When looking for stocks to buy, many UK investors concentrate on the FTSE 100 or FTSE 250. However, in my opinion, the FTSE All-Share contains just as many interesting companies.
This index is made up of the top 600 largest companies in the UK. It includes constituents of both the FTSE 100 and FTSE 250 as well as many other smaller growth stocks.
I’m interested in these smaller companies. While it’s always sensible to add a selection of blue-chips to any portfolio, research shows smaller growth stocks can outperform their larger peers. That’s why I’ve always owned a selection of these stocks alongside my blue-chip holdings.
FTSE All-Share stocks
One company I’ve recently been reviewing for my portfolio is Target Healthcare (LSE: THRL). This business invests in purpose-built care homes. These homes are contracted out to care home operators on long leases. The average unexpired lease term across its portfolio is 28.9 years.
As one would expect, this FTSE All-Share business is highly defensive. Indeed, while many landlords have been struggling to negotiate rent from tenants this year, Target collected 90% of rents due in its most recent period. It’s also been able to increase rents for some tenants. From its 73 operational properties, rents increased 0.3% on a like-for-like basis during the first half of 2020.
Its strong rental and asset base have allowed Target to go shopping for new properties in the downturn. One new property and one new development site have been acquired this year.
All of the above suggests to me this stock is a dependable income investment. Indeed, management is targeting an annual dividend of 6.7p per share, which could provide investors with a yield of 5.8%, according to my figures. I reckon that makes the company one of the best FTSE All-Share stocks to buy for income today.
I’ve also been considering tech group Gocompare.com (LSE: GOCO) for my FTSE All-Share portfolio recently. The firm, which is best known for its GoCompare price comparison site, has seen rapid growth over the past few years. Operating profit nearly doubled between 2015 and 2018.
It looks as if 2020 is shaping up to be another good year for the group. Its latest trading update noted a 13% increase in revenue for the nine months to the end of September.
What I really like about this business is the value of its brand. Most consumers are aware of GoCompare. For many, it’s the first port of call when comparing insurance products. This gives the group a massive competitive advantage, in my view.
Businesses with substantial competitive advantages tend to produce the best returns for shareholders over the long run because they don’t have to spend significant sums chasing competitors. I think the group’s latest trading update shows this effect in action. Even in one of the most challenging economic environments for many years, Gocompare has been able to register double-digit sales growth.
I believe this suggests the firm’s long term outlook is better than many other FTSE All-Share constituents.
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.
Rupert Hargreaves 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.