Investing alongside you, fellow Foolish investors, here’s a selection of listed companies that some of our contributors have been buying shares in across the past month!
Apple
What it does: Apple designs and manufactures consumer hardware products. It also provides services and software.
By Stephen Wright. I didn’t do much in the stock market in January. But I did add to my investment in Apple (NASDAQ:AAPL) with the price below $150.
It’s hard to see Apple shares as attractive value, but I think that a closer investigation reveals that there’s a lot going on. Let’s start with the dividend.
With a yield of 0.6%, the stock doesn’t catch the eye for an income investor. But Apple’s dividend per share has increased by an average of 8% per year over the last decade.
On top of that, I think there’s some more growing still to be done. Apple has been aggressively repurchasing its stock, which increases the value of the remaining shares.
Behind that, the company has terrific returns on its fixed assets (302%) and high cash conversion metrics (89%). That’s why I’ve been buying the stock in my portfolio.
Stephen Wright owns shares in Apple.
Burberry
What it does: Burberry operates in various markets that include fashion, beauty, and fragrances.
By John Choong. Following a strong start to the year, I’ve been buying Burberry (LSE:BRBY) shares. Despite just missing analysts’ estimates in its most recent trading update, the company still showed some positive trends. For one, customers are gravitating towards higher margin and expensive products. Meanwhile, sales excluding China grew by double digits in the three quarters reported thus far.
Additionally, outgoing COO Julie Brown is bullish on China’s prospects and cited a couple of key catalysts for a strong rebound. These include the country’s strong net household deposits and government stimulus that should encourage spending. Moreover, new Chief Creative Officer Daniel Lee is expected to push the British aesthetic in his new line of products, which is key to the company’s long-term growth.
Although Burberry shares are currently trading on slightly pricey valuation multiples, the upside potential is certainly there, especially when considering its push to expand its margins and grab more market share over the next few years.
John Choong owns shares in Burberry.
Calnex Solutions
What it does: Calnex is a technology company that specialises in testing and measurement services for telecoms networks.
By Edward Sheldon, CFA. Calnex Solutions (LSE: CLX) shares experienced a pullback recently and I took the opportunity to buy more for my portfolio.
There’s a lot to like about this under-the-radar British company from an investment perspective, to my mind.
For starters, there’s high demand for its services right now thanks to the rollout of 5G networks. This is illustrated by the fact that for the six months to the end of September, revenue was up 38% year on year to £12.7m. Looking ahead, the global 5G testing equipment market is forecast to grow by around 8% per year between now and 2027.
Secondly, it’s very profitable. Over the last three years, return on capital has averaged 26%.
Third, the company is founder led. Research shows that founder-led businesses tend to be good long-term investments.
It’s worth pointing out that this is a small-cap stock. So I expect it to be volatile.
However, after the recent pullback, I like the risk/reward proposition on offer.
Edward Sheldon owns shares in Calnex Solutions.
Fresnillo
What it does: Fresnillo owns and operates gold and silver mines throughout Mexico.
By Andrew Mackie. As market indices continue to rally, I am ignoring background noise and concentrating on underlying fundamentals. Silver is one market that has really caught my attention recently.
Since November, the silver price has rallied 15%. As the largest primary silver producer in the world, one would expect the Fresnillo (LSE:FRES) share price to react positively. However, since early January its share price is down 16%. I attribute the sell-off to a broker note from UBS, who downgraded the shares to ‘sell’.
Over the past couple of years, the company has failed to reach forward production targets, due to a host of different operational challenges.
In 2022, silver production was in line with guidance, at 53.7moz. Gold production fell 15% from 2021. However, for 2023, it has raised gold production guidance due to an updated mine plan at Herradura, and an increase in volumes at Noche Buena.
I realise that investing in precious metals miners is risky. However, I believe the sell-off here has been overdone. As the economic situation deteriorates, it is important for me to have a diversified portfolio.
Silver has a history of acting extremely explosively in stagflationary-type environments. And ultimately that is where I believe we’re heading, which is why I bought some shares in the sell-off.
Andrew Mackie owns shares in Fresnillo.
Inchcape
What it does: Inchcape is an automotive distributor that operates in over 40 countries, working with most of the world’s leading car brands.
By Roland Head. I bought Inchcape (LSE: INCH) shares for my portfolio in January, just before the company completed a £1.3bn deal to expand its presence in Latin America.
Inchcape’s third-quarter update showed a 16% rise in revenue across the group’s businesses. Management were confident enough to upgrade their profit guidance for the full year slightly, as well.
I was encouraged to learn that the company had “record order books across many of our markets”. Vehicle supply from manufacturers is also expected to gradually improve this year. That should allow Inchcape to convert its order books into revenue.
The main risk is that a global recession could still cause sales to slow unexpectedly in 2023. I don’t know how likely this is.
However, my feeling is that Inchcape looks reasonably valued, on 11 times 2023 forecast earnings. I’m also attracted by the stock’s expected 3.7% dividend yield, which looks well supported to me.
Roland Head owns shares in Inchcape.
Londonmetric Property
What it does: Londonmetric Property manages and leases over 17 million square feet of UK commercial real estate.
By Zaven Boyrazian. Londonmetric Property (LSE:LMP) is a real estate investment trust specialising in commercial facilities. The bulk of its assets are strategically positioned warehouses of varying sizes, from small last-mile delivery depots to massive distribution hubs connecting business supply chains.
The firm also has a collection of retail properties leased to a diverse customer base, including Aldi, Costco, and Howden Joinery.
The revenue stream comprises of rental income, the majority of which is returned to shareholders in a juicy 4.7% dividend yield. However, the stock itself hasn’t been a stellar performer in recent months due to the impact of rising interest rates on the real estate sector.
The firm has just under £1.2bn of debt on its books. And higher interest payments mean fewer residual earnings to fund dividends. And yet, high occupancy levels of 98.7% — along with continued portfolio expansion — are still pushing net rental income up by double-digits even with increased costs.
Zaven Boyrazian owns shares in Londonmetric Property and Howden Joinery Group.
Watches of Switzerland
What it does: Watches of Switzerland Group is a UK-focused retailer of luxury watches via its network of 171 showrooms and online platform.
By James J. McCombie: I have been making regular investments in Watches of Switzerland (LSE:WOSG) stock to add growth exposure to my portfolio.
The company’s sales have grown by 19.4% on average over the last five years. Increasing efficiency (operating margins are up from 4.45% to 11.5%) and profitability (earnings per share are up 117%) have also been delivered over the last half-decade.
The company says that demand for luxury Swiss watches outstrips supply as evidenced by customers having to register interest. That bodes well for future growth.
Also, luxury watch brands are selective about who can sell their wares, being mindful of presentation standards. That gives incumbents like Watches of Switzerland an advantage.
But this stock is not cheap. Even after a 33% or so decline in price since late 2021, it is still trading at 17 times forward earnings, which is high for a speciality retailer.
James J. McCombie owns shares in Watches of Switzerland.
