Don’t know where to start investing? Here’s how I’d invest £5,000 today

Rupert Hargreaves outlines how he’d invest £5,000 today to get the most out of his money.

| 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.

Scene depicting the City of London, home of the FTSE 100

Image source: Getty Images.

If you want to start investing, but don’t know where to begin, here’s some advice on how I would invest £5,000 of my own funds in today’s market.

Personally, I don’t like to take too much risk with my money. I like companies that have a proven track record of creating value for investors, that operate in defensive industries such as healthcare.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

That’s why my first pick is Abcam (LSE: ABC).

World leader

If you’ve never heard of it before, you’re probably not alone. The company flies under the radar of most investors, but that doesn’t mean it’s any less attractive. The business sells antibodies and research tools to life-science groups, a highly specialist and unique industry. 

It has carved out a niche for itself in this market over the past two decades, and while the journey hasn’t been easy, investors who stuck with the business for the tour have seen impressive returns. After going public at around 42p per share in November 2005, today the shares are changing hands for 1,140p, a compound annual return of 19.3% according to my figures.

And it doesn’t look as if it is going to slow down anytime soon. Management believes the company can maintain double-digit revenue growth in the medium term as demand from the world’s ever-growing healthcare market remains robust.

Opportunity to buy 

Back in September, management announced that the company would be increasing the amount it spends on research and development to make the most of the opportunities it has available to it. Unfortunately, the market took a dim view of the decision because it means profit margins will fall slightly (analysts are expecting a contraction in the firm’s EBITDA margin of 3%). The shares have slumped 25% over the past four months following this news.

However, I think this presents an opportunity for investors to acquire shares in a world-leading, defensive business at a favourable valuation. If you are looking for stocks to include in your portfolio, I think Abcam is indeed worth a closer look.

Explosive growth

The second stock I’d buy with my £5,000 fund is NMC Health (LSE: NMC). Once again, this is a healthcare business that has generated impressive returns for shareholders in the past and looks set to continue doing so. 

This company, which operates private healthcare facilities across the Middle East and in several other attractive markets around the world, has produced a total return for investors of 45% per annum over the past five years.

I see no reason why this trend cannot continue. In October last year, the group surprised the market by announcing growth for 2018 would surpass expectations with revenue rising 24% and EBITDA jumping 36%. New facilities in its key UAE market, coupled with the acquisition of Aspen Healthcare — one of Britain’s biggest private hospital providers — are responsible for the improved growth.

City analysts believe the expansion will continue into 2019. They’ve pencilled in earnings per share growth of 29% for 2019, and they also reckon the company will reward investors with a 30% increase in its modest dividend distribution to $0.32 per share, a yield of around 0.9%.

Right now, shares in the hospital provider are expensive, but I think it is worth paying a premium for the growth the business offers. The stock is trading at a forward P/E of 25.6, falling to 19.7 for 2019.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended NMC Health. 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

macro shot of computer monitor with FTSE 100 stock market data in trading application
Investing Articles

Here’s a FTSE 250 stock to buy to benefit from the construction boom!

Jabran Khan details a FTSE 250 stock that could be primed to benefit from the infrastructure and construction boom.

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Is the Royal Mail share price a buying opportunity?

With a 6% dividend yield and a price-to-earnings ratio of 3, is the Royal Mail share price in buying territory?…

Read more »

Scene depicting the City of London, home of the FTSE 100
Investing Articles

3 FTSE 100 shares! Should I buy them?

I'm searching for the best FTSE 100 stocks to buy following recent market volatility. Are these blue-chip UK shares too…

Read more »

macro shot of computer monitor with FTSE 100 stock market data in trading application
Investing Articles

Should I buy one of the cheapest shares on the FTSE 100 index?

This Fool explores one of the cheapest stocks on the FTSE 100 index by share price and decides if he…

Read more »

Asian Indian male white collar worker on wheelchair having video conference with his business partners
Investing Articles

With trading suspended, where could the Eurasia Mining (LON:EUA) share price go next?

This morning, the EUA share price was suspended pending an announcement - so could improving sales send the share price…

Read more »

Hand holding pound notes
Investing Articles

Are the FTSE 100’s top income stocks a bargain?

The FTSE 100 is renowned for its value and dividend stocks. So, are the index's top income stocks worth a…

Read more »

Compass pointing towards 'best price'
Investing Articles

Scottish Mortgage shares have slumped 40%. Time to buy now?

Scottish Mortgage Investment Trust (LON: SMT) shares have rewarded shareholders well in recent years. I'm thinking of buying now they're…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

3 recession stocks I’d buy in a hurry

With the economic outlook getting worse, our writer highlights a trio of recession stocks he would consider buying for his…

Read more »