Which UK and US stocks should I buy in February?

Avon Rubber (LON:AVON) is a UK share I like and Disney is a US stock I’d consider adding to my Stocks and Shares ISA this month.

| 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.

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.

Two companies that I’m considering adding to my Stocks and Shares portfolio this month are UK stock Avon Rubber (LSE:AVON) and US stock Walt Disney Company (NYSE:DIS). I’ve liked both these companies for a long time, but now I’m inspecting the pros and cons of investing in each one.

A UK stock with a niche product

British manufacturing company Avon Rubber has contracts with US and international governments. Along with defence products for the military, it makes respiratory aids for the emergency services. These have been in high demand during the pandemic.

The Avon Rubber share price is up 13% in a year and 312% in the past five years. It’s been declining since November when it suffered a setback. It was due to deliver an order to the US Army that was unfortunately delayed, which will affect this year’s profit margin. Today its price-to-earnings ratio has fallen to a cheap looking 7. Avon offers a dividend yield of 0.9% and earnings per share are £4.47. It has earnings growth and a strong balance sheet, having sold its milk division last year.

The order delays are for a business that appeared to be poised to thrive. However, it’s still winning orders. And given the geopolitical conflict in the world, I doubt demand for Avon Rubber’s products will dry up. If the company can get back to delivering its high-quality products on time, then I believe its share price will recover too. I’d be happy to add Avon Rubber to my portfolio for a minimum five- to ten-year period.

A long established investment

I’m truly amazed by how well Walt Disney Company did in 2020, considering the pandemic closed all its parks and destroyed its hospitality business. But the launch of its streaming network Disney+ outperformed even the most bullish of expectations. Disney’s back catalogue is enormous and has something for everyone from toddler to OAP. This gives it a powerful advantage over competitors. And its established reputation gives it plenty of access to the capital necessary to keep churning out hit series and films.

Disney+ is expanding into new markets across Eastern Europe, South Korea, and Hong Kong, among others. But it’s not just Disney+ that brings home the bacon. Disney also owns streaming services ESPN+ and Hulu, which are both big earners for the company.

With a fall in revenues from its parks and cruises, Disney has cut jobs and begun a reorganisation strategy. It’s also rolling out another streaming service with content from many of its other successful assets, such as ABC Studios.

The downside to investing in Disney is that its share price has already made a phenomenal rebound since the March 2020 market crash. Its P/E is now 74, which indicates an expensive stock. Also, Disney bought Twenty-First Century Fox in a $71bn acquisition. This is an enormous debt burden for the company to carry when times are tough. I think the next year or two could continue to pose some challenges to the group. Nevertheless, I think it’s got great long-term potential, and I’d be happy to own shares of Disney in my Stocks and Shares ISA.

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.

Kirsteen has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Walt Disney. The Motley Fool UK has recommended Avon Rubber. 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

Jumbo jet preparing to take off on a runway at sunset
Investing Articles

Down 70%+ since 2020, is IAG’s share price an unmissable bargain?

IAG’s share price is still down around 73% from its pre-Covid level, but with the business performing well last year,…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

£17,000 of shares in the FTSE 100 dividend giant can make me £18,874 every year in passive income!

This FTSE 100 dividend superstar has an 8.8% yield with dividends projected to rise. It looks very undervalued to me…

Read more »

Investing Articles

2 top UK growth stocks I’m buying for my Stocks and Shares ISA in July

Looking for UK-listed growth firms to add to a Stocks and Shares ISA? Our writer highlights two he's planning to…

Read more »

artificial intelligence investing algorithms
Investing Articles

This overvalued growth stock makes Nvidia look cheap!

ARM Holdings is a growth stock that’s benefitted from the AI rally. Muhammad Cheema takes a look at whether this…

Read more »

Investing Articles

1 penny stock I’d buy today while it’s 63p

This penny stock's down 70% since last March, yet could be set for a big comeback as the firm rebuilds…

Read more »

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Buying 8,617 Legal & General shares would give me a stunning income of £1,840 a year

Legal & General shares offer one of the highest dividend yields on the entire FTSE 100. Harvey Jones wants to…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

£25k to invest? Here’s how I’d try to turn that into a second income of £12,578 a year!

If Harvey Jones had a lump sum to invest today he'd go flat out buying top FTSE 100 second income…

Read more »

Union Jack flag in a castle shaped sandcastle on a beautiful beach in brilliant sunshine
Investing Articles

2 lesser-known dividend stocks to consider this summer

Summer is here and global markets could be heading for a period of subdued trading. But our writer thinks there…

Read more »