Investing alongside you, fellow Foolish investors, here’s a selection of stocks that some of our contributors have been buying across the past month!
Aviva
What it does: Aviva is a market leader in several financial services segments, including life and general insurance.
By Royston Wild. I’ve been seeking ways to boost my dividend income. And Aviva (LSE:AV.), with its 7.6% dividend yield, fits the bill perfectly.
The business doesn’t have a long and unbroken record of payout growth. Unlike, say, Legal & General, Allianz or MetLife, it was forced to cut the dividend during the depths of the pandemic.
But dividends have grown strongly since then, and a Solvency II capital ratio of 206% as of March suggests Aviva has the financial firepower to continue raising rewards. Indeed, City analysts expect dividends to keep moving northwards through to 2026 at least.
One drawback is that the firm has a limited geographic footprint compared to some of its peers. A slimmed-down company with a focus on the UK, Ireland and Canada has limited opportunities to grow earnings compared with its globetrotting rivals.
But I’m confident Aviva will still be able to deliver impressive results as populations in its markets rapidly age.
Royston Wild owns shares in Aviva and Legal & General.
Burberry
What it does: Burberry operates within the global personal luxury market, with a presence in over 140 countries and territories around the world.
By Andrew Mackie. The Burberry (LSE: BRBY) share price has had a miserable 12 months. It’s down a whopping 55%, and languishes at levels not seen since 2016. With sentiment in the stock so low, I couldn’t resist adding some shares to my ISA portfolio in the last week.
It’s not hard to see why the company has struggled. In the US, a key market, pandemic-fuelled stimulus payments have long been spent, and elevated inflation has altered the spending patterns of even affluent consumers.
However, ultimately, I see these challenges as relatively short-term. After all, this is an iconic British brand that traces its roots back to the 1850s.
Its core business strategy of building what it describes as a new “creative expression” is, I believe, the right one. In a crowded marketplace, brand marketing is likely to become a clear differentiator. Its one-month takeover of Harrods, together with a new animation of the famous Burberry Check, are but two examples.
I have not invested in the expectation of an instant turnaround. But taking a contrarian stance is in my DNA.
Andrew Mackie owns shares in Burberry.
Burberry Group
What it does: Founded in 1920, the FTSE 100 group makes luxury British clothing, bags, accessories and fragrances, and is best known for its trenchcoats and cashmere scarves.
By Harvey Jones. I’d wanted to buy shares in Burberry Group (LSE: BRBY) for years, but I’m glad I didn’t. They’ve crashed 54.63% in the last 12 months, the second worst performer on the FTSE 100 after St James’s Place.
And that’s when I swooped.
I love buying shares as a big discount, especially when they’re paying much higher income as a result. Burberry’s trailing yield is now a thumping 5.87%.
I didn’t catch the share price right at the bottom, but came pretty close.
However, in the race to bag a bargain, I underestimated what a mess management has got itself into.
Sales have slumped in China. Ad campaigns have backfired. The famed Burberry check is not as aspirational as it was. Fashionistas just aren’t that into it.
So here’s what I’m going to do. Sit tight and wait. Reinvest my dividends. Be patient. I bought Burberry shares at a reduced price and I’m confident they’ll come good. Given time.
Harvey Jones owns shares in Burberry.
Diageo
What it does: Diageo is in the spirits business. It makes some of the best-selling products in a number of categories.
By Stephen Wright. Even the best businesses find their share prices under pressure from time to time. Diageo (LSE:DGE) is a good example of this at the moment.
A falling share price means the stock trades at a price-to-earnings (P/E) ratio of around 18 and the dividend yield is above 3%. That’s unusually cheap by the company’s standards.
The concern is that rising interest rates might cause a durable shift away from the premium drinks that make up the bulk of Diageo’s portfolio. But I think investors are overreacting.
Sales of Guinness have been holding up well in a difficult environment, which illustrates the resilience of the overall product lineup. And a cut in interest rates looks to be getting closer.
If that happens, I expect the stock to rally from its current levels. That’s why I’m buying as much as I can with the price where it currently is.
Stephen Wright owns shares in Diageo.
Hostelworld
What it does: Hostelworld is an online accommodation booking platform that focuses on the hostel market.
By Christopher Ruane. Hostelworld (LSE: HSW) seems to have put the difficult pandemic years firmly behind it.
The budget accommodation booking platform generated record revenue last year. Operating costs continued to decline as a percentage of that revenue, something I think shows the economies of scale an online platform can achieve as marginal costs decline.
It swung back into the black, reporting an after-tax profit of €5.1m. That puts it on a price-to-earnings ratio of 45, which looks expensive. However, if the business continues to perform strongly, I think earnings growth could outstrip revenue growth due to the platform’s scalability.
The company says 2024 began with “strong momentum”. Several directors dipped into their own pockets last month to buy shares.
The threat of a sudden unexpected downturn in travel demand, as we witnessed during the pandemic and its associated government-imposed restrictions, remains a key risk for Hostelworld. But I like its strong, niche position and the economies of scale its business model offers.
Christopher Ruane owns shares in Hostelworld.
Legal & General
What it does: Legal & General is a financial services and asset management company.
By Ben McPoland. I added to my holding in Legal & General (LSE: LGEN) after shares of the insurer fell 7% in mid-June. The drop came after the new CEO set out plans to restructure the business into three core units and increase shareholder returns between 2024 and 2027.
Specifically, the firm announced a £200m share buyback and 5% dividend growth for 2024, followed by 2% growth per year alongside further share repurchases. It’s aiming for 6%-9% compound annual growth in operating earnings per share over these three years.
The market either didn’t think this was ambitious enough and/or wasn’t happy with the reduced dividend growth starting in 2025. Personally, I’m encouraged that management committed to the payout as well as international growth, particularly in the US.
Seeking out business opportunities overseas does come with execution risk, of course, and much more competition. But it’s a risk worth taking to potentially reignite growth, in my opinion.
After the share price dip, the stock is offering a massive 9.4% forward dividend yield (as I write). I found that too tempting to turn down.
Ben McPoland owns shares in Legal & General.
What it does: Pinterest is an American social media platform that focuses on image sharing and idea discovery.
By Muhammad Cheema. After rising by 82% over the last year, is it too late to buy Pinterest (NYSE:PINS) shares? Well, I’m betting it isn’t after recently adding to my position.
The company has experienced a rollercoaster of fortunes since it went public in 2019. Initially, growth soared when the pandemic struck. But it subsequently decelerated when global economies began reopening.
However, high growth has been resurgent as of late as the company has focused on making its site more shoppable. For example, recent quarterly revenue increased by 23% year on year while monthly active users hit a new high of 518 million, growing by 12% over the same period.
When it has competitors, such as Meta, who have been accused of copying its rival’s ideas, there is a risk. However, this isn’t a big concern as other social media platforms, such as TikTok, and Instagram are seen as somewhat controversial. Pinterest on the other hand isn’t, which should help it maintain its competitive edge in its niche.
Muhammad Cheema owns shares in Pinterest.
Sage
What it does: Sage is a provider of cloud-based accounting and payroll solutions with a focus on small- and medium-sized businesses.
By Edward Sheldon, CFA. Sage (LSE: SGE) shares have experienced quite a large pullback lately and I’ve been buying on the dip, boosting my holdings.
This is not a cheap stock, even after the recent pullback. However, to my mind, it has the potential to generate strong returns over the next five to 10 years.
As a provider of cloud-based accounting software, Sage is very well positioned to prosper from the digital transformation trend going forward. As companies move away from old-school accounting processes towards cloud-based software, it should benefit.
But that’s not the only reason I’m drawn to the company. I also like the fact that it has a high level of recurring revenues and a high return on capital (a key measure of profitability). Generally speaking, companies with these attributes tend to be good long-term investments.
One risk with this stock is an economic downturn. This could hurt smaller businesses and lower demand for accounting software.
Taking a long-term view, however, I think Sage shares should do well for me.
Edward Sheldon owns shares in Sage.
Scottish Mortgage Investment Trust
What it does: Scottish Mortgage is a Baillie Gifford fund that aims to own the most exciting growth companies across the world.
By Charlie Keough. With it down over 40% from its all-time high, I decided to open a position in Scottish Mortgage Investment Trust (LSE: SMT). It’s a stock I’ve had on my watchlist for a while. There are a few reasons why.
Firstly, its shares look cheap. The trust trades on a 10.3% discount to its net asset value. That makes Scottish Mortgage look like good value for money at £9.97 a share. With nearly 100 companies in its holdings, I’m also a massive fan of the diversification it offers.
There are a few risks. To begin, 26.2% of its portfolio consists of private companies. Valuing these businesses can sometimes be difficult. What’s more, with a heavy focus on growth stocks, any signs of a delay in rate cuts could negatively impact its price.
But just like me, management invests for the long term. The trust has been gaining momentum recently. It’s up 13.8% this year already. I’m hoping it can keep up this form going forward.
Charlie Keough owns shares in Scottish Mortgage Investment Trust.
Zscaler
What it does: Zscaler is a Californian cybersecurity company that offers cloud security services to enterprise businesses.
By Mark David Hartley. I recently bought shares in Zscaler (NASDAQ: ZS) as part of a broader portfolio aimed at profiting from the artificial intelligence (AI) boom. With a heavy reliance on cloud-hosted databases, artificial intelligence has created a huge demand for cloud security. As an IT professional, Zscaler’s ‘zero-trust’ approach to cybersecurity appeals to my personal beliefs and understanding of how this technology should operate.
But it’s not alone in the industry. ZScaler faces tough competition from larger and more established players like Palo Alto Networks and Fortinet. At 13.7 times, its price-to-sales (P/S) ratio is significantly higher than the industry average of 4.3. It will need to seriously up its sales if it hopes to meet investor expectations, or shares could fall soon. Still, analysts are positive, with good consensus on a 12-month price target 25% higher than currently. If AI doesn’t end up killing us all, it might pay off.
Mark Hartley owns shares in Zscaler.
