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.

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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.

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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.

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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.

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