Investing in the stock market has become more accessible over the years. The barrier to entry is much lower to potential investors, with many platforms allowing us to buy shares with no minimum investment.
So the number of investors starting off with a portfolio worth £1,000 has grown. I personally started investing in shares with a similar figure.
There are many ways to invest £1,000 today, but the one I like is buying reputable FTSE 100 stocks that have a history of profitability, growth and good management.
US construction boom
Construction equipment company Ashtead Group has managed to see impressive growth in the last 12 months despite the FTSE 100 falling as a result of the pandemic.
This has mostly been down to resolute trading in its biggest market, the US. The construction market in the country appears to be continuing to show strong demand.
In the last five years, the share price has grown by a whopping 350%. That places it in the top five FTSE 100 shares over the period.
As is the case with any stock, however, past performance shouldn’t be taken as an indicator for future performance. The property sector tends to be quite cyclical, and some would argue that another bust could be on the way after this current boom.
As was recently noted by analysts at Deutsche Bank however, Ashtead’s management has taken steps to protect the business from this cyclicality.
When hiking the company’s broker rating from ‘hold’ to ‘buy’, the analysts said the group’s speciality business means it’s building for a more stable future. Speciality “is game-changing insofar as it offers less cyclical, more defensive revenue streams”, Deutsche said.
In Ashtead’s own words, it aims to build speciality businesses “generating $2bn of revenue in time. We have always said we wanted to reduce our dependence on the construction industry.”
A strong record of growth and potential for further growth, and the company is still taking steps to protect itself from poorer economic conditions. That’s why I’m bullish on the stock today.
Top of the class
Education group Pearson is another company that has bucked the FTSE 100 trend and seen share price growth in the last year. The shares have gone up 26% in the last 12 months.
In a January trading update, Pearson said it expected to report adjusted operating profit of between £310m and £315m for 2020. Sales were down 10% on a year-on-year basis, but the company said it was able to offset this with restructuring savings.
The business has been adversely affected by the impact of Covid-19. Assessment centres and schools have been closed for long periods and exams cancelled. But the company has pivoted towards virtual learning environments, with global sales of its online products rising 18%.
Vaccines are being rolled out and a roadmap has been announced for schools to reopen in England and further afield. So, I see enough upside for Pearson’s share price to continue to grow over the next few years.
As a result, I’d add it to my buy list along with Ashtead for a £1,000 investment today.
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conorcoyle has no position in any of the shares mentioned. The Motley Fool UK has recommended Pearson. 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.