Investing alongside you, fellow Foolish investors, here’s a selection of stocks that some of our contributors have been buying across the past month!
Ashtead Group
What it does: Ashtead Group provides a wide range of rental equipment in North America and the UK under the Sunbelt brand.
By Royston Wild. Ashtead Group’s (LSE:AHT) operations are highly cyclical. It is best known for providing rental equipment to the construction industry. However, it also provides hardware to other sectors including retail, industrial and leisure.
This leaves earnings vulnerable to tough economic conditions in its US, Canadian and British markets. So as investor confidence drained in early July, the FTSE 100 firm’s share price crumbled.
I used this as an opportunity to add to my existing position in the company. Trading has remained resilient so far, which bodes well for the rest of 2023 and beyond. Company revenues rose 19% between February and April thanks to strong pricing and volumes.
Ashtead’s share price rose strongly during the last decade as it rapidly expanded its operations. I fully expect it to keep increasing over the long term as the firm moves ahead with its acquisition-based growth strategy. It spent another $1.1bn on 50 bolt-on acquisitions in the 12 months to April alone.
Royston Wild owns shares in Ashtead Group.
AstraZeneca
What it does: AstraZeneca is an Anglo-Swedish pharmaceutical and biotech company. It’s the largest stock on the FTSE 100.
By Dr James Fox. AstraZeneca (LSE:AZN) is among the best performing stocks on the FTSE 100 in recent years.
The Cambridge-based company has experienced revenue and share price growth driven by a broad portfolio of existing treatments, new products, and partially due to its Covid-19 treatments and vaccine.
Oncology is a major and fast-growing part of the business, delivering around 30% of revenue in 2022. Sadly, this is a huge market, and one where constant technological development will lead to more business growth.
AstraZeneca has a robust pipeline of innovative pharmaceutical products, with 178 projects under trial. However, the stock tanked last week after datopotamab deruxtecan trial data did not provide the conclusive evidence the market hoped for.
If later trial updates show datopotamab deruxtecan is less effective than the drug currently considered the standard for chemotherapy, it’s possible that we could see further downward pressure.
Nonetheless, I saw the £14bn selloff as an overreaction, and a great opportunity for me to buy a top-quality stock.
Dr James Fox owns shares in AstraZeneca.
British American Tobacco
What it does: British American Tobacco manufactures and sells cigarettes and tobacco products worldwide
By Christopher Ruane. The recently sluggish share price of British American Tobacco (LSE: BATS) suggests that some investors are downbeat about the prospects for the company. The shares have been trading close to 52-week lows. They are around a third lower than they were five years ago.
That means that the company is trading on a price-to-earnings ratio in single digits. It also offers a dividend yield of over 8%. British American has raised its dividend annually for decades.
There is no guarantee that the dividend will be sustained. Falling smoking rates in many markets pose a threat to profits. The company’s adjusted net debt of £38bn is higher than I would like.
But I expect a new chief executive will keep the company financially disciplined. Cigarette use may be falling but the business remains hugely cash generative. It is also growing its non-cigarette sales quickly.
The income prospects appeal to me and I have bought more of the stock.
Christopher Ruane owns shares in British American Tobacco.
Diageo
What it does: Diageo is a global alcoholic drinks producer. Some of its major brands are Guinness, Smirnoff, and Tanqueray.
By Charlie Carman. Diageo (LSE:DGE) shares currently trade near a 52-week low. A legal battle with rapper Sean Combs and slowing North American sales are pressing challenges for the company’s new interim CEO Debra Crew, only a month into the job.
Nonetheless, recently I took advantage of the share price slump to add the stock to my portfolio. I believe it’s a quality business that can overcome its near-term difficulties.
Diageo is a Dividend Aristocrat. It’s hiked shareholder payouts every year since its formation in 1997. An increasing focus on premium products, which represent nearly 60% of the firm’s sales, bodes well for future profitability and dividend sustainability.
Moreover, the stock has attractive defensive qualities. Consumer demand for alcohol is relatively non-cyclical. Plus, the company’s successfully relied on customer loyalty in raising prices to offset the impact of inflation.
I think it’s only a matter of time before Diageo recovers from its hangover.
Charlie Carman owns shares in Diageo.
Greencoat UK Wind
What it does: Greencoat UK Wind is a renewable infrastructure fund, which is invested in onshore and offshore wind farms across the UK.
By Ben McPoland. Recently I’ve been buying into Greencoat UK Wind (LSE: UKW) stock. This renewable energy company focuses on wind farms that are already producing income. It now operates 46 sites across the UK and this portfolio generates enough electricity to power well over a million homes.
The dividend is linked to retail price index (RPI) inflation, which resulted in it recently hiking the payout 13.4% to 8.76p per share. It has raised the dividend in line with RPI inflation every year since listing in 2013. The stock carries a dividend yield of 6.3%.
A major attraction here is the estimated £100bn wind power market in which it specialises. This is tipped to grow much larger as the UK attempts to reach net zero by 2050.
One downside I’d highlight is the government’s windfall tax imposed in response to rising consumer energy bills. It came into effect in May, and means the company expects to pay more tax until at least 2028.
However, this doesn’t concern me too much, as I’m intending to hold my shares for much longer than that.
Ben McPoland owns shares in Greencoat UK Wind.
Keywords Studios
What it does: Keywords is an industry-leading supplier of talent services to the video game development industry worldwide.
By Zaven Boyrazian. Keywords Studios (LSE:KWS) operates at the heart of the video game development industry. It provides the vital manpower and talent development studios need to complete their projects on time and to high quality.
With fewer studios retaining a permanent staff, reliance on Keywords has skyrocketed over the last decade. Subsequently, revenue and earnings have been growing in excess of 20% annually since 2019 – a trend that doesn’t appear to be changing course.
With the rise of generative AI, investors are concerned that many of the services Keywords offers could be replaced by machines in the future. In fact, that’s why the stock is down over 20% in the past year.
However, management is already acting against this threat through targeted acquisitions. And with several leading AI tools like Yokozuna Data and KantanAI already in its portfolio, I think investors are being overly pessimistic. That’s why I’ve used the recent share price drop as a buying opportunity for the stock.
Zaven Boyrazian owns shares in Keywords Studios.
Lloyds
What it does: Lloyds is a FTSE 100 banking group, with its operations focused in the UK.
By Charlie Keough. I already own Lloyds (LSE: LLOY) shares. However, I recently topped up my holding.
The stock struggled in the first half of 2023, falling by 7%. But I’m optimistic about its long-term potential.
The main attraction for me is its dividend yield. As I write, this sits at 5.5%, trumping a host of its competitors along with the FTSE 100 average. Furthermore, the bank recently announced plans to buy back £2bn of stock this year.
I also think that its shares look cheap, with a price-to-earnings ratio of around 6.
The firm will benefit from rising interest rates in the short term. Q1 saw its underlying net interest income rise by 20%, with this surge being led by an increase in its net interest margin.
With that said, there’s been plenty of volatility surrounding the financial sector in recent months. The looming threat of recession could also damage the stock.
However, I think Lloyds shares represent good value right now. I’ll be looking to bolster my holdings in small increments in the weeks and months ahead.
Charlie Keough owns shares in Lloyds.
PZ Cussons
What it does: PZ Cussons is a consumer goods business primarily focused on the hygiene, baby and beauty markets.
By Andrew Mackie: Over the past 10 years, the PZ Cussons (LSE: PZC) share price has been in a secular decline. After falling 25% in just two months, it is now trading lower than at the depths of the pandemic crash.
Despite seeing like for like revenue growth of 6.7% in the last quarter, the market was spooked by the recent devaluation of the Nigerian currency, a key market for the company. As a result, revenue and operating profit for 2023 was revised downward.
Having missed buying shares in the company back in 2020, I believe the recent sell off to be well overdone. During the next decade, I see the potential emergence of a long-term growth story.
In 2022, it bought Childs Farm, a leading UK brand in baby and child personal care. This was its first acquisition since 2014 and, for me, signals confidence that its transformation is beginning to bear fruit.
As the likelihood of a global downturn increases, I decided to only open a small position with the expectation of buying more of the stock over time.
Andrew Mackie owns shares in PZ Cussons.
Uber Technologies
What it does: Uber is a technology company that offers mobility, freight, and food delivery solutions.
By Edward Sheldon, CFA. There are a number of reasons I’ve bought shares in Uber Technologies (NYSE: UBER).
One is that management is very focused on profitability right now. Like other tech companies such as Amazon and Meta, Uber is exiting unprofitable businesses and focusing on making money. If the company can generate consistent profits, I think that the stock – which has been unloved for years – will get a lot more attention from investors.
Another is that the company is moving into the digital advertising space. Not only is it selling ad space in its apps (which have over 100m monthly active users globally), but it is also showing ads in its vehicles. The company reckons digital advertising will generate an extra $1bn in revenue by 2024.
Finally, I like the upward share price trend here. I prefer to buy stocks that are trending up over those that are trending down.
It’s worth pointing out that Uber shares have had a great run this year. So, they could experience a pullback in the near future.
I plan to hold on to this stock for a while, however, as I see considerable long-term growth potential.
Edward Sheldon owns shares in Uber Technologies and Amazon.
