Here are two of my best share ideas for November onwards. In fact, I think they both could make potentially decent long-term investments and I’d dig into researching the opportunities immediately without waiting for November to arrive!
Howden Joinery (LSE: HWDN) sells kitchens and joinery products to trade customers such as small local builders. It has some 700 depots in the UK and 23 in France and Belgium. Around one-third of the products it sells are manufactured in the company’s own factories in Britain.
The company has an impressive five-year-plus record of steadily rising revenue, earnings, and shareholder dividends. Meanwhile, City analysts expect growth in earnings to continue, despite Brexit, as we’ve all become fond of saying. They have robust single-digit percentage increases pencilled in for this year and next, and if Brexit goes well, I reckon this is just the sort of stock that could shine in the years to come.
In July’s half-year report, Howden said it’s cautious about the effects that Brexit might have on trade but has taken a number of measures to prepare itself, such as adjusting its stocking policy for “at-risk” items. It’s holding around £12m of additional inventory to secure continuity of supply “during the transition,” and the firm’s key suppliers are making similar adjustments.
On top of that, the firm has been “looking closely” at the options for its inbound supply routes logistics and has accreditation in place resulting in Authorised Economic Operator status aimed at reducing potential customs delays.
Meanwhile, trading has been good recently, and with the share price near 579p, the forward-looking earnings multiple for 2020 at 16, and the anticipated dividend yield around 2.3%.
Among the attractions of HICL Infrastructure (LSE: HICL) is a record of steady growth in revenue and the dividend. On top of that, the valuation looks undemanding. With the share price near 170p, the forward-looking earnings multiple for the trading year to March 2021 is just above 11 and the anticipated dividend yield is a smidgeon below 5%.
Given all the positive noises that the government has been making about public spending recently, I reckon there are far worse places to invest than in the infrastructure sector. It seems to me that the firm’s assets have a potentially high degree of resilience to general economic slow-downs. Something like 70% of the business is involved in public-private partnerships (PPP), 20% in demand-based assets such as toll roads, and 8% in regulated assets such as utility providers.
We can get a flavour for the type of investments the firm makes with the announcement earlier this month of the acquisition of the transmission assets associated with the Race Bank Windfarm, which sits off the coast of Norfolk.
HICL said in the announcement the acquisition fits well with the company’s strategy of investing in “essential and public core infrastructure, with a strong social purpose.”
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Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Howden Joinery Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.