Top UK fund manager Nick Train admires companies that take a long-term perspective when investing in their own business. Here are three FTSE 100 stocks he says are feeling sufficiently robust to add acquisitions to their business, despite the pandemic. The stock market crash gives you an opportunity to buy them at a discounted price.

In the right spirit

Train admires the move by spirits giant Diageo (LSE: DGE) to buy Aviation American Gin, part-owned and endorsed by celebrity Ryan Reynolds, for a potential $610m. He sees the purchase as a reassuring sign the group’s balance sheet and liquidity are in good shape, despite the stock market crash.

He says the US gin brand has seen “exponential growth” and Diageo is paying 20 times sales to take the brand to another level. It echoes Diageo’s successful $1bn acquisition of George Clooney-sponsored super-premium tequila brand Casamigos in 2017. Train said that deal “looks smarter and smarter as the US spirits boom continues, with premium brands leading the way.”

The Diageo share price is still trading 20% lower than before the stock market crash. I’m a long-term fan who’d buy today.

Scientific, technical and medical publisher and exhibitions company RELX (LSE: RELX) is another Train favourite that’s been on the acquisition trail. In August, it snapped up Cambridge-based privately held company pharmaceutical software company SciBite, for a rumoured £65m.

RELX has now spent around £800m in 2020, and Train speculates its purchases could one day be worth billions. The stock market crash has also punished the RELX share price, which is down 20% from its January peaks, giving a buying opportunity.

Another stock market crash buy

Finally, Train applauds luxury fashion house Burberry Group (LSE: BRBY) for pushing ahead with its new joint venture store in Shenzhen with Chinese tech giant Tencent. This aims to be a radical new interactive shopping experience for the digital age.

He admires the stock for having strong “brand resonance” in the East, where retail and luxury innovation is now outpacing the West.

The Burberry share price is down to around 30% this year. Train compares this slump to a similar stock in his portfolio, Prada, whose share price has largely shrugged off the stock market crash. Brexit may be one factor. “Apparently global investors have an aversion to the UK stock market, but this is, in some cases, getting ridiculous,” he says.

You can find cheaper shares but these still look like bargains. Burberry trades at just under 20 times earnings, but that’s cheap by its standards. Diageo and RELX are yours for around 22 times earnings, cheap by theirs.

If want to buy FTSE 100 companies looking beyond this year’s stock market crash and pandemic turmoil, Diageo, RELX and Burberry could be a great place to start. 

The post Stock market crash bargains! I’d follow Nick Train and buy these 3 FTSE 100 stocks appeared first on The Twelfth Magpie.

More reading

• Newsflash: the Diageo share price just climbed!
• Which British dividend shares could supercharge a passive income portfolio in 2026?
• Has the turnaround finally started for Diageo shares?
• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry, Diageo, and RELX. 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.

Right now, there are a number of top-notch FTSE 100 blue-chips trading at what I think are attractive discounts. RELX (LSE: REL), at 1,858p, is 8% below its high of 2,011p, while Unilever (LSE: ULVR), at 4,517p, is down 15% from a high of 5,324p. I’d be happy to buy a slice of both these businesses at their current discounts.

Valuable resources

RELX is an information and analytics group, with four divisions: scientific, technical, and medical (34% of revenue), risk and business analytics (28%), legal (23%), and exhibitions (16%). Its huge databases, and sophisticated analytical and decision-making tools have become indispensable for many industries and professions.

To take just one example, its flagship LexisNexis legal product, enables lawyers to access a database of news, case law and precedents, containing 109bn documents and records going back to the 18th century. Such valuable resources would be difficult to replicate by a new entrant to the market, and give RELX what Warren Buffett calls an economic moat. This represents a sustainable competitive advantage, leading to above-average rates of profitability over the long term.

RELX’s operating profit margin, which has averaged 25% over the last five years, and return on capital employed (ROCE), which has averaged 21%, testify to its economic moat. Meanwhile, shareholders have enjoyed an annualised total return (capital gains plus dividends) of 14% over the period, compared with less than 6% for the FTSE 100.

Attractive valuation

In a Q3 trading update last month, RELX reaffirmed its full-year outlook. City analysts expect the company to deliver a 9% increase in earnings per share (EPS) to 92.3p from last year’s 84.7p. This gives a price-to-earnings (P/E) ratio of 20.1. A predicted 9% increase in the dividend to 45.7p from 42.1p gives a 2.5% yield.

I think the valuation is attractive for a business I expect to continue delivering above-average rates of profitability. As such, I also expect it to continue delivering above-average shareholder returns.

Profits powerhouse

Anglo-Dutch consumer goods giant Unilever needs little introduction. On any day, 2.5bn people around the world use its products. Mentioning Dove, Hellmann’s and Domestos barely scratches the surface of the array of valuable brands it owns in beauty and personal care (42% of revenue), food and refreshment (38%), and home care (20%).

The competitive advantages provided by the group’s sheer size, and the strength and depth of its stable of brands, are reflected in its operating profit margin, which has averaged 17% over the last five years, and ROCE, which has averaged 26%. I’m confident Unilever will be a profits powerhouse for decades to come.

Excellent opportunity

There was no change to management’s full-year guidance in the company’s Q3 trading update last month. City analysts expect an 8% increase in EPS to €2.55 from last year’s €2.36, and a dividend increase of the same percentage to €1.68 from €1.55. At the current share price, and at current exchange rates, the P/E is 20.7 and the dividend yield is 3.2%.

Again, I see this as an attractive valuation for one of the FTSE 100’s premier blue-chip businesses, and an excellent buy-on-the-dip opportunity for investors.

The post 2 FTSE 100 dividend stocks I’d buy and hold forever appeared first on The Twelfth Magpie.

More reading

• 3,566 shares in this FTSE 100 stalwart earns a £1,443 second income
• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?
• FTSE 100 volatility: is the market ignoring a bigger shift beneath the headlines?
• Down 36%, is this FTSE 100 growth stock still a long-term compounder?

G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended RELX. 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.

These two FTSE 100 companies have outperformed the index lately, roughly doubling your money over the past five years. The strange thing is, you may not have heard of either of them, even though they are the 15th and 17th biggest companies in the UK, by market capitalisation. Here’s why you might consider buying them inside a Stocks and Shares ISA today.

RELX

I worry that many private investors overlook business-to-business operations like RELX (LSE: REL), because the name is so unfamiliar. Yet this is a massive operation, with a market close to £36bn, making it bigger than National Grid, Barclays, Tesco and many other better-known names.

Formerly Reed Elsevier, it is a global provider of information-based analytics and decision tools for professional customers, that does everything from help scientists make new discoveries to preventing online fraud and money-laundering.

The share price has been on a tear lately, rising 83% over five years, and 20% over the last 12 months. Its latest update reported steady 4% growth in underlying revenue, while it has completed £550m of a planned £600m share buyback.

The forecast yield of 2.5% is lower than the FTSE 100 average of 4.5%, but management has been highly progressive, raising its payout by 75% over the last five years. RELX stock is relatively expensive, trading at 20 times forecast earnings, but with those earnings forecast to grow 28% this year and 8% next, the momentum could continue.

Compass Group

Here’s another behind-the-scenes behemoth that is surprisingly large, with a market cap of nearly £32bn. Compass Group (LSE: CPG) specialises in food, hospitality and support services and it’s a massive operation, employing 550,000 people across 50 different countries.

It’s also a runaway success, investment wise, with the share price up a whopping 106% over five years, against less than 10% for the index as a whole, and 33% in the last 12 months. That’s fine if you like hot momentum stocks, not so good if you like bargains, with the Compass Group share price now trading at 24 times forward earnings.

On the plus, those earnings are expected to rise 9% this year and 8% next, driven by a particularly strong performance in North America. Management continues to generate growth through acquisitions, and this stock could give you some protection against tougher economic times.

Again, the dividend is relatively low, with a forecast 2% yield, covered 2.1 times, but the pace of growth is rather more impressive. In 2015, the dividend stood at 29.4p. By 2020, analysts are predicting 43.69p, a rise of almost 50% over six years.

You can find far cheaper stocks on the FTSE 100, and stocks with more dazzling dividends, but few more consistent performers. So again, it may be worth paying a premium price. I’d pick them over any Cash ISA I can see right now.

The post Forget the Cash ISA! I’d buy these 2 unsung heroes that have been smashing the FTSE 100 appeared first on The Twelfth Magpie.

More reading

• 1 FTSE 100 name for growth investors while everyone else is looking at AI stocks
• How could ‘Prime Minister’ Andy Burnham boost these FTSE 100 and FTSE 250 shares?
• This ‘boring’ FTSE 100 stock’s forecast to grow 3x faster than Rolls-Royce shares!
• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays, Compass Group, RELX, and Tesco. 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.

If you’d been holding the shares, that increase in your income from the firm would have been nice enough. But, on top of that, the share price has lifted by almost 100% over the period, so your original capital investment would have doubled in value too.

Quality and consistency

The financial quality indicators wouldn’t keep me awake at night either. The company’s return-on-invested-capital figure runs at close to 13.2% and the operating margin at just above 26%. When I look at Relx, I reckon I’m seeing a quality enterprise flourishing within its niche in the market.

And I find today’s full-year report encouraging. Underlying revenue rose 4% compared to a year ago and adjusted earnings per share at constant currency rates moved 6% higher. The directors expressed their confidence in the outlook by pushing up the full-year dividend by 7%, which continues that long record of dividend-raising.

The firm abandoned its complicated Anglo-Dutch dual-listed structure during 2018 and now operates with a single parent company listed in London, Amsterdam and New York. I think simplification in business is almost always a good thing, and the firm’s chairman, Sir Anthony Habgood, said in the report the move increases transparency for shareholders.

Organic and acquisitive growth

The firm had a busy year for acquisitions and added nine businesses to its operations in the areas of content, data analytics and exhibition assets for an investment of £978m. But it also disposed of eight assets raising £45m. Such nipping and tucking strikes me as a good thing because it demonstrates the directors are aiming to keep the firm’s operations focused on the best and most profitable areas of the market.

Chief executive Erik Engstrom pointed out in the narrative that despite the acquisition programme, the “number one strategic priority” is to organically develop “increasingly sophisticated” information-based analytics and decision tools that deliver enhanced value to customers. I reckon that strategy keeps the firm ahead of developments in the market and keeps those steady and increasing cash flows rolling in.

Looking forward, the directors are confident the company will achieve growth in underlying revenue, adjusted operating profit and adjusted earnings per share during 2019. More of what we’ve become used to, then.

Meanwhile, at the recent share price around 1,731p, the forward-looking price-to-earnings ratio runs at 19 for 2019 and the anticipated dividend yield is just over 2.6%. City analysts following the firm expect earnings to cover the payment twice. I think the valuation looks fair, but the share-price chart shows a period of consolidation. I also think it’s as good a time now as ever for me to hop aboard by buying some of the shares.

The post Why I’d buy shares in this consistent FTSE 100 dividend grower today appeared first on The Twelfth Magpie.

More reading

• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?
• FTSE 100 volatility: is the market ignoring a bigger shift beneath the headlines?
• Down 36%, is this FTSE 100 growth stock still a long-term compounder?
• Could these 2 dividend stocks help investors build a £1,000-a-month second income?

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended RELX. 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.

Great opportunity

On the surface, the headline numbers in today’s half-year results from Fullers weren’t impressive. Revenue increased 6%, but adjusted pre-tax profit and earnings per share were both down 1%. The National Living Wage and business rates had an adverse impact (a sector-wide issue) but it also took a conscious decision to front-load its investment programme to ensure its estate is in “the best possible position to benefit from the busy Christmas period and beyond.”

This is typical of how it always looks to the longer term, just as it continued to invest during the last recession and later reaped the rewards. The company has faced far greater challenges than Brexit in its 173-year history and I believe the current depressed share price of 912p represents a great opportunity to buy a stake in the business. The forward 12-month price-to-earnings (P/E) ratio of 13.8 is cheap by historical standards, while the dividend, which has been increased every year since the 1950s, yields 2.3%.

Quality global enterprises

While Fullers is a brilliant UK-focused business, Relx and Diageo are top-quality global enterprises. Relx provides information and analytics to customers in attractive growth fields, including scientific, medical and legal. Diageo owns powerful consumer drinks brands, including Johnnie Walker whisky, Gordon’s gin and Guinness stout.

The fundamental quality of Relx’s and Diageo’s businesses are manifested in growing revenues, high profit margins and high returns on shareholders’ equity. I believe both companies are more than capable of continuing to deliver terrific results for investors in the decades to come.

Buy the dips

Having dipped below 1,500p during the October market sell-off, Relx’s shares are currently trading at 1,620p. Similarly, Diageo’s shares dropped to near 2,500p but are now up to 2,800p. Buying on the dips during market turbulence is a good strategy with high-quality businesses like these, and Relx was highlighted near its lows by my Foolish colleague Kevin Godbold. Has the opportunity now passed? Or, with both stocks still below previous highs, are their valuations still attractive?

Relx is on a forward 12-month P/E of 18, with a prospective dividend yield of 2.7%. When I last wrote about the company (last year), the share price was a little lower than today (but so were earnings forecasts) and the P/E was 19. Due to the quality of the business, I viewed the stock as very buyable on that rating. As the P/E is now 18, I maintain the same view today.

Diageo’s forward 12-month P/E is 21.7 and its prospective dividend yield is 2.5%. This is very similar to figures of 21.9 and 2.5% when I last wrote about the company (during the summer). I rated the stock a ‘hold’ at that time, but suggested a dip in the share price (then 2,750p) would be a good buying opportunity. The dip having come and gone, I’m back to rating this higher-premium stock a ‘hold’ for the time being.

The post 3 quality stocks I’d buy and hold for decades appeared first on The Twelfth Magpie.

More reading

• Newsflash: the Diageo share price just climbed!
• Which British dividend shares could supercharge a passive income portfolio in 2026?
• Has the turnaround finally started for Diageo shares?
• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and RELX. 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.

There’s a plethora of undervalued stocks in the FTSE 100 alone as of today, a theme which I have studied in no little detail since October’s sell-off kicked in. A couple of sinkers that I haven’t discussed recently are Smith & Nephew (LSE: SN) and RELX (LSE: REL), however, and I’d like to take the opportunity to explain why I feel dip buyers need to pay them close attention right now.

Medical marvel

Artificial limb and joint manufacturer Smith & Nephew has been host to some significant share price volatility over the past year because of challenging trading conditions in the US. The Footsie firm has steadied in recent sessions following the more recent sell-off but it still remains around 8% lower than levels seen at the start of October.

This leaves the medical mammoth changing hands on a forward P/E ratio of 18.1 times, a big discount to its historical earnings multiples. And this represents a great opportunity for investors to grab a slice of the action, even though I’m not expecting a blowout set of numbers when third-quarter figures are released tomorrow (Thursday, November 1).

You see, while the revenues slowdown in its established territories is causing City analysts to predict a 3% earnings slide in 2018, like the number crunchers, I believe it has the tools to bounce back from next year and deliver solid profits growth.

Europe’s largest medical device maker may be struggling in developed markets right now, but the rate at which sales are growing in emerging markets (by double-digit-percentages in China during the first half of 2018, for example) signals a bright future for Smith & Nephew and its top line.

Make no mistake: global healthcare investment is still on course to boom thanks to the pounding wealth growth being printed in developing regions. And through its best-in-class products like the POLAR3 hip replacement product, I think Smith & Nephew is in great shape to ride this trend.

Another underbought beauty

RELX is another share that took a smack in October, although the 5% drop it has endured this month makes it one of the FTSE 100’s lesser-hit companies.

I can’t help but think that the market is still failing to give the information and analytics specialist the credit that it deserves, however, and particularly following its bright financial update of last week. It advised that underlying revenues had risen 4% in the first nine months of 2018.

RELX’s key markets remain strong and the business is engaged on an ambitious M&A drive to keep profits on an upward slant, clocking up another seven acquisitions at a total cost of £943m in the year to September.

City brokers are predicting earnings growth of 4% in 2018 alone, and this results in a forward P/E ratio of 18.4 times. Not exactly cheap on paper, but in my opinion, this reading makes RELX a snip when you consider its robust position in numerous sectors like science and law, not to mention its wide and ever-growing geographical base.

The post Down but not out! 2 unloved FTSE 100 stocks I reckon could help you to retire early appeared first on The Twelfth Magpie.

More reading

• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?
• FTSE 100 volatility: is the market ignoring a bigger shift beneath the headlines?
• Down 36%, is this FTSE 100 growth stock still a long-term compounder?
• Could these 2 dividend stocks help investors build a £1,000-a-month second income?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended RELX. 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.

These are testing times for investors but when the market corrects like this, some of the best buying opportunities arise. So it’s important to hold your nerve, suppress the natural emotional reactions we all feel when we’re losing money, and scan the market for buying opportunities.

If you’re a buyer of shares now to hold for the long term, cheaper prices are a good thing, because you’ll get more for your money. And one interesting company is the FTSE 100’s Relx (LSE: REL), the publisher and information provider with activities in the medical, legal and business sectors. 

A quality enterprise

I like Relx because its quality indicators are impressive. The return-on-capital figure runs close to 23%, and the operating margin is more than 26%. The company has a decent track record of growing its revenue, earnings, operating cash flow and the dividend. Meanwhile, the share price is down around 13% since the end of August but has shown resilience over the past two weeks, even to the point where it has drifted up while the FTSE 100 index has been falling.

The market capitalisation is near £30bn and the firm has grown by providing information and analytics for professional and business customers in more than 180 countries. It’s a big enterprise, and today’s nine-month trading update reveals some encouraging figures. Overall underlying revenue grew 4% in the period, with all of the firm’s divisions posting a positive single-digit contribution to the total.

During the period, the company acquired seven assets for a total price of £943m, and made four disposals, raising £28m. It also purchased £650m worth of its own shares and expects to spend another £50m before the end of the year to complete a previously announced £700m buyback programme.

Such initiatives will likely help support the share price if the market continues to be weak. As long as trading holds up, it would probably be a good time for the company to consider more buy-backs if the share price drops any further. The firm also completed its restructuring to become a single-listed company rather than the complicated Anglo/Dutch dual listing it had previously. I think the simplification of anything is almost always a good thing.

Positive outlook

Looking forward, the directors are confident the firm will achieve constant currency growth in underlying revenue, adjusted operating profit, and adjusted earnings per share for the whole year. So, despite the weakness in the stock market, it looks like business as usual at Relx.

Meanwhile, today’s share price — close to 1,526p — values the firm at just below 17 times forecast earnings for 2019, and the forward dividend yield sits at 2.9%. City analysts following the firm expect mid-single-digit percentage advances in earnings this year and next, which look set to cover the dividend payment more than twice. I think the shares of this quality enterprise look attractive right now.

The post Why I’d buy this FTSE 100 dividend growth stock in this market weakness appeared first on The Twelfth Magpie.

More reading

• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?
• FTSE 100 volatility: is the market ignoring a bigger shift beneath the headlines?
• Down 36%, is this FTSE 100 growth stock still a long-term compounder?
• Could these 2 dividend stocks help investors build a £1,000-a-month second income?

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended RELX. 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.

If mastering the art of investing boiled down to just crunching the numbers, I think picking up a few shares in speciality pharmaceuticals company Indivior (LSE: INDV) would be a ‘no-brainer’, to use the vernacular.

Indeed, the firm has a strong showing on quality and value metrics, and today’s full-year results update demonstrated further progress, with revenue 3% higher than a year ago and adjusted earnings per share at constant currency rates rising 5%. There’s a healthy net cash pile on the balance sheet of around $376m, up from $131m at the end of 2016, which is further evidence of the firm’s good trading. Chief executive Shaun Thaxter was optimistic about the outlook, saying in the report: “We face the future with enthusiasm and we are guiding to another year of top- and bottom-line growth in 2018.”

Be aware of the risks

However, investing in Indivior isn’t the ‘no-brainer’ that the quantitative information may suggest. There are significant risks that could end up blowing the business model out of the water, and a glance at the company’s risk statement is a sobering experience. The chief risk revolves around the fact that Indivior earns most of its income from one group of products for the treatment of opioid use disorder, branded with names such as Suboxone, and Sublocade in its various forms.

The firm has been trading well in the US where demand for addiction treatments is strong. But generic competition constantly threatens the enterprise, and there’s a depressingly long list of investigative and anti-trust litigation proceedings being undertaken against the company and by Indivior against competitors. The directors have raised the provision for investigative and antitrust litigation matters to $438m – ouch!

Diversification on the way

Yet there’s progress with product diversification. A product for the treatment of schizophrenia is set to launch at the end of 2018, and treatments for alcohol and stimulant use disorders are in the early stages of development. The stock dropped around 9% this morning, and while being aware of the risks, I’d be tempted to invest.

Meanwhile, global information and analytics provider Relx (LSE: REL) strikes me as a more-straightforward investment proposition and today’s full-year figures show continuing trading progress. Underlying revenue grew 4% during 2017 compared to the year before and constant currency adjusted earnings per share lifted 7%. The directors set the full-year dividend 10% higher, to top off what has been a great run for investors.

At today’s share price close to 1,441p, the stock has risen just over 100% over the past five years and the dividend is up more than 60% over that time. That’s a satisfactory investment outcome to me, but the stock seems to be falling now. I think this is a case of the stock being a victim of its own success. Although the outlook remains positive for the underlying business, I think momentum has carried the price a little too high and the valuation is correcting. I’d wait for the fall to base-out — which could be imminent — and then research the firm with a view to buying some of the shares because the enterprise looks like it has more growth left to run.

The post 2 stocks I’d invest £1,000 in right now appeared first on The Twelfth Magpie.

More reading

• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?
• FTSE 100 volatility: is the market ignoring a bigger shift beneath the headlines?
• Down 36%, is this FTSE 100 growth stock still a long-term compounder?
• Could these 2 dividend stocks help investors build a £1,000-a-month second income?

Kevin Godbold 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.

Multi-millionaires

You’ll be surprised how many investors have retired as multi-millionaires despite starting out with very limited funds. There are so many examples of London-listed companies whose share prices have multiplied by hundreds and sometimes even thousands of percentage points over the last few years, making the idea of achieving financial independence via the stock market more realistic than you might think.

Granted, many of these highly successful growth stocks started out as more speculative small-caps, and those types of investments are perhaps understandably not everyone’s cup of tea. Many of you may be new to investing or simply risk-averse, in which case it’s probably best to put your first £1,000 of investing capital to work in rock-solid blue-chips that have a track record of delivering stable returns with comparatively low levels of risk.

Life-changing returns

That’s not to say that our FTSE 100-listed companies can’t deliver life-changing returns for their investors, indeed far from it. Packaging giant DS Smith (LSE: SMDS) for example has provided a return of no less than 1,300% for its shareholders since 2009, and that’s without even including dividends.

The £5bn business is now a leading provider of corrugated packaging in Europe, and a specialist in plastic packaging worldwide. In order to support its corrugated packaging operations, the group also includes a recycling business that collects used paper and corrugated cardboard, from which its paper manufacturing facilities make the recycled paper used in corrugated packaging. And recycling is a business that’s likely to grow in the future.

Explosion in online shopping

The London-based group boasts an excellent track record of sales and earnings growth, and with the explosion in online shopping helping to further increase demand for cardboard packaging, I think the only way is up for this boring-yet-reliable international business.

DS Smith trades on a forecast price/earnings ratio of 14 for the year to April, and offers a progressive dividend, which at today’s prices yields a very respectable 3.5%.

Digitally-focused

Another spectacularly boring FTSE 100 business that’s delivered significant shareholder returns in recent years is Relx (LSE: REL). The Anglo-Dutch group formerly known as Reed Elsevier is a global provider of information and analytics for professional and business customers across a wide range of industries.

After undergoing a huge restructuring programme the group has largely moved away from its legacy of trade journals to becoming a more digitally-focused provider of professional information services. This is likely to bode well for the future with the increasing demand for data and analytical tools helping to offset the global decline in print media.

Relx’s share price has pulled back sharply from the record highs of 1,782p achieved in November last year, and this should provide new investors with a reasonable entry point at a not-too-demanding forward earnings multiple of 17.

The post 2 FTSE 100 stocks I’d buy with £1,000 today appeared first on The Twelfth Magpie.

More reading

• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?
• FTSE 100 volatility: is the market ignoring a bigger shift beneath the headlines?
• Down 36%, is this FTSE 100 growth stock still a long-term compounder?
• Could these 2 dividend stocks help investors build a £1,000-a-month second income?

Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended DS Smith. 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.

Nick Train is often referred to as ‘Britain’s Warren Buffett.’ The portfolio manager employs a very similar investment management approach to Buffett, investing in a small number of companies that have strong competitive advantages, substantial cash flows, high profit margins and excellent returns on equity.

Today, I’m profiling two of Train’s top holdings and looking at why the portfolio manager rates these stocks so highly.

Hargreaves Lansdown

Train has stated in the past that he likes financial services companies that will benefit from rising share prices over time. One such company that he’s clearly bullish about is Hargreaves Lansdown (LSE: HL). At the end of December, it was the fourth largest holding in his UK equity fund, with a weighting of 8.5%.

I can see why the fund manager likes the stock. Hargreaves Lansdown is a leader in its field, with a high market share and a strong client retention rate. The company generates strong cash flows, and has a high operating margin (68%) and an excellent return on equity (76%). In short, this has Buffett written all over it.

Hargreaves released interim figures this morning, and the numbers look excellent. Underlying net new business during the period was £3.34bn, taking assets under administration to £86.1bn, up 9% since 30 June. Profit before tax for the period rose 12% and the company hiked its interim dividend by 17%.

So are the shares worth buying right now?

Personally, at the current valuation, I believe Hargreaves Lansdown shares look a little expensive. For FY2018, analysts expect full-year earnings of 50.1p per share, which at the current price, places the stock on a forward P/E ratio of 36.3. On that kind of ratio, I’m just not seeing much value on offer.

Hargreaves Lansdown is definitely a stock I would like to add to my portfolio at some stage, however for now, it will remain on my watchlist.

Relx

Another FTSE 100 stock that Train is bullish about is Relx (LSE: RELX). It’s currently the largest position in his UK portfolio, with a 9.8% weighting. Formerly known as Reed Elsevier, the company publishes a large number of academic journals and provides a range of information-based analytics tools. It has worked hard in recent years to make the transition from traditional print publishing towards online subscriber-based information and data services, with digital revenues now accounting for around 75% of revenues.

Like Hargreaves Lansdown, the stock has ‘Buffett-esque’ attributes, such as strong cashflows, a decent operating margin (25%) and an excellent return on equity (67%). The company also appears to have solid growth momentum at present, with revenues and net profit forecast to rise 9% and 25% respectively for FY2017.

Since late November, the shares have taken a bit of a tumble, falling from around 1,800p to under 1,500p today. At the current price, the forward P/E is 17.2 and the prospective yield is 2.9%. At those metrics, the stock could be worth a closer look.

The post Why Hargreaves Lansdown plc is a favourite of Britain’s Warren Buffett appeared first on The Twelfth Magpie.

More reading

• The top 3 FTSE shares for beginner investors to consider buying in 2026
• Could a second income become more important than a pay rise?
• FTSE 100 volatility: is the market ignoring a bigger shift beneath the headlines?
• Down 36%, is this FTSE 100 growth stock still a long-term compounder?
• Could these 2 dividend stocks help investors build a £1,000-a-month second income?

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.