The companies in this month’s shortlist are sorted and selected based on their growth, both past and estimated future, as well as their current dividend and earnings yields. They all have steady histories over the past decade and I’d go so far as to describe them as good companies at good prices.
|
Company
|
Index
|
Industry
|
Rolling PE
|
Dividend
(%)
|
|
ASTRAZENECA
|
FTSE100
|
PHARMACEUTICALS
|
7.2
|
5.4
|
|
JD SPORTS FASHION
|
FTSE250
|
APPAREL RETAILERS
|
7.7
|
2.7
|
|
CHEMRING GROUP
|
FTSE250
|
DEFENCE
|
11.6
|
2.7
|
|
BAE SYSTEMS
|
FTSE100
|
DEFENCE
|
7.6
|
5.8
|
|
CLARKSON
|
SMALLCAP
|
TRANSPORTATION SERVICES
|
10.2
|
4.0
|
|
RECKITT BENCKISER
|
FTSE100
|
NONDURABLE HOUSEHOLD PRODUCTS
|
14.4
|
3.5
|
|
BALFOUR BEATTY
|
FTSE250
|
HEAVY CONSTRUCTION
|
8.5
|
4.4
|
|
INTERSERVE
|
SMALLCAP
|
BUSINESS SUPPORT SERVICES
|
7.6
|
6.0
|
|
MITIE GROUP
|
FTSE250
|
BUSINESS SUPPORT SERVICES
|
10.9
|
3.8
|
|
CARILLION
|
FTSE250
|
BUSINESS SUPPORT SERVICES
|
9.0
|
4.4
|
Generally I start at the top of this list and if I find something that fits my criteria I’ll buy it, assuming I have any cash to deploy. Otherwise it’s still worth reviewing a company or two in greater depth just in case some cash magically appears (I wish!), since most of the leg work will have already been done.
I’m pretty sure that out of this list of companies there’s something that I’d be happy to put into my pension fund, in fact I already own four of them. I’m looking for something where I’d be happy to go to sleep for five years and trust that the investment has one hell of a good change of returning a fair profit in that time. Or in the words of a rather clever chap,
“Only buy something that you’d be perfectly happy to hold if the market shut down for ten years” – Warren Buffett
That might be a bit of a stretch for most people, but it should get you in the right mindset for picking great companies. Picking great companies is important because by buying any company’s shares you are putting your money at risk and just as importantly, you are tying your economic future to their economic future.
How you live when you retire is going to be affected in a massive way by the value of your pension fund. Pick the wrong companies and the consequences can be huge. Pick the right companies at the right prices and your retirement might look a whole lot different.
Clarkson has popped-up during my screening too. I've done some initial work on the business and hope to have something posted on CautiousBull in the near future. It looks highly cash generative, lowly-leveraged and to have a strong competitive position within its particular niche. I also think they have significant scope to increase the dividend, while there is a chance that it could be MBOed. I'd be very interested to hear your thoughts.
Hi Stephen. I did look at Clarkson a while back but chose the number 2 company, braemar, because it has a more diverse business with less volatile earnings. However, despite that Clarkson is the number 1 and has had better growth than Braemar and the dividend policy seems progressive and sensible.I don't see why Clarkson shouldn't be a reasonble investment, but that's just on a brief look. I'll probably do a full write up once I've got past AstraZeneca and BAE.