With January coming to an end, I’m looking ahead to investment opportunities in February. And I’ve got five companies on my list of stocks to buy.
Apple
Top of my list is Apple. The stock has fallen by just under 10% over the last 12 months, so I’m looking to invest at what I think is a great price.
Despite some recent headwinds, there’s still a lot going for Apple. The company’s revenue has been growing at around 11% over the last five years, which I think is impressive.
As revenues have grown, operating margins have increased from 38% to 43%. As a result, earnings per share have gone from $2.30 to $6.11
Apple is a stock that is in a better position than it was a year ago and at a lower price. This is why it’s top of my list of stocks to buy in February.
Games Workshop
I’m also looking at shares in Games Workshop. The stock has an enviable track record when it comes to both revenue growth and dividend growth and I think it has scope to continue.
One risk worth noting with the stock is the company’s costs have been variable and this has cut into margins before. But the business has managed impressive growth despite this.
Games Workshop’s dividend per share has increased by 15% per year over the last decade. If that continues, it’ll be generating a 13% yield on cost 10 years from now on an investment made today.
American Express
American Express is a stock that has managed steady, rather than spectacular, growth. It also doesn’t have an eye-catching dividend.
The reason this company is on my list of stocks to buy in February, though, is that it’s cheap. And I think its shares have a clear path to being worth more in the future.
American Express has been buying back shares at a significant rate. Over the last five years, the company has lowered its share count by 11%, increasing the value of the remaining shares.
I think the company will continue to do this going forward. That’s why I think the value of the stock will increase and why it’s on my list to buy in February.
Halma and Diploma
Lastly, I’ve got two UK conglomerates on my list. The first is Halma and the second is Diploma.
Both businesses are conglomerates that operate with the same decentralised culture that has served Warren Buffett so well at Berkshire Hathaway. Moreover, both have excellent cash generating abilities.
Halma generates £417m in operating income using £225m in fixed assets — a 189% return. Diploma has £112m in fixed assets and generates £143m in operating income, which amounts to a return of 129%.
These two UK shares match up with some of the best businesses in the world in this context. Microsoft, for example, generates a 95% return, Alphabet manages 74%, and Diageo achieves 87%.
I own both of these stocks in my portfolio.
