By the time you read this, Parliament might have agreed a Brexit deal. Or it might not.
But I think that the three stocks I’m considering today should be attractive buys regardless of the political landscape.
Between them, they offer a mix of international and UK exposure. They also combine defensive qualities with cyclical opportunities.
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Compare this
Price comparison websites are no longer just the middleman. Increasingly, they’re a destination in themselves. That’s no accident.
Moneysupermarket.com Group (LSE: MONY) and its main rivals have all been investing heavily in technology and marketing to build direct relationships with their users. Two areas of growth being targeted by Moneysupermarket are mortgage price comparison and automated utility switching.
However, the Moneysupermarket share price hit a stumbling block last week, after reporting a marked slowdown in growth during the third quarter.
My view: Moneysupermarket’s evolution from comparison website to finance business won’t be seamless. Personally, I see this slump as a decent buying opportunity. The company remains incredibly profitable, with an operating margin of 30% and a big share of the UK market.
Last week’s dip has left the shares trading on 19 times forecast earnings, with a forecast yield of 4%. I believe this remains a long-term growth story. I’d be a buyer at this level.
An international growth engine
Another FTSE 250 company that’s hit a speedbump in recent years is temporary power supplier Aggreko (LSE: AGK). This global business provides equipment and complete power solutions for events, remote sites, and utility customers in emerging markets.
After a difficult spell, performance has been improving steadily. I believe this is likely to continue. The group has an approximately $200m deal to provide power for the Tokyo Olympics next year and boss Chris Weston is confident that profitability should continue to improve.
My view: Analysts’ forecasts suggest that earnings will rise by a chunky 25% in 2020, valuing the stock at just 12 times forecast earnings, with a dividend yield of 3.6%.
I think that looks decent value, especially as the group’s operating profit margins are now heading further into the mid-teens. Aggreko has been on my watch list for a while – I’m considering a purchase over the coming weeks.
A defensive earner
My final pick is ingredients firm Tate & Lyle (LSE: TATE). This FTSE 250 company has not cut its dividend for more than 20 years.
Tate’s defensive mix of products – which includes sweeteners and specialist ingredients used by food manufacturers – suggests to me that its profits should be fairly stable, even in a recession.
Although this isn’t the most exciting of growth stocks, I see this as a stock you could buy and tuck away for a few years, while collecting a useful 4%+ dividend income.
The group’s results from last year show that adjusted pre-tax profit rose by 4% to £309m, while net debt fell to £337m. That level of borrowing looks reassuringly low to me, which should provide a further layer of safety if the economy hits tough times.
My view: At the time of writing, the shares are trading at about 670p, giving the stock a forecast price-to-earnings ratio of 13 and a dividend yield of 4.4%. TATE stock has been as high as 800p over the last year, but I’d view the current price as a much better entry point. I’d be happy to buy current levels.
