Investing alongside you, fellow Foolish investors, here’s a selection of stocks that some of our contributors have been buying across the past month!
abrdn
What it does: abrdn is an investment company whose clients range from Sovereign wealth funds through to individuals.
By Andrew Mackie. The latest trading update from abrdn (LSE: ABDN) back in October, highlighted that it continues to struggle to stem outflows from its funds. Year to date, capital withdrawn from its funds has been £2.3bn greater than deposits. Since 2022, net outflows have totalled over £25bn.
The reasons for these outflows are varied. But one key factor has been the rise of passive investing strategies. As an active investment manager, its funds have simply been unable to match the stellar returns of the S&P 500, which is where the vast majority of global capital is drawn to.
So, is this a doomed business? I don’t believe it is. Passive investing strategies work well when markets are rising, but when they are falling, they can be disastrous. In such a market, active managers tend to stand out. Indeed, this has been the case in bond markets, where abrdn’s funds have outperformed.
Its falling share price means it now sits on a meaty 10.5% dividend yield. The road ahead will undoubtedly be bumpy but I could not sit on the sidelines when shares in a quality business go on sale.
Andrew Mackie owns shares in abrdn.
Chord Energy
What it Does: Chord Energy is an oil and gas company. It’s the largest independent operator in the Williston Basin.
By Stephen Wright. Warren Buffett et al have been continuing to build Berkshire Hathaway’s stake in Occidental Petroleum. In a similar spirit, I’ve been buying shares in Chord Energy (NASDAQ:CHRD).
Chord’s operations are in the Williston Basin. The downside to that is that extraction costs are higher than they are in the Permean – where Occidental has its operations.
On top of this, depletion rates are relatively high, meaning new wells either have to be found or acquired more regularly. Despite this, I think the stock looks like a good opportunity.
The company is set to return 75% of its free cash flows to investors. And if oil prices average $70 per barrel, that’s forecast to be around $525m in dividends.
With a market cap of $7.8bn, that’s a 6.7% yield. And I’m expecting this to increase over the next decade, making for an attractive passive income opportunity.
Stephen Wright owns shares in Berkshire Hathaway and Chord Energy.
CrowdStrike
What it does: CrowdStrike is a fast-growing cybersecurity company that has clients globally.
By Edward Sheldon, CFA. I’ve had CrowdStrike (NASDAQ: CRWD) shares on my watchlist for ages now. And I finally pulled the trigger and bought a few for my portfolio.
The main reason I’ve invested here is that the cybersecurity industry is set for huge growth over the next decade. And this is the fastest-growing large-cap company in the market.
I also think the industry offers an element of defence. Given the disastrous damage that cyberattacks can cause, no company can afford to pull back on cybersecurity spending today.
It’s worth noting that CrowdStrike was responsible for the major global IT outage a few months ago. This could result in slightly slower growth (and share price volatility) in the near term as customers renegotiate their contracts. So, I’ve started with a very small position here to reduce my risk.
Taking a five to 10-year view, however, I’m fairly confident that this company will generate good returns for me.
Edward Sheldon owns shares in CrowdStrike
iShares S&P 500 Information Technology Sector ETF
What it does: iShares S&P 500 Information Technology Sector ETF invests in industry giants like the ‘Magnificent Seven.’
By Royston Wild. As its name implies, the iShares S&P 500 Information Technology Sector ETF (LSE:IUIT) provides exposure to the US’ biggest technology stocks.
Consequently, it has substantial growth potential and the capacity to deliver exceptional capital gains. In the past five years, it’s delivered an impressive average yearly return of 26.2%.
The ETF’s three biggest holdings are Apple, Nvidia and Microsoft, which collectively account for almost 60% of its entire weighting. So poor news coming out of these businesses can have a significant adverse effect on the fund.
Still, I’m confident a tech-focused fund like this could deliver more great returns over the long term. Segments like robotics, AI, cybersecurity, cloud services, and spatial and quantum computing are all tipped for strong growth in the coming decade.
And with capital spread across 69 different companies, this ETF means investors take on less risk than by investing in one or two particular shares. This is critical, in my opinion, given the industry’s rapid pace of change.
Royston Wild owns iShares S&P 500 Information Technology Sector ETF.
ITV
What it does: ITV is a broadcaster with a terrestrial and digital business, as well as operating production studios and facilities
By Christopher Ruane. The market did not like a recent trading update from ITV (LSE: ITV). That reaction was understandable. Revenues in the first nine months of the year were 8% below the same period last year. Total revenue in the studios part of the business fell a fifth compared to the prior year period.
There are risks that advertising demand may remain weak. Plans for further cost-cutting also involve risks, as I see it. Such cuts can hurt staff morale and also reduce the organisation’s nimbleness, at a time when advertising demand is hard to predict.
Still, I think the current share price undervalues this consistently profitable business. The share price is within 1% of where it began the year, but has more than halved in five years.
That means the dividend yield is now a juicy 7.9%.
ITV still has a lucrative legacy business and has been building its digital footprint strongly. The studios arm provides additional revenue streams.
Christopher Ruane owns shares in ITV.
MercadoLibre
What it does: MercadoLibre is a Latin American based e-commerce enterprise that simultaneously providing digital payment solutions.
By Zaven Boyrazian. While Amazon dominates e-commerce across Europe and North America, MercadoLibre (NASDAQ:MELI) reigns supreme in Latin America. The online marketplace took a bit of a tumble following its latest earnings. Despite revenue surging by 35% to a new high of $5.3bn for the quarter, the lacklustre 9.4% growth in profits due to shrinking margins caused concern.
A drop from 18% operating margins to 10% is undoubtedly worrying. The drag on earnings stems from a jump in credit card loans that helped deliver higher revenue but at a lower margin. When paired with aggressive investment in new distribution facilities in Brazil, seeing earnings take a hit isn’t entirely surprising.
Increased exposure to credit card debt comes at a higher level of risk. But, management seems to be acting prudently to avoid bad debt. At the same time, MercadoLibre just added another seven million new buyers to its online marketplace, bringing the total to 60.8 million!
Zaven Boyrazian owns shares in MercadoLibre.
