I’m on the hunt for the best stocks to buy for my holdings. I want to buy stocks that are on a growth trajectory as well as providing consistent and lucrative returns.

One way I believe I can do this is by looking at trusts that invest in a number of different businesses. One I’m currently considering is 3i Group (LSE:III). Should I buy or avoid the shares?

Venture capitalists

As a quick introduction, 3i is one of the biggest investors in private companies in the UK. Its strategy is to get in early with growth companies and it has a long track record in investing in and helping grow tech firms.

So what’s happening with 3i shares currently? Well, as I write, they’re trading for 1,245p. At this time last year, the stock was trading for 1,272p, which is a 2% drop over a 12-month period. More tellingly for me, however, is the fact that 3i shares have returned 11% since the stock market dip of March, from 1,113p to current levels.

The best stocks to buy have risks too

One of the biggest issues facing 3i Group is that of macroeconomic headwinds. These include soaring inflation, the rising cost of materials, and the global supply chain crisis. A lot of businesses in 3i’s portfolio are consumer goods businesses. This means most are at the mercy of these headwinds. 3i could see profitability and operations negatively affected by cost pressures and supply chain issues.

One risk I always associate with investment trust stocks such as 3i, is over-diversification. Access to a multitude of businesses in a number of sectors isn’t always a good thing. Different businesses and markets perform differently and this can have a negative impact on returns and growth sometimes. This can especially be the case during times of economic volatility like now. I will keep an eye on 3i’s portfolio and performance closely to monitor this.

The bull case and what I’m doing now

So to the positives then. I often refer to a stock’s performance to gauge investment viability, although I do understand that past performance is not a guarantee of the future. Looking closely at 3i, I can see it has a consistent track record. Performance was affected by the pandemic period, but revenue growth returned the following year.

Next, 3i shares would boost my passive income stream through dividend payments, as many of my other best stocks to buy do. At current levels, the shares’ dividend yield stands at close to 4%. This is broadly in line with the FTSE 100 average of 3%-4%. I do understand that dividends are never guaranteed and can be cancelled at any time, however.

Finally, at current levels, 3i shares look dirt-cheap to me on a price-to-earnings ratio of just three. The FTSE 100 average is close to 15 and the general consensus is that a ratio below this indicates value for money.

In conclusion, I believe 3i Group could be one of the best stocks for me to buy for my aims of growth and increasing returns. The shares look good value for money, the business has a good track record of performance, and there’s a dividend currently too. I would add the shares to my holdings.

The post Could this venture capital firm be one of the best stocks to buy for returns? appeared first on The Twelfth Magpie.

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Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Finding the best shares to buy is no easy feat. There are a lot of different aspects to consider. One of the things I look for is stocks that provide consistent and stable returns via dividend payments to boost my passive income stream. One stock I like the look of is Antofagasta (LSE:ANTO). Here’s why I would buy the shares for my holdings.

Copper mining

As a quick introduction, Antofagasta is one of the largest copper mining businesses in the world. Based in Chile, it has three main assets in the country and splits its business into three segments which are mining, transport, and water.

So what’s happening with Antofagasta shares currently? Well, as I write, they’re trading for 1,176p. At this time last year, the stock was trading for 1,413p, which equates to a 16% drop over a 12-month period.

The best shares to buy have risks too

It is a well-known fact that commodities are volatile, as is the market as a whole. Price and demand are often intrinsically linked to the state of the world economy. Uncertainty can cause demand and price to fluctuate. Furthermore, the price of commodities can have a material impact on investor sentiment, performance, and any returns too. This is something I must be wary of regarding Antofagasta shares.

Next, Antofagasta shares look a great option to boost my passive income stream but it is worth noting that dividends are never guaranteed. They can be cancelled at the discretion of the business at any time. This often happens to help conserve cash in times of uncertainty or in the face of extreme events such as a pandemic for example.

The bull case

So to the positives then. Firstly, Antofagasta’s position in the copper mining market as well as the current demand for copper are positives. Demand for metal is climbing and it is a key component in building as well as many other applications throughout the world in a multitude of industries. As one of the largest companies in this sector, Antofagasta should benefit and see a boost in its performance and returns.

So let’s take a look at some fundamentals then. I am buoyed by Antofagasta’s track record of performance, although I am aware that past performance is not a guarantee of the future. Looking back, I can see that it has grown revenue and gross profit for the past four years in a row.

Next, Antofagasta shares’ current dividend yield stands at a very enticing 10%. This is substantially higher than the FTSE 100 average of 3%-4%. Furthermore, the shares look great value for money on a price-to-earnings ratio of just 10. The general rule of thumb is that shares that trade on a ratio of below 15 could represent good value for money.

Overall, I believe Antofagasta is one of the best shares I could buy to boost returns through dividend payments. I would add the shares to my holdings to do just that.

The post This is one of the best shares to buy for juicy dividends! appeared first on The Twelfth Magpie.

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Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

With technology changing the way the world works, I believe some of the best shares to buy now are linked to the rise of tech. One stock I am interested in is Future Plc (LSE:FUTR). Should I buy the shares for my holdings? Let’s take a closer look.

Tech-based media

As a quick reminder, Future is an international media and digital publishing business. It creates, provides, and maintains technology, and has relationships with leading brands throughout the world to bolster their presence and keep them in contact with their customers. Some of its technology includes website platforms, lead generation tools, and email delivery systems.

So what’s happening with Future shares currently? Well, as I write, they’re trading for 1,751p. At this time last year, the stock was trading for 3,594p, which is a 51% decline over a 12-month period. I believe the shares have dropped due to recent macroeconomic headwinds as well geopolitical factors. Furthermore, the business’ acquisition-led approach can be seen as risky, which affects investor sentiment too. I am not concerned by the share price drop. In fact, it could present a buying opportunity.

The best shares to buy have risks too

As mentioned above, acquisition-led business models are often seen as high-risk. This is because there is a greater chance of two major issues. Firstly, anyone can overpay for a business. Overpaying can affect a balance sheet, investor sentiment, operations, and eventually returns too. Next, if a newly added business fails to amalgamate into the existing offering, this can affect operations and performance. More importantly, it can often be costly to dispose of a failed acquisition. This is something I must be wary of relating to Future.

Even with technology adoption rising, I noted that Future performed exceptionally well during the pandemic period. This will have been due to consumers spending less time out and about socialising, and more time on their devices. I can’t help but think that perhaps this performance was a one-off and now that restrictions are easing, it may not be able to maintain its trading momentum.

The bull case and my verdict

So to the positives of Future shares then. Firstly, I note that it has an excellent track record of performance. I do understand that past performance is not a guarantee of the future, however. Looking back, I can see it has grown revenue and profit for the past four years in a row.

Next, Future shares pay a dividend, which would boost my passive income stream. Now the current dividend yield is minimal, under 1% in fact, but if it can continue growing performance, I don’t see why it can’t gradually increase this. I am aware that dividends can be cancelled at any time, however.

Finally, Future makes money from advertising on its websites and platforms, as well as affiliate fees such as those when someone purchases something from comparison sites, like GoCompare. With the reliance on smartphones and tablets for day-to-day activities, I believe Future could see its revenue and profit increase in the future.

Overall, I would add Future shares to my holdings. For me the positives outweigh the negatives and I believe Future shares could provide consistent returns for my portfolio in the future.

The post Could this global media business be one of the best shares to buy now? appeared first on The Twelfth Magpie.

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Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Future. 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.

Finding the best shares to buy is a core part of my investment strategy. I believe Macfarlane Group (LSE:MACF) is a stock that could grow exponentially over the years as well as provide consistent returns. Could now be a good time for me to buy the shares? Let’s take a look.

Packaging and labelling

As a quick introduction, Macfarlane is a packaging and labelling business based in Scotland. After being established over 70 years ago, it has grown into one of the largest distributors of packaging products in the UK with over 1,000 employees. It also sells its products into Europe and the US.

So what’s happening with Macfarlane shares currently? Well, as I write, they’re trading for 118p. At this time last year, the stock was trading for 112p, which equates to a 5% return over a 12-month period.

The best shares to buy have risks too

The biggest risks to Macfarlane’s growth currently are macroeconomic headwinds. Soaring inflation has led to rising cost of raw materials. Furthermore, there is currently a global supply chain crisis that has affected many sectors and industries.

Macfarlane could be adversely affected by rising materials costs. Packaging products require lots of raw materials to manufacture. These rising costs could squeeze profit margins, which in turn could affect performance and investor returns. If it decides to put prices up, it could lose business to competitors too.

The global supply chain crisis has led to many businesses being unable to provide products to their customers. Macfarlane’s sales, performance, and returns could be affected if this crisis continues.

The bull case

So to the positives then. Firstly, the packaging and labelling market has grown massively in recent years. This is linked to the e-commerce boom and the explosion of online shopping, which has been exacerbated by the pandemic. Macfarlane should be able to leverage its dominant market position to grow its business and performance.

Next, let’s take a look at Macfarlane’s performance, although I do understand that past performance is not a guarantee of the future. Looking back, Macfarlane has grown revenue and profit in three out of the past four years. The only year when levels dropped was 2020, this was due to the pandemic. 2021 performance was higher than pre-pandemic levels, which is encouraging.

So on to the Macfarlane share price. At current levels, the shares look decent value for money on a price-to-earnings ratio of 13. Many of my best shares to buy have pulled back in the past few months which has thrown up some bargain buys.

Finally, Macfarlane shares would boost my passive income stream through dividend payments. The current dividend yield on offer is 2.7%, which is higher than the FTSE 250 average of just under 2%. I am aware that dividends can be cancelled at any time, however.

Overall I do believe that Macfarlane shares could be a great addition to my holdings for long-term growth and consistent returns. I would buy the shares and hold on to them.

The post This stock could be 1 of my best shares to buy for long-term growth and returns! appeared first on The Twelfth Magpie.

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Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Macfarlane 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.

I have been on a mission recently to find the best shares to buy for passive income that I believe can provide me consistent returns. I believe Residential Secure Income (LSE:RESI) could be a great option. Should I buy the shares for my holdings?

Residential properties

As a quick introduction, Residential is a real estate investment trust (REIT). It invests in quality, affordable, residential housing across the country. It currently has a portfolio of over £300m and has a 20-year track record of investments and returns.

It is worth noting that REITs are designed to reward shareholders through dividend payments. In fact, they must return 90% of profits to shareholders. I already own a number of REITs as part of my portfolio.

So what’s happening with Residential shares currently? Well, as I write, the shares are trading for 104p, which is the same price as at this time last year. The shares have pulled back 3% from 108p since the turn of the year to current levels, however.

The best shares to buy have risks too

The risk of any divided stock is that dividends are never guaranteed. They can be cancelled at the discretion of the business at any time. This could be for a number of reasons, such as poor performance, a recession, or an extreme event like a pandemic.

The current cost-of-living crisis poses a threat to Residential’s performance, in my opinion. It rents homes out to people and with the current macroeconomic issues, soaring costs have caused many people to tighten their belts. Some are struggling to pay for essentials such as rent, energy bills, and food. If collecting rent becomes tougher, performance and returns could be affected.

The bull case and what I’m doing now

So to the positives. I believe Residential has defensive characteristics. Firstly, a home is essential for any person. Secondly, here in the UK, the demand for homes is massively outstripping supply. In fact, leased residential buildings is one of the most defensive real estate sectors available currently.

So to the returns then. Residential shares offer a dividend yield of just over 5% currently. This is higher than the FTSE 100 average, which is 3%-4%. It also pays a quarterly dividend and aims to offer an 8% annual return to its investors.

Next, Residential shares look good value for money currently too on a price-to-earnings ratio of just over 11. The general consensus is that a ratio below 15 represents value for money.

Finally, Residential’s performance track record is positive. Now, I am aware that past performance is not a guarantee of the future, however. But, performance and returns are linked as the former underpins the latter. Looking back, I can see Residential has increased revenue and profit for the past four years in a row.

Overall I believe Residential Secure Income is one of the best shares to buy now for consistent returns. The shares look attractively priced, and the fact it operates in a defensive sector is a bonus. I will be adding the shares to my holdings imminently.

The post 1 of my best shares to buy now boosts my passive income and has defensive traits! appeared first on The Twelfth Magpie.

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Jabran Khan has no position in any of the shares mentioned. 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.

Could direct home shopping retailer N Brown Group (LSE:BWNG) be one of the best shares to buy now for long-term growth? Let’s take a closer look at the pros and cons of me buying the shares.

Digital retailer

As a quick reminder, N Brown is a top 10 digital UK clothing and footwear retailer. With over 160 years history of trading, it employs close to 1,800 people in the UK. You may have heard of some of its retail brands including JD Williams, Simply Be, and Jacamo.

So what’s happening with the N Brown share price currently? As I write, the shares are trading for 25p. At this time last year, the stock was trading for 53p, which is a 52% decrease over a 12-month period.

Many stocks have come under pressure due to macroeconomic headwinds and the tragic events in the UK, and N Brown is no different. This includes many of my best shares to buy. Could this stock be a bargain with a view to a long-term recovery?

To buy or not to buy?

So what are the pros and cons of me buying N Brown shares?

FOR: I like the look of N Brown’s diversified business model. It is a leading retailer in the plus-size clothing market through its brands Simply Be and Jacamo. Furthermore, it also targets the more affluent 45-65 year old through JD Williams. Despite near-term challenges, this diversification could be the key to growing revenue and profit, and providing returns to its investors.

AGAINST: Well documented macroeconomic issues could hamper N Brown. Soaring inflation, the rising cost of materials, and the global supply chain crisis could have a material impact on profitability and operations. With costs rising, N Brown could see margins squeezed. In addition to this, operations could be affected due to supply chain constraints. All this could impact any returns I would hope to make as an investor.

FOR: I do understand that past performance is not a guarantee of the future. But looking back at N Brown’s track record, I think this is a positive point. I can see it has recorded consistent revenue and profit for the past four years. This was even during the challenging pandemic period. I want to see performance levels return past pre-pandemic levels, although 2022 results weren’t far off. Finally, the shares look good value for money on a price-to-earnings ratio of just seven.

AGAINST: The rise of online fast fashion, and the shift away from the high street has been seen as a positive by many. For N Brown, this is an issue for me as it means competition is more intense than ever. Competitors will try to take market share and this could have an impact on performance and returns in the longer term.

My verdict

I think N Brown Group is a bit of a hidden gem with excellent growth prospects ahead. The shares currently look dirt cheap and I’m buoyed by its diversified business model. Its long trading history and roots also help me believe that it has the experience and know how to navigate stormy waters.

Overall I would be willing to add a small number of N Brown shares to my holdings and keep hold of them for the long term.

The post Is this online retailer 1 of the best shares to buy now? appeared first on The Twelfth Magpie.

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• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Jabran Khan has no position in any of the shares mentioned. 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.

A core part of my investment strategy is to boost my passive income stream through dividend payments. Could IG Group (LSE:IGG) be one of the best stocks to buy now to help me do that? Let’s take a look.

Online trading

As a quick reminder, IG Group provides an online, low-fee platform where people can invest and trade stocks, bonds, CFDs, and index trackers.

It is worth noting that in the past two years, online trading levels have surged. This was mostly due to the pandemic as people had more spare time on their hands due to lockdown, which also led to a bit more spare cash too.

So what’s happening with the IG share price currently? As I write, the shares are trading for 697p. At this time last year, the stock was trading for 868p, which is a 19% decrease over a 12-month period.

Many stocks have pulled back in recent months due to macroeconomic headwinds and the tragic events in Ukraine.

Even the best stocks to buy have risks

The obvious risk of buying a stock purely for its dividends is the fact that dividends can be cancelled at any time. This is because dividends are underpinned by performance. If performance dips, a business cannot return cash to investors. This is a risk I am wary of when reviewing stocks like IG for passive income purposes.

Next, competition in the online trading platform market is intense. One competitor of note is Plus500. With many firms vying for market dominance, IG could suffer from a loss of customers, which could affect performance and returns.

Finally, IG specialises in spread betting, which is classed as gambling here in the UK. Tighter regulations around this in the future could hurt performance and returns too.

The bull case and my verdict

So to the positives then. I can see IG has an excellent track record of performance in recent years. I do understand that past performance is not a guarantee of the future, however. Looking back, I see it has increased revenue and profit for the past three years in a row.

This excellent performance has underpinned consistent dividend payments, which have grown year on year too. IG’s current dividend yield stands at an enticing 6%. This is higher than the FTSE 100 average of 3%-4%. It even managed to pay a dividend during the pandemic period, where many other businesses suspended their payouts.

Finally, the IG share price pulling back has made the shares look really good value for money too. They’re currently on a price-to-earnings ratio of just seven. The general consensus is that a ratio of below 15 represents value for money.

Right now I do believe IG Group is one of the best stocks for me to buy to boost my passive income stream. For that reason, I would add the shares to my holdings.

The post Is this 1 of the best stocks to buy for passive income? appeared first on The Twelfth Magpie.

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Jabran Khan has no position in any of the shares mentioned. 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.

One of my best stocks to buy, JD Sports (LSE:JD), looks more attractive than ever right now. Here’s why I’m seriously considering adding more shares to my holdings.

Undisputed king of trainers

JD Sports is one of the premier sportswear brands in the UK. It has a large store presence throughout the country and is growing internationally too, with a focus on the US. It continues to diversify its business and has forayed into the lucrative gym market.

Retail has been a tough sector in recent years. The shift to online, coupled with changing shopping habits, the rise of technology, and the e-commerce boom has seen many retailers fall by the wayside. Not JD, however. It has continued its impressive growth trajectory.

So what’s happening with JD shares currently? Well as I write, they’re trading for 118p. At this time last year, the shares were trading for 195p, which is a 39% drop over a 12-month period. JD shares falling doesn’t concern me as I am invested in its longer-term growth and believe its shares will bounce back.

The best stocks to buy have risks too

The rise of online fast fashion has changed the clothing market in recent years. Cheaper alternatives, shipped faster via online only methods have placed pressure on more traditional retailers like JD Sports. There is no doubt this burgeoning trend has affected market share. This, in turn, can have a negative impact on performance and investor returns.

Next, recent macroeconomic headwinds such as soaring inflation, rising cost of materials, and the supply chain crisis have had an impact on JD Sports. Rising costs could squeeze profit margins, which will affect performance and investor returns. The supply chain crisis could mean consumers are unable to purchase their favourite items, leading them directly to competitors.

Why I’d buy more JD Sports shares

So let’s look at the positives. I always refer to a firm’s performance history. I do understand that past performance is not a guarantee of the future, however. Looking back at JD Sports, it has an enviable record of performance growth over the past four years, growing revenue and profit consecutively in this period.

Next, at current levels, JD shares look good value for money on a price-to-earnings ratio of just 15. Furthermore, impressive performance has led to dividend payments that would boost my passive income stream. The shares currently yield less than 1%. It is worth remembering dividends can be cancelled, however.

Many investors have moved away from growth stocks and towards safer defensive options. However, my investment strategy has always been with the longer term in mind.

I believe the future for JD looks bright. It is building two new logistics centres in the UK and Netherlands to meet growing demand and improve customer service. Next, it also has unique agreements with some of the biggest brands. Take Nike for example. JD is one of Nike’s top customers in the world. I believe this offers it leverage over a key supplier.

In a competitive market like retail, these advantages and investments can make all the difference. I believe this growth will underpin continued performance growth, which will provide me with stable returns for years to come.

The post Here’s why I’m buying more shares in one of my best stocks to buy! appeared first on The Twelfth Magpie.

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Jabran Khan owns shares in JD Sports. The Motley Fool UK has no position in any of the shares mentioned. 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.

Could mining giant BHP Group (LSE:BHP) be one of the best stocks to buy for passive income? I believe so. Here’s why.

FTSE 100 mining business

BHP is one of the world’s largest mining businesses. The Australian-based firm mines and sells a plethora of commodities such as iron ore, coal, copper, and uranium. With operations in around 90 countries and supported by 80,000 employees, it has a global profile and presence.

So what’s happening with BHP shares right now? Well, as I write, they’re trading for 2,186p. At this time last year, the stock was trading for 1,901p, which is a 14% increase over a 12-month period.

The best stocks to buy have risks too

Although commodities prices are currently higher than usual due to macroeconomic headwinds, they are often volatile. This volatility can affect performance as well shareholder returns. An example of volatility has been BHP’s demand for iron ore from China. Is this unusually high demand sustainable or will it subside?

Next, although I like BHP shares to pay dividends and boost my passive income stream, dividends are not guaranteed. They can be cancelled at the discretion of the business at any time. In fact, BHP did cancel dividend payments recently, namely in 2016 and 2020.

It is worth noting that the rising cost of materials as well as the supply chain crisis could also have a negative impact on operations and performance. This is something I will keep an eye on.

The bull case

So to the positives. Continuing to talk of dividend payments, BHP shares currently have a dividend yield of over 12%. This is close to four times the FTSE 100 average of 3%-4%. Not many of my best stocks to buy can attest to such an enticing yield.

It is worth remembering dividends are underpinned by performance. I do understand that BHP’s past performance is not necessarily a guarantee of its future performance, however. Looking back, it has consistently recorded revenues of over $42bn for the past four years. In addition to this, I noted that its 2021 performance surpassed pre-pandemic levels by some distance, hitting $56bn of revenue.

Next, at current levels, BHP shares look good value for money too on a price-to-earnings ratio of just 10. The general consensus is that a P/E ratio of below 15 on the FTSE 100 represents value for money on the surface of things.

Finally, as one of the biggest mining businesses in the world, BHP’s performance, returns, and growth prospects are underpinned by its vast reach and profile. The old adage too big to fail springs to mind for me here.

Overall, I would add BHP shares to my holdings. I believe they would boost my passive income stream nicely as well as continue to provide consistent returns in the long term. As a dividend seeker, I truly believe it is one of the best stocks I can buy.

The post Here’s 1 of the best stocks to buy for passive income appeared first on The Twelfth Magpie.

More reading

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• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Construction materials and infrastructure

As a quick reminder, Breedon is a construction materials business with operations in the UK and Ireland. Some of the materials it produces include cement, aggregates, concrete, and asphalt, as well as other specialist construction products. Furthermore, it also offers contracting services for large infrastructure projects such as building roads.

So what’s happening with Breedon shares currently? Well, as I write, they’re trading for 59p, as a penny stock. At this time last year, the stock was trading for 110p, which is a 46% drop over a 12-month period.

Many shares have fallen in recent months due to macroeconomic headwinds as well as the tragic events in Ukraine.

The best shares to buy have risks too

The biggest threat to Breedon’s investment viability, especially in the shorter term, is that of macroeconomic factors. Soaring inflation, the rising cost of raw materials as well the supply chain crisis will have an impact on operations, as well as profitability. This could affect its balance sheet and growth plans as well as shareholder returns.

Competition in the construction industry is intense. There are many players all vying for the same customers and contracts to boost their coffers and grow. Breedon could be out-muscled and outmanoeuvred by competitors with more financial power and presence.

The bull case

The construction market is a growing one. In fact, it wasn’t majorly disrupted when the pandemic struck. Governments allowed construction businesses to continue as best they could, unlike many others, and continue building where it was safe to do so. As well as this, demand for housing is currently outstripping supply. A lot goes into building homes and lots of different types of aggregates that Breedon supplies are required. In the longer term, Breedon could see this surge in construction spending turn into performance growth and investor returns.

At current levels, Breedon shares look decent value for money on a price-to-earnings ratio of just 12. Furthermore, the shares would boost my passive income through dividend payments. The shares currently yield 2.8%. Most of my best shares to buy boost my passive income stream. It is worth remembering, however, that dividends can be cancelled at the discretion of the business at any time.

Breedon already has a good track record of performance, even in the pandemic period. It has recorded consistent revenue and profit in the past four years. I do understand that past performance is not a guarantee of the future.

Overall, I think Breedon could be a shrewd addition to my holdings, especially as the shares have fallen back in recent months. Large scale construction spending on infrastructure by the government as well as initiatives to boost the number of homes should benefit a business like Breedon. I would add the shares to my holdings and expect to see consistent and stable returns.

The post Here’s why this AIM-listed stock could be one of the best shares to buy! appeared first on The Twelfth Magpie.

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Jabran Khan has no position in any of the shares mentioned. 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.