Back then, I reminded myself of the FTSE 100 group’s strengths. The global quality assurance provider quietly gets on with the job of testing, inspecting and certifying products. It’s been around for more than 130 years, employs 44,000 people in 100 countries, and is deeply tied into the global economy.

That does make it a cyclical. When companies are expanding, Intertek thrives. During downturns, it can feel the squeeze. Last October, I wasn’t convinced. Despite a solid performance, the shares kept drifting lower. It didn’t look like much of a bargain, either, trading at 21.2 times earnings.

I didn’t miss much. Over the past 12 months, the share price has fallen 8%. Over five years, it’s also down 8%. And it’s down 7.89% this morning as I write this, the biggest faller on the FTSE 100.

Forgotten FTSE 100 stock?

Today’s 2025 half-year results were poorly received, despite CEO André Lacroix praising a “strong performance”. Yet there were some pretty positive numbers here.

Revenue rose 4.5% at constant currency to £1.67bn, helped by strong growth in consumer products and corporate assurance. However, growth fell to just 0.2% at actual currency rates.

Adjusted operating profit climbed 9.7% to £276.3m at constant currency rates (falling to 4.2% at actual rates). Earnings per share jumped 12.6% (4.2% actual). Adverse foreign exchange shifts are a theme of these results. They were a real drag on earnings.

Cash conversion of 118% was described as “excellent”, while the group delivered £266m in operating cash flow.

Margins climbed from 15.9% to 16.5%, return on invested capital rose 170 basis points to 22.5%, and the board hiked the interim dividend 6.3% to 57.3p. The group’s £350m share buyback is well under way, with £187m spent so far. None of that prevented the sell-off.

Growth hit by currency shifts

Intertek remains exposed to global trade volumes at a bumpy time for the world’s economy. Also, today’s results landed as Donald Trump revived his tariff threats, and that may explain why markets reacted so badly.

Valuation may also be an issue. The shares still trade on a price-to-earnings ratio just over 20. That’s a lot lower than the 30 I saw when first monitoring the stock four years ago, but still far from bargain territory. Thanks to poor share price performance, the trailing yield has climbed to 3.44%, and management policy looks progressive.

Analysts remain optimistic. The average one-year target is 5,705p, suggesting potential gains of almost 25% from today. That forecast was made before this latest slide though, and might prove overly ambitious.

Intertek is a high-quality business. It has reliable cash flow, decent margins and long-term relevance. The market response seems harsh. I think it’s worth keeping an eye on after this drop. But there are other FTSE 100 stocks that excite me a lot more today.

The post Is the Intertek share price in deep bargain territory after falling 8% on today’s results? appeared first on The Motley Fool UK.

Here, I’m going to highlight three dividend growth stocks in the FTSE 100 index. I believe all three are worth considering for a portfolio today.

An alternative investments group

First up, we have 3i Group (LSE: III). It’s an alternative investment company with a focus on private equity and infrastructure investments.

At 2.1%, the yield here isn’t high. But dividend growth in recent years has been excellent.

Over the last five years, the payout has jumped from 35p per share to 73p. That represents growth of more than 100%.

That growth (and strong revenue and earnings growth) has helped to push the share price up. It has climbed about 340% over the last five years, meaning that investors have seen huge overall returns.

I think there’s more to come from 3i. Today, the alternative investment industry is booming and the stock still looks cheap (the price-to-earnings (P/E) ratio is under seven).

That said, this industry can be turbulent at times due to changing financial conditions (interest rates, etc.). So, investors need to be prepared for a bit of share price volatility.

One of the FTSE’s best tech stocks

Next, we have Sage (LSE: SGE). It’s a software company that provides accounting and payroll solutions.

This company has a brilliant track record when it comes to dividend growth. Believe it or not, it has registered more than 20 consecutive annual dividend increases.

The yield here has never been high (currently it’s around 1.8%). But investors haven’t been short-changed – over the last 20 years the stock has delivered share price gains of around 9% per year (meaning total returns have been above 10% per year).

It’s worth pointing out that a lot of Sage’s customers are small and medium-sized businesses. This customer size is a risk because in a downturn, these types of businesses often get hit harder than larger businesses.

I expect this stock to do well over the next decade as the world becomes more digital, however. And trading on a forward-looking P/E ratio of 25, I think it’s worth a look.

An under-the-radar industrial company

Finally, we have Intertek (LSE: ITRK). It provides bespoke safety, inspection, and testing services.

This company has the highest yield of the three. Currently, it’s sitting at about 3.5%.

That’s quite attractive when you consider that the payout is growing at a rapid clip. Over the last decade, it has risen from 52p per share to 157p – roughly tripling!

It’s worth noting that Intertek went through a rough patch growth-wise a few years back. During this phase, the payout was held steady for a few years at 106p per share.

Further growth hiccups can’t be ruled out. However, with management forecasting mid-single digit top-line growth this year along with some profit margin expansion, I believe the stock is worth considering today.

Currently, the stock’s trading on a P/E ratio of 18.7. I think that’s reasonable given this company’s quality.

The post 3 top dividend growth stocks in the FTSE 100 to consider in 2025 appeared first on The Motley Fool UK.

Yet its shares have been doing well lately, rising 26.76% over the last 12 months. At least they were doing well until October. The Intertek share price has slumped 9.16% in a month. And that’s why it caught my eye.

I like buying UK blue-chips when they’ve had a bit of a blow, as it gives me a chance to pick them up at a reduced valuation. So is this my moment?

Why have the shares just dropped?

Intertek quietly goes about its business of testing, inspecting and certificating products, describing itself as a “Total Quality Assurance Provider to industries worldwide”.

It has a history stretching back 130 years, and now employs more than 40,000 people in over 1,000 locations across 100 countries.

It’s firmly plugged into the global economy, which this makes it pretty cyclical. When businesses are expanding and pumping out products, its services are in demand. Less so in a downturn. It took a real beating in the pandemic, for example. 

Things have picked up since although the world isn’t exactly firing on all cylinders. I’m therefore pretty impressed by its 12-month growth figure. But what happened in October?

I assumed it must have posted disappointing results, but nope. Its last major update was on 2 August, when it published half-year results. These were pretty good, with operating profits, earnings per share and free cash flow all rising by double digits. Revenue grew 6.6% to £1.67bn at constant currency, although just 1.8% at actual rates.

Recent acquisitions were performing well, while its cost-cutting programme delivered £5m of savings, which are set to hit £11m over the year. Intertek has also been paying off borrowings, cutting net debt to £708m. A 118% cash conversion rate also impressed.

Instead, the damage was done by a note from RBC Capital Markets on 21 October. The broker downgraded its shares from Outperform to Sector Perform, and cut its price target from 5,200p to 5,000p. Today, the shares go for 4,744p, so that’s hardly the end of the world.

The stock is a little pricey

RBC praised recent performance but said Intertek now trades at “what we deem to be fair value”, while warning of a “less certain outlook” for 2025. Its long-term prospects appear strong but RBC would like a better entry point.

A total of 16 analysts offer one-year share price forecasts for Intertek, and they’ve set a median target of 5,380p. That’s up 13.79% from here. That suggests modest growth prospects and doesn’t blow my socks off. Nor does the trailing price-to-earnings ratio of 21.23. That’s notably above the FTSE 100 of average of around 15.4 times.

A price-to-revenue ratio of 2.3 suggests investors have to pay £2.30 for every £1 of sales the company makes. The trailing yield of 2.6% doesn’t grab me either.

An impressive 50.4% return on capital employed (ROCE) is more like it. That persuades me to keep close tabs on Intertek. At some point in the cycle, it will be a good time for me to buy it. Probably not in November though.

The post After falling 9% in October is this forgotten UK share a screaming buy for me in November? appeared first on The Motley Fool UK.

Let me break down my investment case.

Testing, safety, and certification

It’s fair to say Intertek isn’t a name that immediately stands out on the UK’s premier index among its illustrious and prestigious incumbents. Nevertheless, a lack of fanfare or brand recognition doesn’t make the testing and safety business any less of an intriguing investment prospect.

Intertek shares have had a fantastic 12-month period. They’re up 24% from 4,061p at this time last year, to current levels of 5,060p.

The bull case

I reckon Intertek possesses defensive attributes. This is because of the essential nature of the work it does. Think of all the consumer products we use on a day-to-day basis, including the laptop I’m typing on, to the desk it’s sitting on. Everything needs to be tested to regulatory standards, and signed off with the relevant certification. This is Intertek’s bread and butter, and it’s made a good business out of it.

Next, Intertek’s not only made a name for itself, but it’s become a world leader in this field. It currently operates approximately 300 laboratories across the world. Plus, results speak for themselves as the business has an excellent track record of performance. However, I do understand the past isn’t a guarantee of the future.

Looking to the future, there’s great growth potential for Intertek as the world continues to grow, and day-to-day living evolves. This simply means there’s more products available, and more for Intertek to test and make money from. Hopefully it’ll continue returning this to its shareholders.

Speaking of returns, a dividend yield of 2.5% is decent at present. Plus, I can see this growing. However, I do understand that dividends are never guaranteed.

Finally, the shares actually look decent value for money despite a market-leading position, and established name and track record. They currently trade on a price-to-earnings ratio of 19. This is no value stock, but, I think this looks like a fair price for an established business with growth prospects and defensive traits.

Risks and final thoughts

From a bearish view, a significant risk that applies to most industries and firms, and not only Intertek, is economic turbulence. A slowdown could halt Intertek’s growth aspirations and could even dent performance and returns.

Economic issues in China – one of the world’s largest hubs for new consumer products – is a prime example of this risk, and something I’ll keep an eye on. Another example of this occurred when the pandemic struck, and the business was impacted for a short period.

Overall I’m buoyed by Intertek as an established business with a good track record and attractive fundamentals. Furthermore, exciting growth prospects mean now could be a great time for me to buy shares at a decent entry point.

The post Looking for growth shares? I like this underrated FTSE 100 stock! appeared first on The Motley Fool UK.

Here, I’m going to highlight UK-listed dividend growers that have created substantial wealth for investors in the past. I think these shares are worth considering for a Stocks and Shares ISA or Self-Invested Personal Pension (SIPP) today.

Defence and growth

First up, we have Intertek (LSE: ITRK). It’s an under-the-radar FTSE 100 company that provides bespoke safety, inspection and testing services.

There’s a lot to like about this company from an investment perspective, to my mind. For a start, it’s relatively defensive in nature. After all, businesses can’t afford to skip crucial quality and safety checks today.

At the same time however, it has plenty of growth potential. This is a company with a high return on capital (ie it’s very profitable). So it’s able to reinvest a lot of its profits for future growth.

Zooming in on the dividend, this company has a good long-term record when it comes to growth, having raised its payout considerably (+143%) over the last decade. It’s worth noting that it held its dividend constant between 2019 and 2022. But the payout’s now well and truly on the up again. In the company’s H1 results, it raised its interim dividend by a whopping 43%. In terms of the yield, it’s roughly 3%, which is healthy.

Of course, a weak global economy’s a risk in the short term. This could lead to a slow down in growth for Intertek.

In the long run however, I think the stock should do well. It’s currently trading on a forward-looking P/E ratio of 19, which I think’s reasonable given the company’s track record when it comes to generating wealth for investors (the stock is up more than 700% over the last 20 years).

Given its stellar track record, I’m thinking about adding this stock to my own portfolio.

One of the UK’s best tech stocks

The other stock I want to highlight is Sage (LSE:SGE). It’s a software company that specialises in accounting and payroll solutions for small- and mid-sized businesses.

Like a lot of software companies, Sage – which has created a lot of wealth for investors over the long run – has seen its share price pull back this year. Year to date, the stock’s down about 12%.

After that pullback, I’m tempted to buy more shares for my portfolio. At current levels, the stock’s trading on a P/E ratio of 24. That’s high by UK standards. But for a high-quality software company with recurring revenues, it’s actually pretty low by global standards (US-listed rival Intuit trades on an earnings multiple of 33).

While the yield here isn’t particularly high at around 2%, this company has an outstanding dividend growth track record. Indeed, it’s raised its payout every single year for over 20 years now.

Again, a weak economy could present some challenges here. This scenario could lead to the collapse of small- and mid-sized businesses and hence less demand for Sage’s solutions.

Taking a long-term view however, I expect it to do well as small organisations move to get up to speed digitally.

The post 2 magnificent dividend growth shares to consider buying for an ISA or SIPP today appeared first on The Motley Fool UK.

One pick I like the look of is Intertek Group (LSE: ITRK). Here’s why I’m planning on buying some shares when I next have some cash to invest.

Testing and safety

Intertek is a leading testing, inspection, and certification services business. It primarily focuses on consumer products, and it assesses these against safety and a multitude of regulatory standards.

The shares have experienced a decent run over the past 12 months, up 15%. At this time last year, they were trading for 4,136p, compared to current levels of 4,722p.

Why I’d buy some shares

It’s worth remembering that pretty much all of the products we use as consumers on a day-to-day basis need to be tested and vetted. For the businesses selling them, regulatory fines and consequences can be costly. With Intertek’s vast presence with close to 300 laboratories around the world, as well as a track record, it is in a prime position to benefit from this. In fact, I’d go as far as saying this demand offers the business defensive traits.

For me, it’s hard to ignore Intertek’s growth journey. For context, the shares have returned approximately 700%, plus dividends, across the past 20 years. Plus, its recent share price performance is a sign of defensive ability and resilience, despite a cocktail of economic and geopolitical issues facing the world.

Moving on, the shares look decent value for money to me on a price-to-earnings ratio of 19. Let me be clear, this is no bargain basement stock. Part of me wishes I had bought some shares earlier. This current P/E ratio is higher than the FTSE 100 index average of 12. However, I have no qualms buying a fantastic company at a fair price.

Finally, a dividend yield of close to 3% sweetens the investment case. This is supported by a healthy balance sheet, as well as a track record of good cash generation, and high return on equity. However, I do understand that dividends are never guaranteed. Plus, past performance is never a guarantee of the future.

Risks to note

Despite my stance, there are still risks that could harm earnings and returns. My biggest worry is a slowdown in key markets linked to economic turbulence. For example, when the pandemic struck, the business struggled as product testing was less of a priority in core markets. This is an extreme example. Nevertheless, a slow down in key growth economies such as China, and a potential recession in the US, could have a knock on effect for the testing firm.

Overall, Intertek looks to me like a quality business on all fronts. It possesses sound fundamentals, a solid track record and presence, as well as defensive traits, due to the important nature of its offering.

The post 1 under-the-radar FTSE 100 gem I reckon is a no-brainer buy appeared first on The Motley Fool UK.

Here, I’m going to highlight three shares that have taken a hit in the recent sell-off. I think they offer quite a bit of value right now and are worth considering as long-term investments.

Portfolio protection

Given the uncertainty over the global economy at present (one of the reasons the market’s fallen), I believe it’s worth owning a few ‘defensive’ stocks right now. And one company that fits the bill here is Coca-Cola HBC (LSE: CCH), which provides bottling services to beverages giant Coca-Cola.

To my mind, this is very much a ‘sleep-well-at-night’ stock. I can’t see demand for Coca-Cola products suddenly falling off a cliff. Last week, the company actually increased its full-year revenue and operating profit guidance.

Meanwhile, there’s a nice dividend here. Currently, the yield’s about 3.2%. So the shares could provide some nice passive income.

Of course, the economic environment’s still a risk here – it adds some uncertainty to the outlook. With the stock trading on a P/E ratio of 14 however, I think it looks attractive right now.

Moving into quality

As well as owning some defensive stocks, I also think it’s smart to move up the ‘quality’ spectrum in the current environment and focus on highly profitable companies with solid balance sheets. And one company that stands out to me here is Intertek (LSE: ITRK).

This FTSE 100 stock flies under the radar of most investors. That’s a shame as it’s been a phenomenal investment over the long term (700% share price return over the last 20 years plus dividends).

One reason the company’s done so well is that it provides crucial safety and quality assurance testing services that businesses can’t afford to skip. It also has a high return on capital, meaning it’s able to compound its earnings at a high rate.

A slowdown in the economy’s still a risk here as well. This could lead to less growth (revenues lifted 6.6% in H1).

However, I was encouraged by the fact the company recently hiked its dividend payout by 43%. This suggests management’s confident about the future.

The yield here’s currently 3.1% while the P/E ratio’s a reasonable 19.5.

Higher risk, higher return?

Finally, I like the look of Ashtead (LSE: AHT) at the moment. It’s one of the world’s largest construction equipment rental companies.

This stock’s more risky than the other two I’ve highlighted. That’s due to the fact the markets it serves can be quite cyclical.

However, taking a long-term view, I see significant potential here. That’s because the company – which generates the bulk of its revenues in the US today – is well placed to benefit from US government spending on infrastructure and semiconductor plants in the years ahead.

At present, this stock trades on a P/E ratio of 17, falling to 14.9 using the earnings per share forecast for the year ending 30 April 2026. I think there’s value at these earnings multiples.

A dividend yield of nearly 2% adds weight to the investment case.

The post 3 top UK shares to consider buying after the stock market sell-off appeared first on The Motley Fool UK.

The firm’s latest results suggest to me that this business is regaining momentum after a difficult period in the pandemic.

Revenue rose by 6.6% during the first half of the year on a constant currency basis. An increase in operating margin to 15.9% meant this sales growth translated into a 16.2% increase in pre-tax profit, which rose to £242.6m.

CEO André Lacroix is confident of a strong finish to the year and says the business remains on track to meet its medium-term target of a 17.5% profit margin.

Why I like it

Intertek operates behind the scenes, providing a huge range of testing and certification services to business clients in sectors such as energy, consumer goods, chemicals and food.

For example, the company is the world’s leading provider of battery safety testing services. Battery producers pay Intertek to certify their batteries to numerous standards required for them to be sold.

Intertek’s services are essential for many of its customers. So any increase in global economic activity’s likely to generate an upturn in demand.

Of course, this business does face some competition. But Intertek has a history that goes back more than 130 years. It currently operates in more than 1,000 locations in 100 countries, and its certifications are accepted globally.

Replicating these advantages is difficult for competitors, especially as Intertek continues to expand by acquiring smaller specialist firms and incorporating them into its global system.

A 43% dividend increase!

These advantages help to give Intertek strong pricing power and those high profit margins I mentioned earlier.

Since its flotation in 2002, I estimate Intertek shares have delivered an average total return (share price gains plus dividends) of 12.7% a year. That’s well ahead of the UK stock market average of about 8%.

The dividend has never been cut and management recently decided that the business could afford to be a bit more generous with shareholder payouts.

This week’s interim results included details of a hefty 43% increase to the interim dividend, which rises to 53.9p per share.

Broker forecasts suggest the full-year dividend will rise by 30% to 146p this year, with a further 10% increase to 161p predicted for 2025. These forecasts give the shares a 2024 yield of 3%, rising to 3.3% in 2025.

These payouts still look affordable to me, so I reckon this is good news.

What I’m doing

The main risks I can see are that some of Intertek’s main markets could suffer a slowdown. Inevitably, that would have some knock-on effects on demand for the company’s services.

Intertek shares aren’t dead cheap either. They currently trade on a 2024 forecast price-to-earnings ratio of 21.

I don’t think there’s much room for disappointment in the current share price. But the firm’s latest update’s left me confident it’s performing well.

I already have a mid-sized position in Intertek in my portfolio. I don’t have any spare cash to add to this holding at the moment, but I remain very positive and would be happy to buy more at current levels.

The post Why the latest results from below-the-radar FTSE stock Intertek could support further share price gains appeared first on The Motley Fool UK.

Snapping up undervalued shares with growth potential is a long-trusted method that great investors like Warren Buffett swear by. With that in mind, here are two hidden gems that investors could consider for long-term gains.

RS Group

The RS Group (LSE: RS1) share price is down 14.3% this year after releasing subpar results last month. Operating profits fell 27% since May 2023 along with an 8% decline in like-for-like sales. Return on capital employed (ROCE) was also down, recording only 17.4% compared to last year’s 30.8%.

And it’s not just this year. Since reaching a high of £12.50 in November 2021, the shares have fallen 44% to the current price of £7.01.

But it’s not all doom and gloom. Earnings are forecast to increase 14% a year, with the shares estimated to be undervalued by 18%, using a discounted cash flow (DCF) model. The economy’s already made a strong recovery this year and the industrial manufacturing sector’s growing. With RS Group involved in maintenance and repair, the company should benefit from this growth.

And with a low debt-to-equity (D/E) ratio of 46%, any profits can be safely injected back into the business to help it grow further.

Even if a recovery drags out longer than expected, I wouldn’t expect the shares to fall much more from current levels. Plus, the 3.1% dividend yield means shareholders could still net a return even if prices remain stagnant.

Intertek 

The global quality-assurance specialist Intertek Group (LSE: ITRK) is in a similar position to RS Group. It’s down 14% over the past five years but has already begun to make a decent recovery this year, up 12%. Its most recent earnings results were mixed, with revenue and net income up but profit margins slightly down. Despite a mild increase, earnings per share (EPS) missed analysts expectations by 5.8%.

With earnings outperforming the share price, a DCF model estimates it’s undervalued by 9%. Consensus among analysts expects price growth of around 6.5% this year. And at least one major broker seems to agree — Berenberg put in a ‘buy’ rating on the stock last week.

But as with any investment, it’s not without risk. Its recent growth benefits from an improved economic outlook but that could easily turn around.

The upcoming UK election is just one factor that could send markets spiralling again. And while the company’s £900m debt load isn’t excessive, if it pushes the D/E ratio over 100%, profits may take a hit.

But I like its long-term prospects. Having been in business for almost 140 years, it’s a well-established firm with a strong market presence and a good reputation. As such, I suspect it could once again enjoy the strong performance it exhibited between 2010 and 2020 when it grew 377%.

The post The FTSE 100’s full of undervalued gems. Are these 2 UK stocks primed for a strong recovery? appeared first on The Motley Fool UK.

Track record

Intertek has been around since 1885, establishing itself as a pioneer in testing, inspection, and certification services across diverse industries like consumer products, healthcare, energy, agriculture, and more. This lengthy track record shows the company is more than capable of successfully navigating various economic cycles and disruptions over its 138-year history.

As a leading quality assurance provider spanning multiple sectors, Intertek enjoys a strong positioning in several compelling growth areas. The continued expansion of consumer products, energy transition solutions, supply chain visibility, and food safety measures all present opportunities for testing and certification services. Its global scale and comprehensive industry expertise create competitive advantages.

The fundamentals look rock-solid. Intertek grew earnings per share by 9.2% over the past year, far outperforming the UK market’s overall 4.4% return. It has delivered positive earnings growth averaging 0.7% annually, though this severely lags the professional services industry’s growth of 11.2%. I’m not too worried about this though, as analysts forecast earnings to accelerate, growing at a robust 9.7% clip annually going forward.

Risks

The business does carry a higher-than-ideal debt load with a debt-to-equity ratio of 70% on its £900m debt. With profit margins slightly lower than the previous year, and with compensation for the CEO growing by 20% over the same period, this could be a concerning setup for investors.

A large percentage of overall expenditure goes towards dividends. The forward dividend yield sits at a decent 2.3%, though the forecasted 3.7% yield three years from now looks more enticing. However, with positive free cash flows, a 61% dividend payout ratio, a decent interest coverage ratio of 12.8 times and ample cash reserves of £299m on the balance sheet, I’d say the company’s obligations appear to be sustainable.

Valuation

While shares don’t appear significantly undervalued, a discounted cash flow calculation (DCF) suggests that there could still be about 8% growth before reaching fair value. Shares currently trade at 25.9 times trailing earnings, a premium to the professional services industry but likely merited by attractive growth prospects. I’m also encouraged by the amount of shares that management have been buying in recent months, with many board members picking up more shares in March and none selling in the last year.

Overall

Overall, Intertek checks many of the boxes I look for — strong fundamentals, visible growth drivers, solid income, and sound finances. To me, it looks well-positioned to continue delivering value if the FTSE 100’s recent rally continues. I’ll be buying shares at the next opportunity.

The post With the FTSE 100 flying, I love the look of this company appeared first on The Motley Fool UK.