooms in the UK, and with investment in its other major market, Germany, continuing apace. Given concerns around the new variant, the shares fell, which should give scope for recovery as and when fears subside.

Richard Hunter, head of markets at Interactive Investor

Strike the right balance

High inflation has made getting investing decisions right all the more important, but it is not an exact science and no one can be certain how any single stock will perform next year.

Before taking the plunge with any investment decision, it is important to do your own research and, if required, seek advice from a financial professional. It can often be a good idea to have a broad portfolio of stocks or assets, rather than simply owning shares in a single company where all your eggs are in one basket.

It is also crucial to remember, as with any form of investing, that you could end up losing more money than you put in.

Funds will focus on UK companies outside the FTSE 100 index. Mid-sized companies are normally found in the FTSE 250 index. Smaller companies form the smallest 10% of the UK stock market.

Henry Ince - Investment Analyst
21 October 2021

Small and medium-sized companies can punch above their weight. They've got bags of room for growth and research shows they normally grow faster than larger businesses over the long term. There's no guarantee of that though. Their share prices can also be more volatile so there will be more ups and downs in performance along the way,

There's great variety in small and medium-sized company investing. The sector covers everything from well-established industry stalwarts to new and innovative 'micro caps' at the smallest end of the size spectrum.

There are hundreds of small and mid-sized companies in the UK. The larger ones are found in the FTSE 250 index. These are the next 250 largest companies in the UK after the FTSE 100. Sliding down the size scale you'll find the FTSE Small Cap and FTSE Fledgling indices. The FTSE AIM index contains a mix of large, medium, small and micro-sized businesses.

Scroll across to see the full table.

Index	Approximate market cap	Size	Number of companies
FTSE 100	£1.6bn - £131.7bn	Large	101
FTSE 250	£174m - £6.5bn	Medium	250
FTSE Small Cap	£30m - £952m	Small	252
FTSE Fledgling	£2m - £153m	Micro	86
FTSE AIM	£0m - £2.6bn	Micro to large	725

Source: FTSE Russell as at 30/08/21.

Our view on the UK small and mid-sized companies sector

Small companies in the UK can be among the most exciting businesses around. Some are pioneers of emerging industries and adapt quickly to new opportunities.

Mid-sized companies are often seen as the investing 'sweet spot'. They're usually at a later stage of growth, so can be less volatile than their smaller peers. But they still can offer higher potential for growth than large companies.

We think the long-term prospects for both small and mid-sized companies are compelling. Some could grow rapidly or blossom into the giants of tomorrow. But others will struggle or could even go bust.

Smaller companies are higher-risk investments than larger ones. When markets have gone down, it's usually the smaller companies that have suffered the most. Their shares are also harder to buy and sell – or 'less liquid', which increases risk as fund managers could be forced to sell at a lower price than they would like, or experience restricted trading. That's because there are fewer buyers and sellers of smaller companies' shares.

Opportunities for active managers

There are lots of excellent fund managers investing in these companies. Many are among the best long-term performers across all sectors, not just in this area of the market. Fortunately for them, small and medium-sized companies are often under-researched. That creates lots of opportunities to uncover hidden gems. We think this is an area where managers can have a great stock-picking edge.

It adds up to an enticing prospect. Companies with some of the biggest potential for long-term growth and some of the country's finest fund managers to invest in them. If you're happy to accept the greater risks, we think investing in UK small and mid-sized companies can add some excellent long-term growth potential to your portfolio. With the added volatility though, you should invest in these companies as part of a diversified portfolio providing it fits your needs and objectives.

Investment notes

Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.

Wealth Shortlist funds in this sector

Funds chosen by our analysts for their long-term performance potential

See the Wealth Shortlist

Our Wealth Shortlist features a number of funds from this sector, selected by our analysts for their long-term performance potential. The Shortlist is designed to help investors build and maintain diversified portfolios. To use the Shortlist, you should be comfortable deciding if a fund fits your investment goals and attitude to risk. For investors who don't feel comfortable building and maintaining their own portfolio we offer ready-made solutions, which are aligned to broad investment objectives. For those who want extra help, you can also ask us for financial advice.

The fund reviews below are provided for your interest but are not a guide to how you should invest. For more information, please refer to the Key Investor Information for the specific fund. Remember all investments can fall as well as rise in value so you could get back less than you invest. Past performance is not a guide to the future.

There is a tiered charge to hold funds on the HL platform. It is a maximum of 0.45% a year - view our charges. Comments are correct as at September 2021. Remember investing in smaller companies is higher risk than investing in larger companies.

Wealth Shortlist fund reviews

Source for performance figures: Financial Express.

Latest research updates

ASI UK Smaller Companies: October 2021 update

Tue 12 October 2021

In this fund update, Investment Analyst Henry Ince shares our analysis on the manager, process, culture, cost and performance of the ASI UK Smaller Companies fund.

Investment notes

Please note the research updates are not personal recommendations to trade. If you are unsure of the suitability of an investment for your circumstances please seek advice. Remember all investments can fall as well as rise in value so investors could get back less than they invest.

Fund research

Our expert research team provide regular updates on a wide range of funds.

See fund updates

We believe this sector is blessed with a number of skilled and high-quality fund managers.

Dominic Rowles - Investment Analyst
23 November 2021

A fund investing in UK shares is often the first port of call for UK-based investors.

And for good reason. The UK stock market is home to many world-class companies. From international giants selling their products and services across the globe to a diverse array of smaller businesses.

The UK is a rich hunting ground for fund managers. UK Growth funds aim to grow the value of investors’ money over the long term, although each will go about this in different ways. Some focus on larger companies in the FTSE 100 Index, others invest in higher-risk smaller or medium-sized companies, and some have the flexibility to invest in companies of any size.

Similarly, some fund managers are more constrained than others. Some aim not to deviate significantly from the performance of the broader stock market. Others have more freedom to take risks – they might invest in a small number of companies and run a concentrated portfolio, for example.

The overall makeup of the UK stock market is quite different to other global markets. For example, it includes more oil & gas and financial services companies than many of its peers. We think UK-focused funds can be used to diversify a portfolio of overseas funds. In particular, global funds tend to have a focus on the technology industry, an area that currently only makes up a small part of the UK market.

Our view

The UK is currently one of the world’s most unloved stock markets. A conclusion to Brexit talks removed some uncertainty, but the impact of the coronavirus crisis will be felt for years to come. Markets will remain sensitive to news about the pandemic.

We still think many homegrown companies can survive uncertainty over the long run though. Our stock market is truly diverse, with many companies making money both overseas and on home soil. Not only that, the UK is home to some exceptional fund managers with great track records of adding value. We think the UK is often a good starting point for investors, and most long-term growth portfolios should consider some exposure.

The decision of which funds to invest in can be difficult. We’ve narrowed the field to those we think have the greatest long-term performance potential, which feature on the Wealth Shortlist.

Investment notes

Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, remember they can fall as well as rise in value so you may not get back the original amount invested.

Wealth Shortlist funds in this sector

Funds chosen by our analysts for their long-term performance potential

SEE THE WEALTH SHORTLIST

Our Wealth Shortlist features a number of funds from this sector, selected by our analysts for their long-term performance potential. The Shortlist is designed to help investors build and maintain diversified portfolios. To use the Shortlist, you should be comfortable deciding if a fund fits your investment goals and attitude to risk. For investors who don't, we offer ready-made solutions, which are aligned to broad investment objectives. For those who want extra help, you can also ask us for financial advice.

The fund reviews below are provided for your interest but are not a guide to how you should invest. For more information, please refer to the Key Investor Information for the specific fund. Remember all investments and income from them can fall as well as rise in value so you could get back less than you invest. Past performance is not a guide to the future.

There is a tiered charge to hold funds with HL. It is a maximum of 0.45% p.a. - view our charges. Comments are correct as at 30 September 2021.

Wealth Shortlist fund reviews

Latest research updates

LF Lindsell Train UK Equity: March 2022 update

Fri 11 March 2022

In this fund update, Lead ESG Analyst Dominic Rowles shares our analysis on the manager, process, culture, cost and performance of the LF Lindsell Train UK Equity fund.

Investment notes

Please note the research updates are not personal recommendations to trade. If you are unsure of the suitability of an investment for your circumstances please seek advice. Remember all investments can fall as well as rise in value so investors could get back less than they invest.

Fund research

Our expert research team provide regular updates on a wide range of funds.

See fund updates

Stock picking requires immense skill and the best information available. This guide to the best companies to invest in for 2021 aims to arm you with data and shortlists to begin your research. We’ll screen the best companies from multiple perspectives to help you generate investment ideas and filter down a list of what to invest in now. 

This article is not financial advice. Please perform your own research and consider finding a financial adviser if you need assistance making investment decisions. 

Best performing companies in 2021 

The following companies have posted share price gains of over 300% in the latest 12 month period. This means that if you had invested £1,000 in a company below, it would now be worth at least £4,000, give or take foreign currency movements. Past performance is not a reliable indicator of future share price movements.

1. Moderna, Inc.
2. Norsk Hydro ASA
3. Reach plc
4. Tremor International Ltd
5. BioNTech SE
6. Kin and Carta plc
7. Argo Blockchain plc
8. Hapag-Lloyd Aktiengesellschaft
9. S&U plc
10. Sareum Holdings plc

Let’s look at each of these fast-moving businesses in turn:

Moderna  – This modest pharma company earned worldwide recognition with its Covid-19 vaccine, now known as Spikevax. The vaccine was approved for use in the US, UK and the EU. Its rise from relative obscurity has driven its share price through the roof. Spikevax is its only commercially available product, although the company is also developing other Messenger RNA-based vaccines for influenza and other viruses.

Norsk Hydro ASA – A Norwegian industrial company that supplies aluminium products and other mineral-based services. This acquisitive group recently bought control of Aluminium extrusion company SAPA, which had locations based in Europe including the UK. 

As an aluminium producer, Norsk Hydro’s financial performance is closely linked to the aluminium commodity price, which has more than doubled since the commodity slum during 2020. Its share price now approaches the 2017 highs, with the 12-month gains having offset a gradual slump over the preceding 3 years. 

Reach plc – A sprawling online and print news media group that owns several national newspapers including the Daily Express, the Sun and the Daily Record. The business is successfully navigating the transition from print to digital. A recent tweak to its advertising formats yielded a 65% additional revenue from those ads units. 

Tremor International Ltd – A mobile advertising company which is based in Israel but listed recently on the London Stock Exchange. Tremor owns an end-to-end mobile ad platform called Taptica and recently posted record results. 

BioNTech SE – An innovative medical treatment company providing personalised therapies for cancer and infections. It has produced exceptional returns for investors during the pandemic due to the global rollout of the Pfizer-BioNTech vaccine which was developed jointly with BioNTech. 

Kin and Carta plc – An IT consultancy with grand ambitions and a soaring share price to match. Its shareholder return is driven by an increasingly positive outlook for the business rather than the financial performance for the 2020 year.

Argo Blockchain plc – A cryptocurrency mining service provider. Specialising in low-carbon, efficient data centres, Argo provides the IT infrastructure and technical know-how as a service to miners to effectively rent its computing power to mine cryptocurrencies such as Bitcoin Gold, Ethereum, Ethereum Classic and Zcash. Argo’s fortunes are tied to the crypto markets it serves. In 2020 and 2021 this has worked to its favour; leading to a staggering shareholder performance which reflects the resurgence in many cryptocurrency prices in the last 18 months. 

Hapag-Lloyd Aktiengesellschaft – A container shipping business that covers the globe. Container shipping prices have spiked during the pandemic, to Hapag’s absolute advantage. Harpag-Lloyd reported that profits had more than doubled in 2020 compared to the year prior. The share price has responded accordingly. Supplier chains remain at capacity and international logistics businesses are finally enjoying a period of comfortable profitability. 

S&U plc – A long-established provider of consumer credit in the UK. S&U plc floated in 1961 and currently specialises in non-prime loans for used car purchases, and bridging loans for property development. This narrow focus appears to be paying off, as S&U plc reported a £35m profit in 2020.

Sareum Holdings plc – A specialist drug development company delivering targeted small molecule therapeutics to improve the treatment of cancer and autoimmune diseases. Sareum is not currently profitable and is spending on R&D to develop treatments that are at an early stage. Sareum concluded a £1 million fundraising via subscriptions for new shares as recently as 21 August 2021. Current shareholders are taking a calculated risk that Sareum’s pipeline will convert into multiple revenue streams. 

How to invest in the best-performing companies?

To invest in the best-performing companies, you’ll want to find a stockbroker with low trading commissions and fees. This will allow your investment capital to buy more shares. We’ve shortlisted the best of the best UK brokers below to help your search:

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Trade shares with zero commission. Open an account with just £7. High performance and useful friendly trading app. Other fees apply. For more information, visit etoro.com/trading/fees.

Large UK trading platform with a flat account fee and a free trade every month. Cheapest for investors with big pots.

The UK’s no. 1 investment platform for private investors. Boasting over £135bn in assets under administration and over 1.5m active clients. Best for funds. 

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Youinvest stocks & shares ISA offers lower prices the more you trade! Which? 'Recommended Provider' for last 3 years.

Choose a pre-made portfolio in minutes with Nutmeg. Choose your level of risk and let Nutmeg efficiently handle the rest.

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Buy and sell funds at nil cost with Fidelity International, plus simple £10 trading fees for stocks & shares and ETFs.

What do the best companies to invest in now have in common? 

Having reviewed this shortlist of the best companies to invest in (on the basis of past performance), we can draw out some common themes:

• Pandemic performance
• Crypto
• Positive future outlook

A subset of this group have often been on the supply side of the products demanded during the pandemic. Moderna and BioNTech manufacture the Covid-19 vaccines, and Hapag-Lloyd and Norsk Hydro are finding that demand (and the market price) of their industrial products and services have reached a new height as economies have restarted. 

Argo is riding the wave of investments into cryptocurrency, which appears to be following its own investment cycle. 

Reach, Tremor and Kin & Carta are benefiting from the seismic changes in business and consumer behaviour. The move to digital was accelerated during the pandemic, and businesses who can help the rest of us adapt, or serve adverts to the larger (and more captive) audiences are well placed to deliver strong financial results.  

Again, the past is not a reliable indicator of future returns. The best companies to invest in aren’t necessarily the ones seen to be riding a current trend. The best company to buy inside your ISA is actually the companies who are about to ride the next trend. However, if you can run a financial model which outputs this answer with accuracy then why are you still reading this article? You should start a hedge fund and begin soliciting funds from prospective clients today!

Should you invest in the best-performing companies of 2021 for high returns in 2022?

Taken from the best investing books and economics books, here is a summary of the theoretical positions you might want to consider before allocating cash to the top performers. 

Investing at the peak

The company which posted the largest recent gain in the stock market is not necessarily a ‘no-brainer’ as an investment. The performance of companies, sectors and the broader financial markets tends to ebb and flow to the beat of the financial cycle. Experts suggest that financial cycles last between 7 – 10 years, whereas sector booms can be shorter, and the golden age of an individual company could last as little as a year. 

In fact, high performing sectors and asset classes tend to underperform in the short term. This is a form of reversion to the mean. 

An investing strategy which is known as ‘Dogs of the FTSE’ attempts to capitalise on the reverse scenario. It encourages investors to pick some of the worst performers on the index, with the hope that their share prices will recover in the following year. The theory goes that the market tends to overreact to news, and therefore the brave investors willing to put money into the most ‘unpopular’ shares could earn a premium return by investing at a bargain. 

If Dogs of the FTSE is a successful strategy, the implication for investors chasing the highest performers is bleak. If markets overreact, then companies soaring may be facing a sharp dose of reality in the coming months.

It may interest you to hear that the Dogs of the FTSE strategy has inconclusive results, giving investors neither a firm validation or rejection of the ‘overreaction’ theory, as applied to the UK stock market. 

You’ll have to make up your own mind as to whether chasing high performance is smart or folly. 

Bias towards high-risk strategies

Lists of top-performing companies over a short period are likely to be packed with companies that have some of the following characteristics: 

• High leverage
• ‘Eggs in one basket’ business strategy
• High levels of sensitivity to external factors
• High volatility of share price

These high-risk companies tend to produce extreme performance (in both directions), and therefore when on a good run, they will naturally appear close to the top of share movement league tables.

It’s easy to visualise this problem by asking the question: “What would need to happen for Tesco plc to triple in value?”

Tesco plc is a mega grocery retailer with a dominant market position in the UK. It is difficult to even conceive of how it could triple its revenues or profits within the confines of the markets it inhabits. Therefore it is extremely unlikely to ever grace the top of the ‘mover and shaker’ rankings. 

Compare this to the plight of a small video game developer with no current releases and two games in its pipeline. If one or both of its titles achieved anticipated commercial success, the profits of that company could vastly outstrip all prior expectations and this would likely send the value of its shares up by an order of magnitude. 

Ignorance of passive approaches

An investing approach that sees an investor attempt to ‘beat the market’ by picking companies based on fundamental or technical factors are following an active investment approach. 

This is the antithesis of the passive investment approach. A passive investment strategy will never produce a portfolio that will produce top-of-the-market returns. 

That’s because as a passive investor, you are choosing companies that represent the whole of the market, in order to efficiently generate the market return. Of you could buy into index-tracking funds which follow a similar objective. 

By keeping their operations simple, passive funds can charge much lower fees to investors, which over the long run should produce superior returns to a higher-risk fund that flip-flops between over and underperformance, while charging investors a premium regardless.

Passive funds charge between 1% – 1.5% less than the best funds to invest in listed above, which means the top active equity funds need to beat the market by this margin each year merely to keep pace with a passive approach. The data shows that few if any professional fund managers have been able to do so over long periods.

The companies invested in by ISA millionaires

AJ Bell, Interactive Investor and Hargreaves Lansdown have all published insights into what their most successful stocks & shares ISA clients have invested in. 

They have all noted that direct holding of company shares is a very popular investment choice within this group. This demonstrates that those investors who are canny enough to generate the awesome returns needed to hit a seven-figure ISA account value are confident enough to pick stocks and hold them for the long term.

These companies are some of the most common choices of the ISA millionaires (in no particular order):

• Lloyds Banking Group
• Royal Dutch Shell
• GlaxoSmithKline
• Vodafone
• Aviva
• BP
• Legal & General
• AstraZeneca
• Unilever

It’s also worth noting that the companies above tend to pay a higher average dividend yield than the FTSE 100 overall. If you’d like to invest for income then read our dividend growth investing guide.

Besides this finding, the main conclusion we can draw is that this list reads like a simple list of the largest companies on the FTSE 100. 

This reveals an unpopular truth about investing which is that investing success is often as much about getting your money into the stock market early and waiting for as long as possible, then it is about picking the perfect companies and waiting for the right time to enter the market. 

Sourcing private investment opportunities

Of course, the public markets aren’t the only selection of companies to invest available. Other fast-moving businesses include those in the tech and marketing industries.

For example, take Ignite SEO, an SEO agency based in the UK which serves businesses. Investing in a small marketing company such as Ignite would provide investors with exposure to a fast-growing private company in the digital space. As the business isn’t listed on a public stock exchange, keen investors would need to explore the venture capital or seed-funding equity investment routes.

Alternatively, you could approach an online marketing company as a potential angel investor if you believe you have the credibility and pitch which could land you a meeting and potential investment with a marketing company.

Best companies to invest in: conclusion

I hope this article has helped to give your investment research some inspiration or focus. The best companies to invest in now is a very subjective list and there is no right or wrong answer.

Only with hindsight can we ever prove or disprove a projection into the future. This article is not financial advice and we do not claim or offer any guarantees that the best companies we’ve listed above will outperform in the future, as past performance is not a guarantee of future returns. 

The best companies to invest in now might be ‘every single company’ in the sense that financial advisers and financial planning books have consistently recommended that investors create a diversified portfolio that gives them exposure to the whole of the stock market. 

If you’re interested in exploring fund ideas, then visit our article about the best funds to invest in now.

Investors in individual companies are spoilt for choice, with more than 1,300 trading on the London Stock Exchange alone. 

Of course, a well-constructed portfolio should contain many holdings so investors do not have all their eggs in one basket. 

But for a bit of fun – and to test the strength of their conviction – we asked a group of experts what single company they would invest in if they could pick only one. 

They considered factors such as potential growth, income and track record – and then revealed their choice. This is what they told us. 

Hot property: Experts favour Rightmove, games firm Team17, and The Restaurant Group

Aviva 

Insurance company Aviva is the top choice of Ben Yearsley, an investment director at Shore Financial Planning. 

He believes the FTSE100 company has been unloved for many years, but is coming back into fashion. Its strategy is also likely to benefit investors looking for an income.

'The chief executive Amanda Blanc has done a great job of realising value by selling off non-core assets to the tune of £7.5billion,' Yearsley says. 'This is going to lead to a big capital return to shareholders.

'It will also allow management to focus on the core business, which has arguably trod water for many years.' 

Yearsley points out the company has announced a £750million share buyback and predicts further buybacks, as well as special dividends. 

'Recent results showed good progress in the core business, too' he adds. 'The final cherry is that the dividend yield from normal earnings is a healthy 5 per cent.' 

Aviva shares (£4.11) are up an impressive 55.4 per cent over one year, and 8.8 per cent over three. 

ID CODE: 0216238 Ticker: AV. 

FDM 

Alexandra Jackson, manager of the Rathbone UK Opportunities Fund, says her top pick would be FDM, which recruits, trains and deploys IT and business professionals to work with clients around the world. She believes demand for its services is set to grow. 

'When questioned, the chief financial officers of some of Britain's biggest businesses said that recruiting staff with IT and digital skills is the biggest hurdle right now,' she says. 

Jackson adds that FDM has long offered a classy solution to this recruitment problem. 

'They train graduates, returners and ex-Forces personnel with the most relevant and up-to-date IT skills, who then get a two-year placement with one of FDM's clients,' she explains. 'They usually stay on with the client after that.' 

Recruiting staff with IT skills is a big challenge for British firms, according to Alexandra Jackson, manager of the Rathbone UK Opportunities Fund

She notes that FDM has a gender pay gap slightly in favour of women in the UK, thanks to an increase in women in senior leadership positions and the success of its programme to support people returning to the workforce after a break. 

'Not only do leading companies get well trained software testers or data engineers on a flexible basis, they also get access to a genuinely diverse and representative workforce,' she adds. 

FDM's dividend yield was 4.1 per cent last year and its share price (£12.94) rose by 27.7 per cent. Over three years, shares are up 55.5 per cent.

ID CODE: BLWDVP5 Ticker: FDM 

Rightmove 

Online property portal Rightmove is the preferred choice of Darius McDermott, managing director of investment scrutineer Chelsea Financial Services. In fact, he describes it as a 'money printing machine'. 

'It is the dominant UK property portal and estate agents are totally dependent on it to get their properties seen,' he says. 

'The UK is obsessed by property and Rightmove reaps the benefits.' 

McDermott points out that neither the website nor the app require much capital to run. 

This means the company generates huge amounts of cash, which it can return to shareholders. 

The company has also been a beneficiary of the recent property market boom, Darius adds. 

'Rightmove has rebounded strongly and recently announced underlying earnings up 93 per cent for the half year to the end of June,' he says. 

'Despite all this, the stock still trades around where it was before the pandemic started.' 

Rightmove's share price (£7.26) is up 14 per cent over one year and 47 per cent over three years.

ID CODE: BGDT3G2 Ticker: RMV 

Team17 

Leigh Himsworth, a portfolio manager at Fidelity International, is impressed by the 'amazing' games created by Team17 – especially one called Worms Rumble. 

Team17 makes premium computer games and educational apps for children under the age of eight. 

Himsworth suggests Covid-19 has accelerated the trend towards gaming, but it was already an area with broadening appeal. 

'Faster download speeds lend themselves to greater interactive and collective gaming,' he says. 'This content need will grow with 5G and perhaps autonomous driving.' 

Himsworth believes Team17 will benefit as it has a wide geographic reach, is available on most tech platforms, and could continue to enjoy an annual growth rate of near 20 per cent for the foreseeable future. 

Shares in Team17 (£8) are up 22per cent over one year and 233 per cent over three. It did not pay a dividend last year.

ID CODE: BYVX2X2 Ticker: TM17

Wagamama is one of the brands owned by The Restaurant Group – the chosen stock of AJ Bell's Danni Hewson. It also owns Frankie & Benny's, Chiquito and Coast to Coast

The Restaurant Group 

The Restaurant Group is top of the menu for Danni Hewson, financial analyst at wealth platform AJ Bell. 

She believes there is a lot to like about the business, which owns brands including Wagamama, Frankie & Benny's, Chiquito and Coast to Coast. 

'It is in the midst of a restructuring plan, has shed underperforming restaurants, negotiated rent cuts and secured new long-term debt facilities,' she says. 

The Restaurant Group has had a difficult few years, with shares down 36 per cent over three years. However, it has benefited from a bounce as hospitality has opened up again following national lockdowns. Shares (£1.20) are up 122 per cent over one year. 

However, it is Wagamama – the jewel in the crown – which interests Hewson the most. 

'From home delivery to home cooking, the brand has become a firmly entrenched consumer favourite, plugging nicely into the healthy eating, healthy living vibe,' she says. 

Hewson believes there are still opportunities for expansion in the UK and US. 'It won't be a shortterm winner, but there does appear to be plenty of soul left in this particular bowl,' she adds. 

ID CODE: B0YG1K0 Ticker: RTN 

WPP 

Roddy Davidson, media analyst at Shore Capital, believes WPP is extremely well placed to benefit from the strong growth in advertising spending following the pandemic. The FTSE100 company is an expert in communications, advertising and marketing. 

'Its deep resources, digital expertise, comprehensive international service offering and diverse blue-chip client base make for a very strong competitive position,' says Davidson. 

He adds that the management team is currently introducing initiatives that should strengthen it even further, including simplifying operations, investing in technology and reducing debt. 

WPP shares (£9.98) are down ten per cent over three years. However, they were up 62 per cent over one year, and the dividend yield was three per cent.

'Although its stock has performed well of late, we see good scope for forecast upgrades and strong medium-term returns.' 

ID CODE: B8KF9B4 Ticker: WPP 

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No stocks on London’s markets have experienced markedly different fortunes since the start of 2021 but, overall, the FTSE 100 index has risen by more than 11 per cent in the past year, while the FTSE 250 has jumped by more than 12 per cent. Some experts think such gains could moderate over the next year.

FTSE 100-listed firms will shell out £76.9bn in dividends this year, up £15.2bn on levels seen in 2020. Experts at AJ Bell are forecasting a more modest £2.9bn, what companies should i invest in uk, or 4 per cent, annual increase in 2022. The outlook for individual stocks is uncertain, and it is unclear whether the economic recovery will continue at pace, or if new Covid variants will plunge the nation back into a major healthcare crisis. Whatever happens, there will be winners and losers on the stock market.

i asked experts from 10 brokers and investing platforms to give their single top UK stock pick for 2022. AJ Bell’s chief executive, Andy Bell, what companies should i invest in uk, has also revealed which stock he has his eye on as we what companies should i invest in uk into the new year.

Croda

Ticker: CRDA; Share price: 9,974.00p

One company I believe could do well in 2022 is Croda, which is a global manufacturer of ingredients for fast-growing, niche consumer markets and specialist industrial markets.

The company has been able to flex its financial muscles through the pandemic, relative to its peers, by investing in new technologies and through the acquisition of Iberchem to strengthen its core offering. I believe Croda how much was bitcoin in july 2022 a quality company and investors could continue to be rewarded over the what companies should i invest in uk years.

Zoe Gillespie, investment manager at Brewin Dolphin

Ashtead

Ticker: AHT; Share price: 6,372.81p

It has been a good year for much of the FTSE 100, but international equipment rental company Ashtead continues to be a star performer. The sell-off caused by Covid in 2020 prompted only a brief interruption in the long-term rise of this strong performer, when others have struggled to recoup their previous bullish form, what companies should i invest in uk. Its focus on the US economy continues to provide reason for optimism and, top cryptocurrency investment funds with the outlook weakening, at present the shares look well-placed to benefit from continued fiscal stimulus and the overall strength of the US economy.

Chris Beauchamp, chief market analyst at IG

easyJet

Ticker: EZJ; Share price: 553.33p

Travel stocks have been battered during the pandemic and have struggled since the Omicron variant was discovered. The expectations for airlines are particularly low and so their valuation reflects that.

While Omicron is causing panic among governments and scientists, we don’t see a return to strict travel restrictions at this stage, particularly in Europe, where easyJet operates. Before Covid, you would have had to go back to 2012 to get easyJet this cheap. The pandemic what companies should i invest in uk pass and, at this price, you can argue the risk-reward is there for easyJet.

Adam Vettese, analyst at eToro

AJ Bell boss Andy Bell 

easyJet

The travel sector continues to suffer Covid-related setbacks, but longer-term demand for a week in the sun is unlikely to be diminished by the pandemic. If you can hold your nerve, one of the best times to invest is when share prices are weak, and easyJet certainly fits the bill.

It offers good value for money and a better flying experience than rivals like Ryanair. In October the airline said bookings were picking up and chief executive Johan Lundgren declared: “it is clear recovery is underway”.

The company received a takeover offer in 2021, rumoured to be from Wizz Air, and another bid wouldn’t be a surprise if the share price stays low. International Consolidated Airlines is keen to do more in the low-cost market and buying easyJet would be a quick way to do it.

easyJet founder Stelios Haji-Ioannou didn’t take part in the airline’s recent £1.2billion fundraise which means his stake in the business has been diluted. He is now unable to veto key decisions by the board that require the support of three quarters of shareholders. That effectively makes it easier for someone to come along and try to buy the business.

Fuller, Smith & Turner

Ticker: FSTA; Share price: 674.00p

It might seem like looking for trouble by selecting pubs-to-hotel group Fuller, Smith and Turner at a time when a new Covid-19 variant is prompting fresh debate over the merits of socialising in groups. But the best investment decisions are often the ones that make you feel most uncomfortable. If the Omicron scare passes quickly, then the Chiswick firm should be well placed to benefit from rising footfall in commuter hubs, high streets and tourist hotspots.

If it does not, we have some downside protection. Net debt is low and the £416m what companies should i invest in uk capitalisation compares to a conservative valuation of the firm’s net assets of £441m, so the shares are trading below book value. That already prices in a lot of bad news.

Russ Mould, investment director at AJ Bell

Future

Ticker: FUTR; Share price: 3,468.00p

There’s a certain irony in a firm called Future selling print magazines. But that’s why its transition towards a digital-led model is so appealing. So far, the strategy has been to snap up popular titles like FourFourTwo and widen the company’s overall readership to increase advertising revenues. Stumping up around £600m to buy comparison site GoCompare adds to the ability to lead readers straight from article to price comparison to sale.

A massive jump in underlying operating profit and operating margins of 32 per cent are not to be sniffed at. Next year will be all about maintaining a cadence of what companies should i invest in uk acquisitions and using even greater scale to get eyeballs reading, comparing and boosting revenues.

Dan Lane, senior analyst at Freetrade

Halma

Ticker: HLMA; Share price: 3,083.00p

Halma’s growth has been nothing short of spectacular. Since listing in 1988, it has grown to more than £11bn in size, producing some of the most impressive returns on the London Stock Exchange. Its management’s ability to grow the business, both through acquisitions and organic growth, has led to impressive long-term growth.

And, while shares consistently trade at a premium to the market, we believe that this is more than warranted given its lengthy track record and ability to consistently grow both revenues and profits at impressive rates.

Ben Staniforth, research analyst at Redmayne Bentley

International Consolidated Airlines Group

Ticker: IAG; Share price: 141.42p

Travel company shares were pummelled by the pandemic and have only recovered some of their losses in the market rally.

However, International Consolidated Airlines Group (IAG) shares remain a long way off from their pre-pandemic levels. Chief executive Luis Gallego Martín has confirmed that there are no plans to follow easyJet’s lead and go cap in hand to shareholders to ask for extra cash via a rights issue, so dilution of existing shareholders now looks less likely. Of course, the path of the pandemic will be a significant driver of returns. Once the global economy normalises, IAG’s shares could really fly.

Garry White, chief investment commentator at Charles Stanley

Saietta Group

Ticker: SED; Share price: 260.00p

Saietta has developed a highly efficient what companies should i invest in uk affordable axial flux electric motor. The International Energy Agency estimates that 45 per cent of all electrical energy flows through electric motors globally. And with Saietta claiming that its motor is up to 10 per cent more efficient than conventional radial flux motors, the potential is significant, which is why we’re invested in it ourselves. Auto manufacturers Daimler and Renault have acquired other axial flux manufacturers, demonstrating the utility of this technology. Saietta is the only pure play for investors looking to play this trend.

Leigh Himsworth, portfolio manager at Fidelity UK Opportunities

Tesco

Ticker: TSCO; Share price: 283.75p

Tesco has largely shrugged off the supply chain crisis, partly due to its enormous scale and the indications are that it will continue to do this even as price pressures ramp up. The advanced, deeply rooted nature of its supply relationships has been a real benefit in enabling the supermarket giant to keep its shelves well stocked. The huge scale of its distribution also gives the group added flexibility to deliver goods, despite ongoing challenges in the broader logistics space.

It’s managing to outshine its competitors in the process, what companies should i invest in uk is particularly good timing given the reinvigorated competition expected following the acquisitions of Asda and, most recently, Morrisons.

Susannah Streeter (left), what companies should i invest in uk, senior investment and markets analyst at Hargreaves How to invest in us stock market from uae WTB; Share price: 2,974.00p

The expected staycation rise in the UK due to restrictions on overseas travel played into hotel and restaurant group Whitbread’s hands. Also, the balance sheet is in good shape, which puts Whitbread in the enviable position of being able to continue to invest in the business at a time when some of its smaller competitors are hamstrung due to a lack of finance, or even face the prospect of going to the wall.

The company is showing no signs of slowing down strategically, with an aim for 110,000 rooms in the UK, and with investment in its other major market, Germany, continuing apace. Given concerns around the new variant, the shares fell, which should give scope for recovery as and when fears subside.

Richard Hunter, head of markets at Interactive Investor

Strike the right balance

High inflation has made getting investing decisions right all the more important, but it is not an exact science and no one can be certain how any single stock will perform next year.

Before taking the plunge with any investment decision, it is important to do your own research and, if required, seek advice from a financial professional. It can often be a good idea to have a broad portfolio of stocks or assets, rather than simply owning shares in a single company where all your eggs are in one basket.

It is also crucial to remember, as with any form of investing, that you could end up losing more money than you put in.

Funds will focus on UK companies outside the FTSE 100 index. Mid-sized companies are normally found in the FTSE 250 index. Smaller companies form the smallest 10% of the UK stock market.

Henry Ince - Investment Analyst
21 October 2021

Small and medium-sized companies can punch above their weight. They've got bags of room for growth and research shows they normally grow faster than larger businesses over the long term. There's no guarantee of that earn your own money quotes. Their share prices can also be more volatile so there will be more ups and downs in performance along the way,

There's great variety in small and medium-sized company investing. The sector covers everything from well-established industry stalwarts to new and innovative 'micro caps' at the smallest end of the size spectrum.

There are hundreds of small and mid-sized companies in the UK. The larger ones are found in the FTSE 250 index. These are the next 250 largest companies in the UK after the FTSE 100. Sliding down the size scale you'll find the FTSE Small Cap and FTSE Fledgling indices. The FTSE AIM index contains a mix of large, medium, small and micro-sized businesses.

Scroll across to see the full table.

Index	Approximate market cap	Size	Number of companies
FTSE 100	£1.6bn - £131.7bn	Large	101
FTSE 250	£174m - £6.5bn	Medium	250
FTSE Small Cap	£30m - £952m	Small	252
FTSE Fledgling	£2m - £153m	Micro	86
FTSE AIM	£0m - best non risk investments to large	725

Source: FTSE Russell as at 30/08/21.

Our view on the UK small and mid-sized companies sector

Small companies in the UK can be among the most exciting businesses around. Some are pioneers of emerging industries and adapt quickly to new opportunities.

Mid-sized companies are often seen as the investing 'sweet spot'. They're usually at a later stage of growth, so can be less volatile than their smaller peers. But they still can offer higher potential for growth than large companies.

We think the long-term prospects for both small and mid-sized companies are compelling. Some could grow rapidly or blossom into the giants of tomorrow. But others will struggle or could even go bust.

Smaller companies what companies should i invest in uk higher-risk investments than larger ones. When markets have gone down, it's usually the smaller companies that have suffered the most. Their shares are also harder to buy and sell – or 'less liquid', which increases risk as fund managers could be forced to sell at a lower price than they would like, what companies should i invest in uk, or experience restricted trading. That's because there are fewer buyers and sellers of smaller companies' shares.

Opportunities for active managers

There are lots of excellent fund managers investing in these companies. Many are among the best long-term performers across all sectors, not just in this area of the market. Fortunately for them, small and medium-sized companies are often under-researched. That creates lots of opportunities to uncover hidden gems. We think this is an area where managers can have a great stock-picking edge.

It adds up to an enticing prospect. Companies with some of the biggest potential for long-term growth and some of the country's finest fund managers to invest in them. If you're happy to accept the greater risks, we what companies should i invest in uk investing in UK small and mid-sized companies can add some excellent long-term growth potential to your portfolio. With the added volatility though, you should invest in these companies as part of a diversified portfolio providing it fits your needs and objectives.

Investment notes

Please remember past performance is not a guide to future returns. Where no data is shown, figures are not available. This information is provided to help you choose your own investments, what companies should i invest in uk, remember they can fall as well as rise in value so you may not get back the original amount invested.

Wealth Shortlist funds in this sector

Funds chosen by our analysts for their long-term performance potential

See the Wealth Shortlist

Our Wealth Shortlist features a number of funds from this sector, selected by our analysts for their long-term performance potential. The Shortlist is designed to help investors build and maintain diversified portfolios. To use the Shortlist, you should be comfortable deciding if a fund fits your investment goals and attitude to risk. For investors who don't feel comfortable building and maintaining their own portfolio we offer ready-made solutions, what companies should i invest in uk, which are aligned to broad investment objectives. For those who want extra help, you can also ask us for financial advice.

The fund reviews below are provided for your interest but are not a guide to how you should invest. For more information, please refer to the Key Investor Information for the specific fund. Remember all investments can fall as well as rise in value so you could get back less than you invest. Past performance is not a guide to the future.

There is a tiered charge to hold funds on the HL platform. It is a maximum of 0.45% a year - view our charges. Comments are correct as at September 2021. Remember investing in smaller companies is higher risk than investing in larger companies.

Wealth Shortlist fund reviews

Source for performance figures: Financial Express.

Latest research updates

ASI UK Smaller Companies: October 2021 update

Tue 12 October 2021

In this fund update, Investment Analyst Henry Ince shares our analysis on the manager, process, culture, cost and performance of the ASI UK Smaller Companies fund.

Investment notes

Please note the research updates are not personal recommendations to trade. If you are unsure of the suitability of an investment for your circumstances please seek advice. Remember all investments can fall as well what companies should i invest in uk rise in value so investors could get back less than they invest.

Fund research

Our expert research team provide regular updates on a wide range of funds.

See fund updates