Having previously suggested five stocks David Cameron should consider buying, it seems only fair, in the interests of balance at this sensitive time, that I afford Ed Miliband the same courtesy.
Here are the reasons (some serious; some a little more light-hearted!) why I think Mr Miliband — and you — might want to consider buying shares in BAE Systems (LSE: BA), WM Morrison Supermarkets (LSE: MRW), DFS Furniture (LSE: DFS), Halma (LSE: HLMA) and FW Thorpe (LSE: TFW).
Mr Miliband has described FTSE 100 blue-chip BAE Systems as “a great company that offers skilled jobs to its workforce and offers thousands of apprenticeships a year”. The aerospace, defence and security firm has what Mr Miliband sees as the qualities of Britain’s best “world-class businesses” (Rolls-Royce and GlaxoSmithKline are others he’s praised for the high-quality jobs and training they offer).
BAE’s chairman has recently spoken out in support of Mr Miliband’s plans to abolish the “non-dom” tax regime — commenting, “it is seen as a relic of the past which unfairly favours the few at the expense of the many” — so, I’d suggest BAE is a stock the Labour leader might not be averse to buying. And the company looks decent value on a below-market-average price-to-earnings (P/E) ratio of 12.8, and with an above-average dividend yield of 4.1%.
Mr Miliband has decried the “Tesco-isation” of the high street. He and other prominent party members — such as Ed Balls and Harriet Harman — are more likely to be found on walkabout in Britain’s number-four supermarket Morrisons. Mr Miliband’s advisor on zero-hours contracts is a former Morrisons HR & Communications director, while the company’s current chief executive has a CBE for his services to employment, skills and apprenticeships in retail.
Morrisons is fighting tough competition in the sector, particularly from hard discounters Aldi and Lidl, but analysts reckon Morrisons can battle through with 6% earnings growth this year, followed by 19% next year. A P/E of 13.8 with 19% earnings growth suggests the shares could be decent value.
Discount retailer DFS Furniture has been around since 1983, but has only recently joined the stock market. I don’t suppose many DFS products have found their way into the £2 million north London home of “Two-Kitchens Miliband”, but an investment in the company could serve the Labour leader and Doncaster North MP well.
With his London base, and coming only fourth on a recent list of the most influential people in Doncaster, an investment in the discount furniture group, which has its headquarters in the town, could help re-connect him with his constituents and bolster his man-of-the-common-people credentials. DFS isn’t the highest-quality business in terms of profit margins, but a P/E of 12 and 16% earnings growth forecast for the company’s financial year ending July 2016 is not unattractive.
FTSE 250 firm Halma does a load of stuff that would get a big thumbs-up from Mr Miliband. Its products improve such things as workplace safety, personal and public health, and the quality of the environment.
Halma’s markets are relatively non-cyclical, and there are good drivers for sustainable growth of the business and significant barriers to entry for potential competitors. The company trades on a premium P/E of over 20, but I think that’s merited, because of the nature of the business and the company’s ability to knock out strong earnings growth year-in, year-out.
There was a bit of a buzz among the chattering classes earlier this year about Ed Miliband’s arrangement of family affairs, via a deed of variation of his father’s will, to reduce possible inheritance tax liabilities. If Mr Miliband would like to reduce IHT on his estate, without raising a furore, he could invest in some AIM market shares, many of which become exempt from IHT if held for two years or more.
FW Thorpe is one candidate Mr Miliband could consider. This lighting company has a forward-looking philosophy and has invested heavily over recent years in developing LED products, which now account for 58% of group turnover — and rising fast. This long-established family-run firm is conservatively stewarded, but is still delivering high-single digit earnings growth.
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G A Chester has no position in any shares mentioned. The Motley Fool UK owns shares of FW Thorpe. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.