Investing alongside you, fellow Foolish investors, here’s a selection of shares that some of our contributors have been buying across the past month!
What it does: Barclays is a well-known Tier 1 bank, serving both private and corporate clients around the world.
By Jon Smith. I bought Barclays (LSE:BARC) shares in January for several reasons. The stock is down 22% over the past year, putting it in undervalued territory in my eyes. With a price-to-book ratio of 0.33, I believe the share price is too low. When I compare it to the latest earnings, the price-to-earnings ratio of 4.73 again looks cheap.
Another factor is the restructuring, with a £1bn cost cutting drive announced late last year. An update on this is due this month. It shows to me the management team are aware of the problems and are making drives to push for greater efficiency going forward.
A risk is that Barclays continues to underperform peers, and remains undervalued for years to come. It’s true that I might have to be patient here before we get a rally, but I’m confident that the long-term direction is higher.
Jon Smith owns shares in Barclays.
What it does: BP is an international oil and gas company and one of the largest businesses in the world measured by revenues and profits.
There are a few reasons for this. Firstly, I think its shares now look too cheap to ignore. Trading on just 4.2 times earnings, that’s considerably lower than the FTSE 100 average.
On top of that, I’m also keen on its 4.8% yield. That’ll provide me with some solid passive income. It’s forecasted its dividend will rise in 2024 and 2025.
I’m aware of the risks surrounding BP. The energy transition poses a major threat to the business. Governments across the globe have been pressing for a greener world.
However, it’ll be some time before we aren’t reliant on traditional products. What’s more, BP is adopting sustainability measures to ensure it’s a company that aligns with future trends. In the weeks to come, I’m eager to continue buying cheap BP shares.
Charlie Keough owns shares in BP.
What it does: General Motors is a US automotive company that owns and manufactures car brands such as Chevrolet and GMC.
It’s guiding for earnings per share (EPS) to grow from $7.68 last year to between $8.50 – $9.50 in 2024. This is quite impressive considering the increased costs associated with new union contracts it took on towards the end of last year to end the worker strikes.
Despite this, the stock is trading at incredibly cheap levels. Its forward price-to-earnings (P/E) ratio is only 5, compared to an average of 20 across US automakers.
However, in an unfortunate event, one of the self-driving cars from its subsidiary, Cruise, recently dragged a pedestrian thrown into its path. This has caused regulatory and reputational troubles.
But I believe Cruise will recover from this in the long term, with the potential to become a major catalyst and growth engine for General Motors.
Muhammad Cheema owns shares in General Motors.
Liontrust Asset Management
What it does: The company is an investment house that allows its fund managers to use their own specialised asset strategies.
Its high 12% dividend yield sold me. While this isn’t likely to last, it convinced me the shares had a place in my portfolio at this time.
I consider the investment significantly undervalued, selling at a price around 75% below its all-time high.
I always look for stability when I invest. But while Liontrust has £131m in cash and just £4m in debt on its books, it had an over 25% decrease in its earnings growth in the last year.
Therefore, there’s a risk that Liontrust shares could make for a volatile ride. However, it seems to balance this with nice dividend payments if things go south.
Three years ago, I wouldn’t have bought this. But at the current valuation, it’s worth me owning to see how things unfold.
Oliver Rodzianko owns shares in Liontrust.
What it does: QinetiQ develops scientific and technological solutions used by international security and defence forces.
By Mark David Hartley. QinetiQ (LSE:QQ.) is a £2bn up-and-coming UK defence contractor competing for a place in the FTSE 100. Unlike major UK defence contractor BAE – known for artillery and combat vehicles – QinetiQ focuses on advanced robotics and drones.
Admittedly, it’s had a rocky start to the year.
Its recent 1H 2024 earnings report revealed lower-than-expected earnings per share (EPS), down to 11p from 19p. It also reported decreases in both net income and profit margins compared to 1H 2023. (To combat this, it plans to buy back £100mln of shares).
But I believe the escalating conflicts in Ukraine and the Middle East will increase demand for QinetiQ’s products in 2024 – and I’m not alone. Even after five years of consistent growth that saw a 20% share price increase, analysts estimate QinetiQ shares are still undervalued by almost 45%.
Combine this with a low price-to-earnings (P/E) ratio of 19.3 times, and I expect QinetiQ will see growth in 2024.
Mark David Hartley owns shares in QinetiQ.
Primary Health Propeties
What it does: Primary Health Properties is a real estate investment trust that owns health centres in the UK and Ireland.
The stock had risen sharply as investors were optimistic about the idea of an imminent cut in interest rates. But things have gone back the other way since then.
Shares in Primary Health Properties have fallen back below £1 and the dividend yield is back above 7%. With a 10-year government bond offering 4%, that looks attractive to me.
In an election year, investors shouldn’t ignore the risk of a change in government causing a shift in NHS spending (which accounts for 89% of PHP’s rent). But I think it’s worth it at today’s prices.
Ultimately, I think the company will be able to maintain its dividend for the foreseeable future. And at today’s prices, the dividend looks attractive to me.
Stephen Wright owns shares in Primary Health Properties.
What it does: Ramsdens offers foreign currency exchange, pawnbroking loans and jewellery buying and selling in 162 stores.
By Ben McPoland. I recently topped up my holding in pawnbroker Ramsdens Holdings (LSE: RFX). The share price has struggled in recent months, falling around 20% since the summer. This means the stock is trading on a P/E ratio of 8 with a forward dividend yield of 5.8%.
For the 12 months to the end of September, revenue rose 27% to £83.8m and the company achieved a milestone pre-tax profit of more than £10m. Meanwhile, its active pawnbroking loan book increased by almost 20% to £10.3m. The full-year dividend was lifted by 16%.
Unfortunately, management said Q1 (which ended 31 December) was a bit slow and staffing and energy costs are rising. This adds a bit of risk to the near-term outlook.
Yet brokers still see revenue growing to around £94m by the end of next September. And the dividend is well-covered, with the firm planning to up its payout ratio to 50% from 42%.
Meanwhile, the high gold price is a positive for its pawnbroking and precious metals buying operations. All in all, I think the shares are undervalued.
Ben McPoland owns shares of Ramsdens Holdings.
Scottish Mortgage Investment Trust
What it does: Scottish Mortgage is an investment trust with a focus on high-growth, disruptive technologies companies.
This trust has had a bad run in recent years as interest rates have risen and disruptive tech stocks have fallen out of favour. However, the share price is now rising again. And I think it may continue to climb as rates come down.
Looking at the trust’s portfolio, I like the holdings. At the end of 2023, the top 10 holdings included ASML, Nvidia, Amazon, and SpaceX (which is unlisted). These companies all have a lot of potential.
One other thing I like about this trust is that it’s currently trading at a double-digit discount to its net asset value (NAV). In other words, I’m getting exposure to these growth companies at a substantial discount.
Now, I’ve always said that this is a higher-risk trust. I expect it to be volatile. I’m comfortable with the risks though. Even after my recent purchases, it’s still a relatively small part of my overall portfolio.
Edward Sheldon owns shares in Scottish Mortgage Investment Trust, ASML, Nvidia, and Amazon.