Ashtead

Ashtead (LSE: AHT) is a British industrial equipment rental company. It has networks in the UK, US, and Canada. It also trades under the name of Sunbelt Rentals. The industrial firm is expected to report earnings for its financial year 2022 on Tuesday, 14 June 2022. The earnings preview indicates a positive trend in both its top and bottom lines as it recovers from its pandemic woes.

• Market cap: £17.5bn
• Price-to-earnings (P/E) ratio: 18
• Dividend yield: 1.1%

• Earnings per share estimate (FY 2022): £2.47
• Earnings per share (FY 2021): £1.56
• Total revenue estimate (FY 2022): £6.47bn
• Total revenue (FY 2021): £5.0bn

Halma

Halma (LSE: HLMA) is a British global group consisting of safety equipment companies. These firms make products for hazard detection and life protection. The FTSE 100 group is expected to report earnings for its financial year 2022 on Thursday, 16 June 2022. The earnings preview indicates slight growth from the previous year.

• Market cap: £8.0bn
• P/E ratio: 30
• Dividend yield: 0.9%

• Earnings per share estimate (FY 2022): 63.1p
• Earnings per share (FY 2021): 58.7p
• Total revenue estimate (FY 2022): £1.5bn
• Total revenue (FY 2021): £1.3bn

FirstGroup

FirstGroup (LSE: SSE) is a British multi-national transport group. The company operates transport services in the UK. The transport company is expected to report earnings for its financial year 2022 on Tuesday, 14 June 2022. Earnings preview indicates a drop in revenue and a return to unprofitability.

• Market cap: £1.0bn
• P/E ratio: 2
• Dividend yield: –

• Earnings per share estimate (FY 2022): -0.4p
• Earnings per share (FY 2021): 2.4p
• Total revenue estimate (FY 2022): £4.52bn
• Total revenue (FY 2021): £6.8bn

The post Earnings preview: Ashtead, Halma, FirstGroup appeared first on The Motley Fool UK.

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John Choong has no position in any of the shares mentioned at the time of writing. The Motley Fool UK has recommended Halma. 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.

The volatility in global stock markets over 2022 so far is enough to shake the conviction of even the most grounded of investors. Here are a few strategies I’ve been using to ride out the storm.

1. Don’t panic-sell

When the chips are down, it’s easy to see why moving into cash is so appealing. It draws a line under the situation and allows me to move on. But does it really?

Beyond holding an ’emergency fund’ to cover, say, a sudden unexpected bill or brief period of unemployment, cash is just about the worst asset I could have right now. Low interest rates and galloping inflation means its value is gradually (or not so gradually!) being eroded. So in addition to crystallising any losses, I’d essentially be jumping out of the frying pan into the fire.

Selling up also implies that I also know when will be the right time to buy stocks again. The sheer volatility we saw on markets last week, where share prices actually rose as the Russian invasion of Ukraine progressed, tells me I don’t.

As a committed Fool, it goes without saying that panic-selling everything I own right now is not something I’m contemplating. 

2. Buy quality

Warren Buffett tells us to “be greedy when others are fearful“. I’d say right now offers me a great opportunity to put this advice into practice.

Now, it doesn’t make sense to buy any old stock on the market and expect it to recover in style. I would, for example, avoid any company lacking financial stability (such as cinema chain Cineworld). I would also steer clear of any business that lacks an identifiable advantage over competitors (such as white goods seller AO World, in my opinion). Instead, I’d be out to snap up proven ‘winners’ in their respective sectors. From the FTSE 100, for example, I remain convinced that Halma is a great growth buy. 

Aside from looking for quality businesses, there are also ways of making the buying process easier from a psychological point of view. One is buying in tranches, otherwise known as pound-cost averaging. Such a strategy helps to avoid trying to time the market exactly (which I know I can’t do, at least consistently). It also ensures at least some of my money starts working for me. 

A third element of my buying strategy is to make sure that anything I snap up is held within a Stocks and Shares ISA. This means any profits I make (and dividends I receive) are free of tax. 

3. Switch off

Assuming I’ve not sold anything in haste and bought things I’ve had on my watchlist, there’s one final solution that’s unsurpassed in helping me deal with stock market volatility. Simply, just switch off. That’s right — close off my portfolio, turn off the laptop, stop watching the news and go and do something more productive.

I have the confidence to do this because evidence shows that equities outperform all other asset classes. This includes cash (naturally), bonds, real estate and gold. The only caveat here is that this requires being invested for the long term.

For someone content to grow his wealth slowly but surely, that suits me. As distressing as current events are, I also know that “this too shall pass“. 

The post 3 Foolish ways I’m dealing with stock market volatility appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. 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.

I’m delighted! Let me explain why.

Opportunity knocks

One of the great things about being a Foolish investor is that I can take a long-term view of stocks. I don’t need to worry too much about, say, the latest scandal at Downing Street, or a possible military conflict in Eastern Europe. That’s because I’m looking to grow my wealth slowly but surely over the years. Today’s headlines are tomorrow’s fish and chips wrapper.

Nor do I need to fixate on the quarterly or annual performance of my portfolio. Knowing the equities have consistently shown themselves to be the most lucrative asset I can own over decades is enough. 

Contrast this attitude with that of the typical professional investor. They know that underperforming a benchmark (the FTSE 100 in many cases) for too long could put their job at risk. As a result, they can be forced to move out of underperforming stocks, regardless of their overall quality.

One example of this, in my opinion, is health & safety equipment maker Halma (LSE: HLMA). As I type, its shares are down 22% in 2022. This looks like a great buying opportunity to me.

Quality FTSE 100 stock

I certainly don’t think there can be any doubt over whether Halma is a good company. For years now, the business has been steadily growing revenue and profits. And given no client wants to be seen to be compromising the safety of its employees, or bypassing regulations, I have no doubt this will continue for many years to come. 

Halma is also in a strong financial position. Having barely any debt on its books should mean that the £9bn-cap can continue acquiring smaller enterprises and throwing cash at research & development. 

While perhaps of less importance for the committed growth investor, it’s also worth pointing out that Halma’s history of increasing its dividends is second to none.

Although cash payouts are never guaranteed, I don’t know of many other FTSE 100 stocks that have increased their cash payouts by 5% or more in 42 consecutive years. Considering just how many challenges the UK stock market has faced over this period, that’s got to count for a lot.

Time to buy?

Despite falling so far, Halma’s shares still change hands for 38 times forecast FY22 earnings. That’s a rich valuation in anyone’s book. It is however, significantly lower than when I last looked at the company in November 2021. Back then, this FTSE 100 member’s P/E stood at nearly 50!

The fact that I was a prospective buyer even back then shows how highly I regard this business. Now that things have fallen back despite no negative news being released, I think it could be time for me to back up the truck.

Of course, the shares could get even cheaper as we progress through 2022 if the rotation into value stocks continues. Indeed, this is why holding a diversified portfolio of stocks remains vital. 

But quality stocks are rarely without friends for long. If ever there was a FTSE 100 firm where a 20% drop in its share price should be celebrated by long-term investors like me, it’s this one. 

The post This FTSE 100 stock has crashed over 20%! I think it’s a screaming buy appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. 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.

Today, the company announced yet another set of record numbers for the first half of its financial year. 

Profits jump!

Revenue increased 19% to a little over £737m in the six months to the end of September as the company “performed well in all sectors and major regions“. Adjusted for foreign exchange fluctuations, the growth rate comes in at 23%.

Halma’s bottom line was even better. Statutory pre-tax profit jumped a heady 74% to £167.5m, albeit boosted by the sale of its security systems business (Texecom) for £34m. 

As if this wasn’t good enough, the company also decided to leave its full-year guidance unchanged despite rising costs and “increased supply chain, logistics and labour market disruption”. Other FTSE 100 constituents can’t afford to be quite so optimistic.

This is not to say today’s statement was devoid of caution. For example, Halma noted that “more typical rates of revenue growth” were expected in the second half. This may help explain why the shares were off almost 2% this morning. 

FTSE 100 quality stock

Based on this update and the long-term performance of its share price, I’d buy a slice of Halma today. The company operates in a highly defensive sector that should continue growing, regardless of the wider economic environment. As a global business, earnings are nicely diversified and there’s little in the way of debt on the balance sheet.

It’s also worth mentioning the dividends. A forecast yield of 0.6% won’t attract income seekers. However, Halma has grown its annual payout by 5% or more for 42 consecutive years. That sort of trend is only seen in businesses of the highest quality. With a “healthy acquisition pipeline“, I can’t see it ending anytime soon. 

The only real concern I have rests on the valuation. A forecast P/E of almost 50 is extremely rich. As such, I wouldn’t be going ‘all in’ on this FTSE 100 stock now. Picking up bigger chunks of HLMA when markets are crashing would be the dream scenario.

From little acorns

Of course, Halma isn’t the only attractive ‘buy and hold’ option out there. Small-cap SDI (LSE: SDI) is another quality stock I’d snap up. The firm designs and manufactures digital imaging products for fields as diverse as life sciences, healthcare, astronomy and art conservation. And, right now, business is booming.

Earlier this month, the AIM-listed company said it expects to report “very strong sales and profits” for the first half of its current financial year. As a result, full-year revenue of £45m and adjusted pre-tax profit of £9.2m have been forecast. Encouragingly, both numbers were higher than what analysts had been predicting. 

On the downside, SDI shares aren’t cheap. A P/E of 30 suggests there’s little room for error. Especially as management already expects the heavy demand seen for its Atik cameras over the pandemic to reduce. Once again, supply chain pressures are a potential headwind.

Still, I’m confident this could become another multi-bagging stock by 2030 if recent progress is anything to go by. I regard SDI as a buy today. But I’d really get stuck in when markets next wobble.  

The post 1 FTSE 100 growth stock I’d buy and hold until 2030 appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. 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.

Becoming better at anything usually involves needing to reflect on our errors. Stock picking (and holding) is no different. Here are three investing mistakes that have held me back over the years and how I’ve tried to overcome them. 

Mistake #1: Having too little/too much patience

Unless I’m queueing for petrol, I like to think of myself as a patient soul. However, there have been times over my investing journey where I’ve been unable to sit on my hands. This has usually involved snatching at profits ( FTSE 100 stock Halma springs to mind) or selling on a bit of temporary bad news (step forward online casino operator 888). Just to muddy the waters somewhat, I’ve also been too patient at times and waited for a recovery that never arrives. Sometimes it’s better to get out, stay out, and take the loss.

There’s no perfect solution here. However, simply getting into the habit of reflecting on exactly why I’m wanting to act/not act is a start. Keeping a journal and revisiting my reasons for buying a particular stock also helps. Has a company’s strategy changed? Is this now a better business? If yes, why sell?

Mistake #2: It’s all about the price

The ‘buy low, sell high’ mantra persists because it’s patently good advice. However, investing mistakes arise when I tend to put too much weight into categorising something as ‘cheap’ or ‘expensive’. An expensive stock becomes a bargain if the underlying business grows massively. A cheap share can become cheaper if the underlying business is failing.

Now, let’s not get silly here. I’m not suggesting a stock trading on a P/E of 20 is somehow cheaper than one trading on a P/E of 10. My point is simply to look beyond this basic metric and ask whether the price is fair relative to what I’d be getting for it.

Does the company consistently deliver great returns on capital? Is it unfairly valued compared to sub-standard rivals? Does it have the finances to withstand a stock market crash? If so, I’ve likely found a good business worth paying more for. 

Owners of Fundsmith Equity will know that Terry Smith always puts quality ahead of price when picking stocks. To date, this has enhanced rather than impeded his returns.

Mistake#3: Listening to the noise

It’s remarkably easy to assume that the more information I gather about a stock, the greater the edge I have over my peers.

This tactic isn’t necessarily irrational. Finding a promising company that’s flying under many investors’ radars can sometimes generate incredible returns. Think Argo Blockchain from December 2020 to Feburary 2021. 

That said, any information-grabbing exercise must always consider the quality of the source. Back in the day, for example, I’d pay attention to forums and social media sites like Twitter. There would be the odd useful nugget among the dross, but the signal-to-noise trade-off was invariably poor. 

These days, my approach is far more focused and reflects my limited time. My first port of call is always the London Stock Exchange’s news page. I’ll also listen to podcasts or audiobooks from/about proven investors (William Green’s ‘Richer, Wiser, Happier’ is highly recommended).

Again, this won’t guarantee great returns. Even the best are still susceptible to investing mistakes. Nevertheless, standing on the shoulders of identifiable giants rather than unverifiable online personas sounds far less risky.

The post 3 costly investing mistakes to avoid appeared first on The Motley Fool UK.

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Paul Summers owns shares in Fundsmith Equity. The Motley Fool UK has recommended Halma. 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.

FTSE 100 market leaders

The first stock on my shopping list would be Auto Trader. Operating completely online (the print version was ceased years ago), the FTSE 100-listed vehicle marketplace is the clear market leader. Apparently, more than 75% of all time spent looking at car adverts is on the company’s site. I suspect this figure might be even higher now following the scramble for second-hand motors due to the global chip shortage.

The other leader is property portal Rightmove. Like its automotive equivalent, this FTSE 100 constituent is the go-to destination for buyers and renters. For years, competitors have tried but failed to take meaningful market share, suggesting RMV’s brand serves as a great economic moat. Throw in a bulletproof balance sheet and (like Auto Trader) spectacular returns on capital, and RMV would be a compelling purchase for me.

There are still things to be aware of, of course. The vehicle and housing markets in the UK should moderate in time and could even plummet in the event of a serious economic wobble. Moreover, I don’t expect either company to ever be screamingly cheap, since quality rarely lacks friends. So I’d need to stay realistic with my target purchase price.

Luxury brand

Third on my list of FTSE 100 to buy is luxury brand Burberry. This may seem an odd choice, especially as the company still hasn’t recovered from the coronavirus crash. Moreover, the recent fall in retail sales in China doesn’t exactly bode well. After all, BRBY is hugely dependent on shoppers continuing to buy into its highly-coveted brand.

As an existing owner, I’m not worried. Burberry’s long history (and sound finances) clearly mark it as one of the FTSE 100’s most resilient members and one I’d continue to buy in a correction.

Notwithstanding this, it’s important for me to monitor just how much exposure I’d have if I continued to buy on a correction. Too much money in one company’s risky. I want to sleep at night!

Then again, all this may prove immaterial. I still reckon BRBY will be bought out before long. 

Priority buy

Last of my FTSE 100 buys would be a stock I once owned and stupidly decided to sell too soon. Health and safety tech firm Halma‘s share price has rocketed since. As I type, it’s up 36% in the last year. Anyone buying five years ago would have tripled their money. 

Still, a forward P/E of 50 suggests shares are now priced to perfection. Yes, Halma operates in a highly defensive sector. And yes, a multi-decade history of hiking dividends is nothing to be sniffed at. However, there comes a point when it’s wise to pull back from a purchase if I feel I’d be overpaying.

This is why the HLMA remains on my watchlist, for now. When the next correction inevitably comes, I want to have some dry powder ready… 

The post 4 FTSE 100 stocks I’d buy during the next market correction appeared first on The Motley Fool UK.

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Paul Summers owns shares in Burberry. The Motley Fool UK has recommended Auto Trader, Burberry, Halma, and Rightmove. 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.

Small-cap stocks tend to be under-researched by professional investors. This makes them a potential source of great returns for private investors like me who can buy before they catch on more widely. With this in mind, here are two that I’d be willing to begin building a position in today.

SDI

SDI (LSE: SDI) designs and manufactures scientific and technology products for use in digital imaging and sensing and control applications. Like FTSE 100 health and safety giant Halma, it’s actually a collection of businesses that all contribute to the bottom line. The shares are up over 300% in the last 12 months! That’s despite the business being impacted by Covid-19-related shutdowns.  

Full-year (FY21) numbers are due in mid-July. Based on what the company had to say in May, I don’t think those already invested need to worry. 

In its most recent update, SDI said that revenue and adjusted pre-tax profit of roughly £35.3m and £7.4m, respectively, would likely be reported next month. Importantly, these were improved estimates from those given in February thanks to “robust” sales in March and April. This is impressive considering the company had reported that it would already exceed analyst predictions two months earlier.

Any drawbacks? Well, the shares don’t scream value. A forecast price-to-earnings (P/E) figure of just under 30 means that SDI has its work cut out to keep impressing the market. Then again, I do wonder if management’s decision to not change its expectations on FY22 despite recent momentum could see it surprising on the upside next month. After all, the lifting of restrictions will surely allow the company to pick up even more business in the months ahead.

Regardless, an investor like me shouldn’t let a single report on trading dictate whether I buy or not. As such, I’d be happy to start buying this small-cap stock today. 

Agronomics

Alternative food companies are hot right now. In the US, stocks such as Beyond Meat have grabbed investors’ attention, as has the recent (successful) listing of Oatly.

As a UK investor, I’m not exactly spoilt for choice in this area. However, one option I like is Agronomics (LSE: ANIC). It’s focused on owning companies that specialise in cultivated meat. This is grown in a lab from cells rather than taken from slaughtered animals.

In addition to addressing concerns about animal welfare, this process is far more environmentally friendly. As things stand, almost 50% of the water used in the US goes on raising animals for food. They also consume 80% of all antibiotics due to being kept in less-than-ideal conditions.

Agronomics believes its companies (including Blue Nalu and Mosa Meat) will help disrupt the $7.3trn global meat, poultry and seafood market. That’s a bold claim and I suspect getting people to eat ‘clean’ won’t be a smooth process. The fact that it’s a small-cap stock also means the share price could be volatile. It’s already down over a third in value since hitting a high of 37p only last month.

Notwithstanding this, I do find the investment case pretty compelling. The fact that Richard Read (founder of Innocent drinks) and entrepreneur Jim Mellon are on the board is particularly encouraging.

Like SDI, I’m not sure I’d go ‘all in’ right now. However, I’d have no trouble taking a small stake in Agronomics today. 

The post 2 small-cap shares to buy today appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Beyond Meat, Inc. The Motley Fool UK has recommended Halma. 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.

Here are three examples from the FTSE 100 I’d be happy to buy, regardless of what they say in June. 

Halma

Safety products firm Halma (LSE: HLMA) reports full-year numbers on 10 June. Based on its most recent trading update, I don’t think there’s much for existing holders (or prospective buyers) to worry about.

Back in March, the FTSE 100 member said it had made “good progress” over the previous six months. Thanks to a recovery in markets such as China, it predicted adjusted pre-tax profit would come in around the same level achieved in the previous financial year. It had previously expected it to be 5% below FY2019/20’s level.

Sure, value investors will baulk at the valuation (42 times forecast earnings). The opportunity cost of not investing elsewhere also needs to be considered. However, the essential nature of its various products and services gives Halma a defensiveness many firms in the FTSE 100 arguably lack. As such, I’m confident it’ll still outperform its index over the long term.

Factor in strong cash generation, sound finances and dependable dividend hikes and I continue to think this is a company to tuck away in the bottom drawer. 

Auto Trader

Also reporting full-year results on 10 June is online vehicle marketplace Auto Trader (LSE: AUTO). If recent new car sales are anything to go by, I think these could make for pleasant reading.

Of course, the prospect of good news doesn’t mean the share price won’t continue trading within the 500p-600p range it’s been stuck in. The potential for coronavirus variants to disrupt things going forward also can’t be ruled out.

Notwithstanding this, the beauty of Auto Trader is that everything’s online. Its status as a portal gives it the ability to navigate inevitable economic setbacks far more easily than bricks and mortar dealerships.

What’s more, a price-to-earnings ratio of 26 for FY22 looks reasonable. After all, Auto Trader consistently generates sky-high margins and returns on capital (ROCE). A commitment to focusing on the latter is one reason why star fund managers such as Terry Smith and Nick Train consistently outperform the market. 

Ashtead

A final FTSE 100 stock I’d have no issue buying next month is Ashtead Group (LSE: AHT). The construction and industrial equipment rental giant reports on trading on 15 June. Again, I don’t expect any nasty surprises. Back in April, the company said it expected full-year results to be “slightly ahead” of management’s previous expectations. 

When it comes to share price performance, the £22bn-cap takes no prisoners. Over the last year, Ashtead has more than doubled in value. By contrast, the FTSE 100 is up ‘just’ 14%. Some short-term profit-taking can’t be ruled out, but I wouldn’t expect this to last for long. Trading can only improve as more construction projects get the green light as economies open up from their coronavirus-induced slumber.

At 28 times forecast earnings, Ashtead can never be labelled ‘cheap’. As billionaire investor Warren Buffett suggested, however, it’s “far better to buy a wonderful company at a fair price than a fair company at a wonderful price.“

The post 3 FTSE 100 stocks to buy in June appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Auto Trader and Halma. 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.

As a long-term investor however, it’s vital to keep things in perspective. Anyone buying IAG five years ago would still be underwater. Back in 2015, the shares were changing hands around the 230p mark. Today, they’re at 156p. No wonder top UK fund managers like Terry Smith avoid the airline sector like the plague.

Now compare this derisory performance to FTSE 100 peer and life-saving technology specialist Halma (LSE: HLMA). Over the same five-year period, its share price has soared almost 190%!

Regardless of today’s initially underwhelming half-year numbers, I still think Halma is the better investment for anyone looking to retire early.

“Resilient performance”

Revenue fell 5% to £618.4m over the six months to the end of September with sales at the firm’s Safety sectors (Process and Infrastructure) declining.

On a more positive note, Halma did see revenue growth in its Environmental & Analysis and Medical sectors. Sales in the US were also stronger, making up for tricky trading in the UK, Mainland Europe and the Asia Pacific region.  

All told, adjusted pre-tax profit fell by 5% over the period to £122m. Given just how tough 2020 has been, this was regarded as a “resilient performance” by management.

I agree. What’s more, I think the company’s ‘essential’ line of work should mean things get back on track quicker than many more cyclical FTSE 100 shares, including IAG.

Encouraging outlook 

According to CEO Andrew Williams, Halma has had a “good start” to the second half of its financial year. While the near-time economic outlook is uncertain, orders and revenue have already been better than in 2019.

As a result of this, the £9bn-cap now expects adjusted pre-tax profit for the full year will come in “around 5% below FY 2019/20.” That’s actually an improvement on its previous prediction of somewhere between 5% and 10% down.

Unsurprisingly, this news has been lapped up by the market. Halma’s share price rose 4% in early trading. But the good news doesn’t end there. 

Dividend delight

Halma’s appeal goes beyond capital gains. Although not a stock I’d buy just for the income, it remains one of the most consistent dividend hikers on the market. Despite recent events, the interim dividend was raised another 5% to 6.87p per share today. 

By sharp contrast, IAG no longer pays a dividend. Due to its battered balance sheet, I can’t help but think it’ll be a long time before it does. Halma, by contrast, had just £315m in net debt at the end of September — around 4% of the company’s entire value.

Better value than the IAG share price?

It’s certainly possible the IAG share price will move a lot higher over the next few weeks and months now that we seem to be turning a corner on the vaccine front. Then again, the recovery is unlikely to be free of turbulence, given the logistical challenge of distributing it to so many people.

As a Foolish investor, I’m therefore asking myself which business I’d rather own for years. Despite its eye-watering valuation (44 times earnings), the answer continues to be Halma.

The post Forget the IAG share price. I’d rather buy this FTSE 100 stock to retire early appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. 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.

Only a week or so after being the first US company to pass the $2tn mark, Apple’s value has now increased to almost $2.3tn. To put this in perspective, the Cupertino-based giant is now worth more than all the companies in FTSE 100 combined.  

With this in mind, does avoiding the UK’s top tier and buying the iPhone maker’s shares instead make sense? Momentum-jockeys would say so. I don’t think the answer is quite so straightforward. 

Apple shares: worth buying now?

Sure, there are a number of reasons to think Apple’s shares could go even higher. 

For one, it doesn’t look like the coronavirus will be leaving us anytime soon. This being the case, we can probably expect more home-working — and subsequent demand for Apple’s products and devices — in the months ahead. Speaking of which, the rumour mill suggests we’ll see new iPhone, Apple Watch, iPad, Airpods and MacBook Pro launches before the end of 2020.

Aside from this, you have the coveted brand (ranked the third most-valuable in the world back in January) and ‘sticky’ products. Once you’ve entered the company’s ecosystem, it’s hard to leave. No wonder Warren Buffett is a big holder of Apple shares given his preference for companies with strong ‘economic moats’.

In sharp contrast, the FTSE 100 contains lots of stocks no one is chomping at the bit to own.

What’s so bad about the FTSE 100?

It’s to be expected that an index based on size rather than quality is bound to include a few duds. Nevertheless, the fact remains that only a proportion of the index are truly great businesses based on their ability to compound investors’ money. For every Halma, you have a battered bank, oil company or tobacco stock with limited growth propsects. For every Rightmove, you have a company with a truckload of debt. While some members have resumed dividends, many are still to do so. 

Then again, I do think parts of the FTSE 100 offer better value compared to Apple shares at the moment. While the coronavirus has savaged sales, premium spirit maker Diageo and luxury fashion brand Burberry look great contrarian buys. This is unless you think the pandemic has completely altered our drinking habits and desire to show status. 

Taking the above into consideration, I don’t think the choice between investing in Apple shares or the FTSE 100 is ‘obvious’.

Here’s what I’d do

If buying Apple shares while they’re ‘hot’ feels like too much of a gamble at present, you could always buy a fund that has a significant holding in the company instead. An example of this would be Polar Capital Technology Trust.

In addition to having 9.6% of its assets invested in the company at the end of July, Polar also has holdings in titans such as Microsoft, Alphabet (Google) and Amazon. Naturally, this won’t protect you from another market crash. However, knowing your money is spread around other companies should help calm your nerves.

With any remaining money, I’d be inclined to grab whatever quality you can find in the FTSE 100, especially if it’s trading on a bargain valuation.

The post As Apple exceeds the FTSE 100’s value, should UK investors buy its shares? appeared first on The Motley Fool UK.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers owns shares of Burberry. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, Apple, and Microsoft. The Motley Fool UK has recommended Burberry, Diageo, Halma, and Rightmove and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. 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.