I’m looking for the best stocks to buy in November as I’d like to add to my Stocks and Shares ISA. I tend to own a variety of shares spanning growth and value. A balance of different styles can diversify my investments, and picking the right shares can also reduce the volatility of my portfolio.
Best stocks to buy
It released a string of encouraging trading updates this year. Most recently, it reported strong trading momentum across its stores and online channels. Sales in the six months to 30 September jumped by 91% compared with the same period last year. Store closures in last year’s lockdown amplified this gain, but it’s interesting to note that sales are also ahead of pre-pandemic figures.
So what’s boosting sales? As usual, it’s a variety of factors. Online sales were boosted via food delivery platforms including Just Eat and Deliveroo. The company also opened 20 new franchise stores in the first half the year. The pipeline for signing up new franchisees looks exciting to me, with 62 deposits held for new stores. This should drive growth further over the coming years.
One thing I have to bear in mind, however. The shares are relatively illiquid as the founder owns over 30% of the company. This can make it difficult for large funds to buy a slice, but it shouldn’t be an issue for smaller investors. Also, at some point, new franchisee sign-ups will start to slow and it’s a point I’ll be watching for very closely.
Although there’s no fixed definition, value shares often trade at a discount to their intrinsic value. They are often described as cheap stocks. The top value share I’d buy in November is Vertu Motors (LSE:VTU). It has several financial ratios that are typical of value shares. With a price-to-earnings (P/E) ratio of just 7x, and a price-to-book-value (P/B) of 0.7, these shares look cheap to me.
It’s important to note that it’s sometimes not enough just to find cheap value shares. Cheap shares can stay that way for quite some time. That’s why I like my value shares to have other qualities that could propel their share prices higher.
As with many car retailers at the moment, Vertu Motors is in something of a sweet spot. Delays and shortages in computer chips are driving the prices of used cars upwards. This is great for Vertu. In fact, it recently reported record results, beating market expectations. If car prices continue to stay elevated, I don’t think Vertu will remain cheap for too much longer.
A word of warning, however. Chip shortages are likely to be temporary. At some point, the market for new and used vehicles will normalise. Also, as with many companies in the current climate, cost pressures are being seen. Vertu specifically noted a rise in employment costs.
Weighing everything up, I’d say Vertu Motors could be too cheap for me to ignore though, and could be one of the best stocks to buy this November for my ISA.