Investing alongside you, fellow Foolish investors, here’s a selection of shares that some of our contributors have been buying across the past month!
Arista Networks
What it does: Arista Networks develops mission-critical cloud networking hardware and software for data centres worldwide.
By Zaven Boyrazian. One of the largest positions in my growth portfolio is Arista Networks (NYSE:ANET). The firm specialises in ethernet switches – a small but critical component that powers the entire internet. These devices are ultimately what provide the bandwidth within a datacentre ensuring reliability and low latency.
Historically, this arena has been dominated by Cisco Systems. And Cisco continues to be a significant competitior. But Arista’s technological edge has resulted in the firm systematically taking market share. Today it stands at 29.9% in 10GbE switches compared to 3.5% in 2012. Meanwhile Cisco is at 34.3% down massively from 78.1% over the same period.
Arista’s rampage has translated into staggering growth, consistent beating of analyst expectations, and operating margins just shy of 50%. Today’s valuation is a bit lofty, opening the door to volatility. But in the long run, paying a premium may be worthwhile in my opinion.
Zaven Boyrazian owns shares in Arista Networks.
Burberry
What it does: Burberry designs and sells a range of premium-priced clothes and accessories drawing on its British roots.
By Christopher Ruane. There is no doubt that Burberry (LSE: BRBY) has been going through a tough patch. Lower customer spending is a problem across the high end of the rag trade in the current economic environment. The British firm has felt the consequences.
Last year saw revenues fall 4% (due to exchange rate movements). Attributable profit fell an alarming 45%. Free cash flows tumbled 84%.Ouch!
The dividend has been suspended. Weak demand generally remains a risk, as do brand-specific challenges. First-quarter revenues fell over a fifth year on year.
Still, Burberry sales remain significant. It has a distinctive identity I see as a potential asset and it is still making money, albeit at a sharply lower level.
As a long-term investor, I think its share price fall of almost two thirds in the past year has gone too far. I bought some Burberry shares recently to take advantage of what I see as an attractive valuation.
Christopher Ruane owns shares in Burberry.
HSBC Holdings
What it does: HSBC is an international bank with historical links to Asia. Today, it operates in over 60 countries.
By Charlie Keough. I recently added to my position in HSBC (LSE: HSBA). There are a few reasons why I’m a big fan of the stock.
Firstly, it looks cheap trading on just 7.4 times earnings. That’s considerably below the FTSE 100 average. What’s more, it’s trading on just 7.2 times forward earnings.
There’s also a meaty dividend yield on offer. The stock boasts a 7.4% payout, which has been steadily rising over the last couple of years. This year, it announced a special dividend which takes its yield up to 9.2%. The bank also continues to buy back shares, including $2bn worth last year.
As much as I’m a fan of its exposure to Asia, that does come with risks. Ongoing US and China tensions could prove to be an issue, especially if Donald Trump is elected. The Chinese property market has also encountered periods of volatility recently.
But over the long term, I think its focus on Asia will pay off. It’s home to some of the fastest-growing nations in the world. I reckon we could see demand for banking services soar in the years to come.
Charlie Keough owns shares in HSBC.
HSBC Holdings
What it does: HSBC is one of the world’s largest banks, with a strong focus on Asia.
By Ben McPoland. I recently added to my holding in HSBC (LSE: HSBA). The stock is trading below book value and the forward price-to-earnings (P/E) ratio is currently under seven. Meanwhile, the well-supported dividend yield of 7.3% is approximately double the FTSE 100 average.
In the first quarter, the bank’s revenue came in at $20.8bn, up 3% from the same period a year ago. And while pre-tax profit dipped slightly to $12.6bn, it was still higher than analysts were expecting.
One thing adding a bit of uncertainty here is that there’s a new CEO at the helm. He’ll have to navigate rising tensions between the West and China, as well as falling interest rates, which will likely hit the bank’s bottom line. It could be a baptism of fire, so to speak.
However, I’m willing to take on these risks for the potential reward of those high-yield dividends. Plus, the Asia region where HSBC makes the lion’s share of its profits is tipped to grow rapidly for many years, offering higher earnings and share price growth potential.
I think the stock offers excellent all-round value.
Ben McPoland owns shares in HSBC Holdings.
HSBC S&P 500 UCITS ETF
What it does: HSBC S&P 500 UCITS ETFtracks the performance of the 500 largest companies in the US by market capitalisation.
By Royston Wild. Investing in individual stocks can help investors to achieve market-beating returns. However, a good exchange-traded fund (ETF) can also turbocharge the profits an individual makes over time.
Someone who bought an S&P 500 tracker fund 30 years ago, for example, would have enjoyed a 10% average annual return over that time. They would also have endured lower risk by spreading their cash over hundreds of different companies.
This is why I’ve been steadily building my stake in HSBC S&P 500 UCITS ETF (LSE:HSPX). With one of the lowest ongoing charges, at 0.09%, it enables me to track the US share index in a cost-effective manner, too.
There’s no guarantee that I’ll make a double-digit return each year, of course. A persistence of high interest rates for one could compromise the S&P’s performance looking ahead.
But a strong long-term outlook for the US economy bodes well for me, as does the fund’s high concentration of AI stocks. Major holdings include Nvidia, Microsoft and Meta.
Royston Wild owns HSBC S&P 500 UCITS ETF.
Persimmon
What it does: York-based Persimmon is one of the UK’s biggest listed housebuilders
By Paul Summers: With the new Labour government setting a target of 1.5 million homes to be built over the next five years and interest rate cuts (hopefully) on the way, I’ve been busy buying more Persimmon (LSE: PSN) shares in July.
As I type, this has worked out well with shares enjoying some nice upward momentum. A positive half-year report from the company in August could provide a further boost.
This is not to say there are no risks. Even if a rate cut does come soon, it may be less than the market’s hoping for. We also don’t know how long it will be before additional cuts arrive.
But I’m a long-term investor. This means I’m far more motivated to buy and hold Persimmon shares for decades rather than years as the UK’s chronic shortage of housing is addressed.
The 4% dividend yield is another attraction.
Paul Summers owns shares in Persimmon.
Renewables Infrastructure Group
What it does: Renewables Infrastructure Group is an investment trust that owns wind farms, plus some solar and battery storage assets.
By Roland Head. Renewables Infrastructure Group (LSE: TRIG) is one of the older renewable energy investment trusts on the London market, having floated in 2013.
Shareholders have enjoyed an annualised total return (including dividends) of about 7% per year over the last 10 years. I think that’s quite respectable.
However, higher interest rates have created a short-term headwind, triggering a sell-off that’s left the stock trading 30% below the all-time high seen in 2022.
Investors are worried that higher borrowing costs could lead to a squeeze on the dividend.
I can’t ignore this risk altogether. But my analysis suggests the trust is conservatively financed and has some good assets. Debt levels are falling, and TRIG has recently sold some assets at attractive prices.
I think the situation should be manageable. And with interest rates expected to fall, I believe the stock’s 7.5% dividend yield and 20% discount to book value could represent an attractive entry point.
Roland Head owns shares in Renewables Infrastructure Group.
Snowflake
What it does: Snowflake is a technology company that offers cloud-based data storage and analytics services via a Software-as-a-Service (SaaS) model.
By Edward Sheldon, CFA. Snowflake (NYSE: SNOW) shares have taken a big hit this year and I’ve been buying more of them for my portfolio.
One reason I’ve been adding to my holding here is that recent quarterly results were solid. For the quarter ended 30 April, revenue was up 34% year on year. So, the company is still growing at a very fast pace.
Another is that regulatory filings show that board member Mike Speiser purchased around $10m worth of stock in early June. Mr. Speiser was Snowflake’s founding CEO from 2012 to 2014. Therefore, he’s likely to have a very good understanding of the technology company and its long-term outlook.
Now, while this stock has underperformed this year, it’s still expensive. The high valuation doesn’t leave much room for error in terms of operational execution.
Taking a long-term view, however, I reckon this tech stock has bags of potential. After all, demand for data storage and analytics is only likely to increase.
Edward Sheldon owns shares in Snowflake
TP ICAP
What it does: Provider of intermediary trade execution and settlement services to clients in Europe, Asia, and beyond.
By Mark David Hartley. This month I purchased shares in TP ICAP (LSE: TCAP) for my dividend portfolio. The share price recently breached the 200p level that it’s been trading below since Covid. But it’s still down 23% over the past five years.
In an attempt to appease shareholders, the company initiated a £30m share buyback program in March. This seems to be working, as the price is up 15% since the announcement.
Despite an improving price, the latest FY 2023 results weren’t great. Earnings per share (EPS) were down from 13p to 9.5p, along with net income down 28% and profit margins down 30%. Only revenue beat analyst expectations, up 3.4%.
But dividends-wise, it looks good. The yield is currently at 7% and has spent much of the past few years above 6%. Barring Covid, payments have been consistently increasing for over 10 years, so I think it’ll make a good addition.
Mark David Hartley owns shares in TP ICAP..
Unilever
What it does: Established more than a century ago, Unilever is one of the world’s largest consumer goods companies. Some 3.4bn people in 190 different countries use its products every day. Famous brands include Ben & Jerry’s, Domestos, Dove, Hellmann’s and Sunsilk.
By Harvey Jones. I’d wanted to own Unilever (LSE: ULVR) shares for years, but its price-to-earnings (P/E) valuation was always too steep and the yield too low. Then the company lost its way. Revenues slowed. Management stumbled into culture wars. Activist investors pressed the board to shake up its business model. The share price went south. Unilever’s P/E ratio followed. The yield picked up.
I first bought it in June last year, only for the share price to fall another 12%. It swiftly recovered, and I decided there was more to come once the cost-of-living crisis eased.
So I topped up my stake in May this year, and again last month. So far, I’m up around 9%, including a couple of dividends. Over 12 months, the Unilever share price is up 12.44%.
This follows my investment strategy to a tee. Find a good company, that’s having a bad time. Buy its shares at a discount. Then sit back, reinvest my dividends and wait for the recovery. Unilever isn’t there, yet, but it’s on the right track.
Harvey Jones owns shares in Unilever
