2 stocks I’d invest £1,000 in right now

If you are looking for decent share ideas, check out these two that reported on Thursday.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Public domain.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

If mastering the art of investing boiled down to just crunching the numbers, I think picking up a few shares in speciality pharmaceuticals company Indivior (LSE: INDV) would be a ‘no-brainer’, to use the vernacular.

Indeed, the firm has a strong showing on quality and value metrics, and today’s full-year results update demonstrated further progress, with revenue 3% higher than a year ago and adjusted earnings per share at constant currency rates rising 5%. There’s a healthy net cash pile on the balance sheet of around $376m, up from $131m at the end of 2016, which is further evidence of the firm’s good trading. Chief executive Shaun Thaxter was optimistic about the outlook, saying in the report: “We face the future with enthusiasm and we are guiding to another year of top- and bottom-line growth in 2018.”

Be aware of the risks

However, investing in Indivior isn’t the ‘no-brainer’ that the quantitative information may suggest. There are significant risks that could end up blowing the business model out of the water, and a glance at the company’s risk statement is a sobering experience. The chief risk revolves around the fact that Indivior earns most of its income from one group of products for the treatment of opioid use disorder, branded with names such as Suboxone, and Sublocade in its various forms.

The firm has been trading well in the US where demand for addiction treatments is strong. But generic competition constantly threatens the enterprise, and there’s a depressingly long list of investigative and anti-trust litigation proceedings being undertaken against the company and by Indivior against competitors. The directors have raised the provision for investigative and antitrust litigation matters to $438m – ouch!

Diversification on the way

Yet there’s progress with product diversification. A product for the treatment of schizophrenia is set to launch at the end of 2018, and treatments for alcohol and stimulant use disorders are in the early stages of development. The stock dropped around 9% this morning, and while being aware of the risks, I’d be tempted to invest.

Meanwhile, global information and analytics provider Relx (LSE: REL) strikes me as a more-straightforward investment proposition and today’s full-year figures show continuing trading progress. Underlying revenue grew 4% during 2017 compared to the year before and constant currency adjusted earnings per share lifted 7%. The directors set the full-year dividend 10% higher, to top off what has been a great run for investors.

At today’s share price close to 1,441p, the stock has risen just over 100% over the past five years and the dividend is up more than 60% over that time. That’s a satisfactory investment outcome to me, but the stock seems to be falling now. I think this is a case of the stock being a victim of its own success. Although the outlook remains positive for the underlying business, I think momentum has carried the price a little too high and the valuation is correcting. I’d wait for the fall to base-out — which could be imminent — and then research the firm with a view to buying some of the shares because the enterprise looks like it has more growth left to run.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Person holding magnifying glass over important document, reading the small print
Investing Articles

Just released: our top 3 small-cap stocks to consider buying in October [PREMIUM PICKS]

Small-cap shares tend to be more volatile than larger companies, so we suggest investors should look to build up a…

Read more »

Investing Articles

How I’d use an empty Stocks and Shares ISA to aim for a £1,000 monthly passive income

Here's how using a Stocks and Shares ISA really could help those of us who plan to invest for an…

Read more »

Investing Articles

This FTSE stock is up 20% and set for its best day ever! Time to buy?

This Fool takes a look at the half-year results from Burberry (LON:BRBY) to see if the struggling FTSE stock might…

Read more »

Investing Articles

This latest FTSE 100 dip could be an unmissable opportunity to pick up cut-price stocks

The FTSE 100 has pulled back with the government’s policy choices creating some negative sentiment. But this gives us a…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

As the WH Smith share price falls 4% on annual results, is it still worth considering?

WH Smith took a hit after this morning’s results left shareholders unimpressed. With the share price down 4%, Mark Hartley…

Read more »

Investing Articles

The Aviva share price just jumped 4.5% but still yields 7.02%! Time to buy?

A positive set of results has put fresh life into the Aviva share price. Harvey Jones says it offers bags…

Read more »

Investing Articles

Can a €500m buyback kickstart the Vodafone share price?

The Vodafone share price has been a loser for investors in recent years, and the dividend has been cut. We…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Growth Shares

3 mistakes I now avoid when choosing which growth stocks to buy

Jon Smith runs through some of the lessons he's learnt the hard way over the years about what to look…

Read more »