3 buy-and-forget stocks I think could be hidden gems

Andy Ross explains why he thinks these three companies could make investors big gains with minimum risk and stress over the long term.

| 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.

Do you dream of being able to get wealthy from your investments? I know I do and so I have picked out three companies in the FTSE 350 that I believe investors can tuck away in their portfolios then sit back and make money.

Money in data

Is data really the new oil? Experian (LSE: EXPN) will certainly be hoping so as the credit and analytics company increasingly makes money from the mountains of data it holds. Although primarily still a credit data company, increasingly it is turning its data mining expertise to marketing and analytics as well.

Previous problems in Brazil seem to have improved recently. And another challenge, that of free credit-checking rivals, is not new for the company and is why we are seeing the company innovate and move into new markets. Its future-proofing efforts mean Experian looks set to continue rewarding investors, although expectations are high leaving the shares with a P/E of around 29 and driving dividend yield to a quite low 1.5%. Nonetheless, the share price is on a strong upward trajectory as the business continues to do well. In the year to date the shares have leapt around 19%, so if that continues, an investment now could pay off in the long term, even with that low yield.

Cooking a treat

FTSE 100 contract catering company Compass Group (LSE: CPG) is in a league of its own. Although not a high-margin business, the company is a leader in its industry with full-year revenues of over £23bn. This truly global company benefits from generating a very high return on its capital, it achieves about 20%, because it uses client facilities to provide catering services. Low spending needs help create healthy cash flows, that in turn have helped the group grow its ordinary dividend every year for over a decade.

This is great for investors and I believe it is not too late to jump on the bandwagon, even if the shares do now trade on a P/E of over 22 (that shows just how much investors like the shares). Past performance, although admittedly not usually a good indicator for the future, shows why investors have confidence in the company. Over the past five years, the share price has jumped by 69%.

The smallest of the three

Self-storage company Safestore Holdings (LSE: SAFE) is another company I think makes a good investment for those seeking steady returns from their investment portfolios. It is growing and in Q1 2019, revenue rose as much as 6% to £37.2m year-on-year. It is adding more self-storage sites both in the UK and France too. Growth has been consistently good and previous quarters saw even larger jumps versus the same period a year earlier, indicating sustained growth.  

Alongside these results, the company indicated that it would be willing to invest in further growth and ca do so because the balance sheet is in great shape. This could add investor value in the future if acquisitions or adding new sites boost growth. 

The storage company’s share price also has a P/E higher than most at over 25. This is admittedly fairly high, but again, the prospects for growth mean it is a price worth paying in my opinion and it is the long-term potential for the share price to rise that I think is worth paying a premium for. 

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 considered so you should consider taking independent financial advice.

Andy Ross has no position in any of the shares mentioned. The Motley Fool UK has recommended Compass Group and Experian. 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

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

If I’d invested £1k in BP shares 5 years ago, here’s how much I’d have now!

BP shares have gained considerably over the course of the past 12 months, despite a massive writedown on its assets…

Read more »

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer
Investing Articles

Should I buy Lloyds shares while they’re still under £1?

The banking sector might finally be back on the road to long-term health. I'm thinking of buying more Lloyds shares…

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

Using the price-to-earnings metric to find the cheapest UK shares to buy now!

There’s certainly no shortage of value UK shares right now. I'm finding the cheapest stocks for my portfolio using the…

Read more »

Man changing battery on electric bicycle
Investing Articles

Stock market recovery: my top 2 FTSE 100 shares to buy this month!

The UK index might be trading above 7,500, but many FTSE 100 shares still haven't recovered. In fact, plenty trade…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

4 of my best shares to buy for an autumn stock market bounce

Jon Smith explains which are his best shares to buy depending on different scenarios behind a potential market rally.

Read more »

Risk reward ratio / risk management concept
Investing Articles

Is the GSK share price good value after the 13% fall last week?

Jon Smith considers the reason behind the sharp fall in the GSK share price last week, and wonders if now…

Read more »

Young black woman in a wheelchair working online from home
Investing Articles

At under 5p, are Woodbois shares a no-brainer buy now?

I didn't buy Woodbois shares when they were up over 8p. Now they've fallen back, I'm wondering if I'm seeing…

Read more »

Business development to success and FTSE 100 250 350 growth concept.
Investing Articles

Are we about to see a raging bull market for shares?

Investor sentiment looks like it's changing and we could be in the early stages of a bull market for shares…

Read more »