It’s natural at this time of year to be thinking about UK stocks that could bolster my Stocks and Shares ISA. Two candidates I like the look of are Ashtead Group (LSE: AHT) and Premier Foods (LSE: PFD).
Here’s why I’d love to buy some shares in both when I next have some investable cash.
Ashtead Group
Construction rental business Ashtead is a solid FTSE 100 stock that has a good track record, as well as bright future prospects.
The shares are up 22% over a 12-month period from 4,630p at this time last year, to current levels of 5,658p.
For context as to how well the business has done in the past, it used to be a penny stock just 20 years ago. Now, it resides on the UK’s premier index, with a global presence and good market position.
From a fundamentals view, the shares aren’t exactly cheap, nor overly expensive, in my view. They trade on a price-to-earnings ratio of 18 at present. I’m happy to pay a fair price for a good company. Plus, there’s a dividend yield of 1.5%. I reckon this could grow in line with the business.
Growth could come from its market position in the US, where a potentially lucrative $1trn infrastructure bill passed recently. This could result in boosted performance and returns for the business.
Staying with the firm’s US market aspirations, a stalling economy could present problems. Demand for equipment has cooled in recent months as projects have slowed. If this continues, performance and returns could be impacted negatively. I’ll keep an eye on this moving forward.
Premier Foods
The company behind popular brands such as Hovis, Lloyds Grossman sauces, Mr Kipling, and Branstons, to name a few, looks like a good stock to buy and hold.
Premier Foods shares have had a good 12-months, rising by 21%. At this time last year, they were trading for 121p, compared to current levels of 147p.
From a bullish view, the shares look good value for money right now on a forward price-to-earnings ratio of just 10.9 times. Plus, a dividend yield of just under 1% could rise in line with the growing business.
This growth stems from its international expansion efforts, which have been ramping up and paying off. Overseas sales increased by 11% in the last quarter, compared to the previous quarter.
Furthermore, overall performance for the 20-strong brand food business has been positive. The last quarter showed a 14.4% increase in sales compared to the same period last year. Food is a defensive business, as it’s a basic need for all no matter the economic outlook.
However, from a bearish view, the economic outlook can impact what brands consumers choose to buy. Premier Foods’ brands may be considered premium. The recent cost-of-living crisis has shone a spotlight on non-branded essential items, and has helped boost the market share of supermarket disruptors Aldi and Lidl. Discount retailers like B&M have also benefitted. There is a chance a change in consumer habits away from branded premium goods could hurt Premier’s performance and returns.
