Looking at the stock market today, one thing’s very clear to me – it’s a stock picker’s market. This year, a lot of individual stocks have outperformed the major indices by a significant margin (50%+ in some cases).
Here, I’m going to highlight three individual companies I have invested in recently. I think these are good shares to buy today.
A play on the technology boom
First up is FTSE 250 company Softcat (LSE: SCT), an IT company that helps organisations with things like cloud computing and cybersecurity.
This is a stock I have owned for several years now. However, I have been buying more shares recently.
One reason is that the company recently raised its guidance for the financial year ending 31 July and increased its interim dividend by nearly 10%. The large dividend increase indicates to me that management is confident about the future.
Another is that after a major pullback, the shares are now starting to trend up again. In other words, the stock has positive momentum.
A risk here is that the business could be impacted by a further deterioration of the UK economy. This could see organisations spend less on technology in the short term.
I’m confident in the long-term story however. In the years ahead, I expect spending on tech to remain robust as organisations undergo digital transformation.
On the cusp of a ‘new era’
Next, we have Alpha Group (LSE: ALPH), the company formerly known as Alpha FX. It’s a UK-listed financial technology firm that provides foreign exchange risk management solutions and business-to-business payments services.
This company is performing very well at present.
Last year, Alpha generated year-on-year revenue growth of 22% in its FX Risk Management business and 41% in its Alternative Banking Solutions arm.
On the back of this growth, the company raised its dividend by a whopping 31%.
Looking ahead, management was confident about the future. “I believe we are on the cusp of a new and important era in the business,” said founder and CEO Morgan Tillbrook in the company’s full-year results statement.
Now this stock does have a lofty valuation. Currently, the forward-looking P/E ratio is about 30. I’m comfortable with this multiple though. This is a high-quality, founder-led company that’s growing at a tremendous pace.
Huge long-term growth potential
Finally, we have Visa (NYSE: V). Listed in the US, it operates one of the largest electronic payment networks in the world.
There’s a lot to like about Visa shares right now, to my mind. For starters, the company is benefitting from the strengthening travel industry. In Q1, cross-border volume was up 24% year on year.
Secondly, the company is seeing strong growth in its business-to-business segment, B2B Connect. This is an area of the company that has significant growth potential.
Meanwhile, the valuation (forward-looking P/E ratio of 24) seems quite reasonable to me, given the company’s dominance and long-term growth potential.
The biggest risk here, to my mind, is a major slowdown in consumer spending (including travel). This would reduce the company’s revenues and earnings in the short term.
With trillions of transactions set to shift from cash to card in the next decade however, I expect this stock to do well in the long run.
