Investing alongside you, fellow Foolish investors, here’s a selection of shares that some of our contributors have been buying across the past month!
Apple
What it does: Apple is the world’s largest consumer technology company, with it being best known for products such as the iPhone.
By Charlie Keough. It’s been a monumental year for Apple (NASDAQ: AAPL), rising 55%. As such, I recently decided to top up my position.
My main investment thesis for the stock originates from a piece of advice given by Warren Buffett. He said to invest in companies that you know and understand. With Apple, this is clear.
Around 20% of the world’s population uses its products. And on top of its competitive advantage, the firm is efficient at keeping users in its ecosystem.
Inflation will continue to provide a challenge in the times ahead. And there’s always the risk that a cost-of-living crisis may stop consumers from spending. iPhone sales were down slightly for 2023 compared to last year.
However, I can’t see this being a major issue. It’s also diversified to offset this risk, including with its services sector, which has posted record revenues in recent times.
The stocks had an incredible year. I’m hoping it’ll take this momentum into the future.
Charlie Keough owns shares in Apple.
Diageo
What it does: Diageo is a global alcoholic beverages giant.
By Ben McPoland. I recently topped up my holding in Diageo (LSE: DGE) after the shares took a clobbering. But I did think hard about whether to do this.
That’s because (new) management had only reaffirmed its FY 2024 outlook in late September. Then it was back in November saying that “materially weaker performance” in the Latin America and Caribbean (LAC) region meant H1 organic net sales there would be 20% lower than last year.
Clearly it had been caught by surprise, making me question how much visibility management really has over global regional sales. Could they weaken much further? Inflation is a problem in many parts of the world, so it’s a risk.
However, the LAC region only made up 11% of Diageo’s net sales last year, and reports suggest that younger drinkers there are preferring different types of alcohol to Scotch whisky.
If so, this doesn’t worry me. Diageo has long been a master at optimising its portfolio for different regions and target audiences.
Looking forward, I expect the global drinks premiumisation trend to outlast the current macroeconomic challenges.
Ben McPoland owns shares of Diageo.
PayPal
What it does: PayPal is one of the world’s largest payments companies. Its brands include PayPal, Braintree, Venmo, PayPal Zettle, PayPal Honey, and Paidy.
By Edward Sheldon, CFA. Recently, I bought some more PayPal (NASDAQ:PYPL) shares for my portfolio. There are a few reasons why.
For a start, after a huge share price fall, the payments company now has a very low valuation. Currently, it has a P/E ratio of just over 10, which I think is too low given the growth the group is generating (9% revenue growth last quarter).
Secondly, earnings are growing at a healthy clip. This year, PayPal expects earnings growth of about 20%. Buybacks should help to boost earnings. Recently, the company has been buying back a ton of stock.
Finally, figures from Black Friday and Cyber Monday showed that a lot of consumers have been turning to ‘buy now, pay later’ services recently. PayPal is one of the biggest players in this space so it stands to benefit from this trend.
Now, the big risk here is competition from Apple Pay. It has been cutting PayPal’s lunch recently.
At the current valuation, however, I like the risk/reward skew.
Edward Sheldon owns shares in PayPal and Apple,
Pets at Home
What it does: Pets at Home is a pet care company offering products and services for animals and owners in the UK.
By Oliver Rodzianko. I bought Pets at Home (LSE:PETS) shares for the first time in November. The price is currently down around 45% since September 2021.
The company has a strong 11% three-year average annual revenue growth rate. It’s also got a top-class gross margin of 48%.
I recently wrote an article on the company for Foolish readers outlining its potential as a passive income investment. The dividend yield at the moment is 4.5%!
The company is even considering international expansion. That means the shares could grow significantly if overseas operations are as successful as in the UK.
However, the share price is down at the moment for specific reasons. Predominantly rising living costs are curbing spending on pets and pet products.
Nonetheless, I bought the shares because when the British economic environment recovers, I bet Pets at Home is going to be back on top, and then some.
Oliver Rodzianko owns shares in Pets at Home.
Rolls-Royce
What it does: Rolls-Royce is a British engineering giant focusing on civil aviation, power systems, and defence.
By Dr James Fox. A few months ago, I sold my holding in Rolls-Royce (LSE:RR.). I was happy to take my gains with the stock surging over 100% from my entry point. However, I now believe that was a mistake, and I’ve once again bought Rolls-Royce shares.
Of course, there are always concerns about buying a stock that’s up 212% over 12 months. And the pandemic has taught us that Rolls is highly dependent on the success of the civil aviation sector.
Nonetheless, the future looks very positive for this engineering giant. While demand for defence and power systems remains strong and stable, civil aviation is anticipated to experience a boom in the coming two decades.
And this positive outlook appears to be underappreciated by the market. This is highlighted by the price/earnings-to-growth ratio (an earnings metric adjusted for growth) of 0.48. That suggests the stock could be undervalued by half.
As such, fair value for Rolls could be around 570p. And that’s why I’ve bought back in.
Dr James Fox owns shares in Rolls-Royce.
