Investing alongside you, fellow Foolish investors, here’s a selection of stocks that some of our contributors have been buying across the past month!
J.D. Wetherspoon
What it does: J.D. Wetherspoon is a UK pub chain. The company is known for consistent food, decent beer, and low prices.
By Stephen Wright. I really ought to have been buying shares in J.D. Wetherspoon (LSE:JDW) for a lot longer than I actually have. But I’ve been buying more of the stock lately.
I think the market is making a mistake with this company. The firm has been reducing the number of pubs it operates, but this isn’t a sign of a business in decline.
Instead, it’s a move to maintain its competitive advantage. By reducing lease commitments, the company can keep its costs low, which is what allows it to charge low prices to customers.
I expect those low prices to allow Wetherspoon’s to remain durable in an economic downturn. But inflation are a bigger challenge – and probably the biggest risk with the stock.
The good news, though, is that the Bank of England is focusing on reducing inflation, rather than boosting the economy. In my view, those are favourable priorities for a low-cost pub chain.
Stephen Wright owns shares in J.D. Wetherspoon.
Legal and General Group
What it does: Legal and General Group provides life insurance policies, pensions, and a raft of other financial products.
By Royston Wild. There are multiple ways for UK share investors to profit from the developing ‘grey tidal wave’. I chose to do this by opening a position in Legal and General (LSE:LGEN) last summer. I then added to my holdings earlier this month.
From a value standpoint, I think the financial services firm is one of the most attractive ways to capitalise on the world’s rapidly-ageing population. It trades on a forward price-to-earnings (P/E) ratio of 8.4 times. Its corresponding dividend yield, meanwhile, sits at a showstopping 9.3%.
The over-65 demographic is growing at an incredible pace. According to the United Nations, 16% of the global population will fall within this category by 2050, up from 10% in 2022. This provides excellent sales opportunities for Legal and General.
While it faces fierce competition, I still expect demand for the FTSE 100 firm’s retirement, protection and wealth products to rise strongly in the coming decades.
Royston Wild owns shares in Legal and General Group.
Michelmersh Brick Holdings
What it does: The company has seven brands that operate to manufacture clay bricks and pavers and owns a landfill operator.
By Oliver Rodzianko. Michelmersh Brick Holdings (LSE:MBH) seems like an exceptional business for me to own. I view it as undervalued, highly profitable, and a nice way for me to diversify away from the heavy technology focus I have in my portfolio.
To put it into perspective with its competition, its net margin is in the top 25% of companies in the building materials industry. Additionally, I think its balance sheet is exceptional, with equity balancing 70% of its assets. Also, its dividend yield is 4.4%.
However, this isn’t a high-growth investment in terms of its share price. It’s up only 48.5% over 10 years, which is slow. Also, if there’s a crash in the housing market, the results would be poor.
Nonetheless, it has a price-to-earnings ratio of just 9.5. Because I think I’m buying the stock at a low price, and the dividend contributes to my income, I’m a happy shareholder.
Oliver Rodzianko owns shares in Michelmersh Brick Holdings.
PZ Cussons
What it does: PZ Cussons is a consumer goods company, with a portfolio of brands across hygiene, baby and beauty.
By Andrew Mackie: The PZ Cussons (LSE:PZC) share price has been in a downward trend for over a decade. The last year has been particularly brutal with the stock down 50%. Its immediate challenge is navigating a devaluation in the Nigerian Naira, which wiped £60m off of its H1 FY24 revenues.
However, with the stock now trading at a 15-year low, I decided to take the plunge and buy some. When I look beyond all the negative headlines, I see a business with a number of growth opportunities.
Its UK personal care business has started to see a turnaround in performance lately. I see signs of positive momentum beginning to build across many of its core brands. For example, the launch of Morning Fresh into the Australian auto dishwasher market, is helping to grow revenues in that geography.
I am under no illusion that the business has a mountain to climb if it’s to deliver sustainable growth. However, one key lesson I’ve learnt on my investing journey, is that when investor sentiment in a stock is so low, that’s often the best time to step in.
Andrew Mackie owns shares in PZ Cussons.
Safestore
What it does: Safestore is the UK’s largest self-storage unit provider. It has over 130 stores nationwide as well as a growing international presence.
By Charlie Keough. I continue to increase my position in Safestore (LSE: SAFE). There are a few reasons why.
What I most like about the business is its ambitious growth plans. It dominates the UK. As a result, it’s now looking to build its international portfolio. For example, last year it added 500,000 square feet of lettable area across 13 sites.
Trading on a price-to-earnings ratio of 8.9, I also think Safestore shares look cheap. That’s below the FTSE 250 average of around 12.5. Coupled with a cheap valuation is a 3.7% dividend yield.
Debt on its balance sheet could be an issue. High interest rates make this more difficult to pay off. Higher rents may also see businesses look to cut down on costs.
But that’s a short-term concern. And down 23.1% in the last 12 months, as I write, I think Safestore shares are a steal. If I have any spare cash going forward, I’ll slowly continue to increase my holding.
Charlie Keough owns shares in Safestore.
