There are only a few days left to make the most of the current Stocks and Shares ISA allowance. We can put as much as £20k into an ISA in the current year and the allowance will reset on 6 April. So it’s a good time for me to look for shares to buy.
Why I think Alumasc is a share to buy now
At the beginning of February, building products supplier Alumasc (LSE: ALU) delivered a strong set of half-year results. Revenues and earnings were higher than last year. Net debt and the pension deficit were lower. And the directors declared an interim dividend underlining their confidence in the outlook for trading.
City analysts expect a triple-digit percentage bounce-back in earnings for the full trading year to June 2021, and high single-digit progress the following year. Meanwhile, the forward-looking valuation looks modest. And with the share price near 174p, the dividend yield looks set to be around 5.5%.
However, Alumasc’s fortunes are tied to the building and construction industry. And there’s a lot of cyclicality in the firm’s operations. The share price has already risen a lot since the Covid-crash last year. And the shares now change hands near the top of a price range established for around 20 years. Nevertheless, I’m tempted to put some of the shares in my ISA and hold them for the long term.
A steady business
NWF (LSE: NWF) operates as a specialist distributor of fuel, food, and animal feeds. I’ve admired the business for some time because of its steady nature and consistent financial and trading record. Revenue, earnings, and shareholder dividends have been on a gradual climb upwards for years.
In February, the company released its half-year results report covering the period to 30 November 2020. And the figures show a bit of a dent in revenues and earnings because of the pandemic. However, the directors didn’t miss the interim dividend but held it flat compared to the previous year.
The outlook remains positive. And the directors expect the business to be resilient through whatever other challenges the pandemic may yet throw at it. The company expects to resume its growth strategy based on organic and acquisitive progress.
The valuation looks full
However, there’s no coronavirus bargain for me to pick up here. With the share price near 221p, the stock has already exceeded its pre-Covid level. In fact, the share recovered fast and was already at its pre-crash level by 1 May. I reckon the market was quick to recognise the strengths of the business.
Looking ahead, City analysts expect the full year to May 2021 to deliver a single-digit percentage dip in earnings followed by a single-digit recovery the following year. And against those forward predictions, the earnings multiple is just above 12. The anticipated dividend yield is around 3.3%. Of course, forecasts can change.
Given the slow rate of growth on offer, we could argue that the valuation looks full. And another risk is that the stock is almost at its previous high just before it crashed during the financial crisis. That big down-move started in late 2007.
Nevertheless, I’m focused on the underlying business and its fundamentals. And I’d like to get the shares in my ISA to hold for the long term.
