After the stock market sell-off yesterday, is now a good moment to buy? My view is that it’s always a good time to buy quality businesses at fair prices for my portfolio. If I can pick them up a little bit cheaper than last week, so much the better. Below are three shares I would consider adding to my portfolio today.
£1,000 isn’t a huge sum, but I’d consider splitting it across three companies to diversify. That would help reduce my risk. I’d invest in two growth shares and one income pick.
While JD Sports may be very familiar to UK shoppers, there is nothing parochial about the ambitious retailer.
It already has a store footprint from the South Pacific to the North Atlantic, as well as online. The company has a proven ability to grow revenues and profits. It understands shopper trends and has been finding new ways to know exactly what its customers are likely to want next, for example by running a chain of gyms.
The company is clearly ambitious and I expect it to focus on maintaining its growth strategy in years to come. But global expansion is a risk as well as an opportunity: it could end up stretching management attention too thin.
Shares to buy now for digital exposure
Not all stock market news yesterday was doom and gloom. Digital advertising group S4 Capital (LSE: SFOR) advised the market that it had arranged new debt financing and said activity in the past couple of months was at “unprecedented levels”. S4 advised that both revenue and gross profit continued to perform ahead of expectations.
Even after falling back slightly, S4 remains close to its highest ever price. So why do I continue to see these as shares to buy now?
In short, I think the growth story here is set to get even stronger. The new debt financing provides financial firepower for more acquisitions. That should help boost the company’s growth further. As the update shows, S4 seems to have found a successful formula for growth. As digital advertising is set to keep growing, the company can ride that trend.
One risk is that such breakneck growth can sometimes damage a company’s work quality, which could hurt revenues if clients are unhappy.
High yield hero
One of the highest yielding FTSE 100 shares is British American Tobaco (LSE: BATS). Despite that, the shares continue to languish and look somewhat unloved. Over the past year, for example, they are up less than 1%, while the FTSE 100 has added 9%.
I like British American Tobacco for three main reasons. First, the yield is very attractive. At 7.7%, BAT’s quarterly dividend payouts can add up to a lot. Even investing just £330 into them, that would equate to a prospective £25 in passive income each year if the dividend is maintained. Secondly, I think iconic brands such as Lucky Strike help give the company pricing power. That could partially offset the profit impact of volume declines as people stop smoking cigarettes. Third, the company’s global reach allows it to achieve meaningful economies of scale.
Still, cigarette consumption is falling in many markets. That is a key risk both to revenues and profits in years to come.
Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028 — more than double what it is today!
And with that kind of growth, this North American company stands to be the biggest winner.
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We think it has the potential to become the next famous tech success story.
In fact, we think it could become as big… or even BIGGER than Shopify.
Christopher Ruane owns shares in British American Tobacco and S4 Capital. The Motley Fool UK has recommended British American Tobacco. 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.