Advertisement

Three quality companies with compelling prospects

Owning quality companies, especially during periods of uncertainty and volatility, pays off over the long-term, says professional investor Michael Foster. Here, he picks three of his favourites.

Each week, a professional investor tells us where he'd put his money. This week: Michael Foster of the Ocean UK Equity fund highlights three favourites.

We seek out the highest-quality companies with the potential to deliver attractive returns. We look at aspects such as margin sustainability, culture, research and development (R&D) budget, vision and integrity of senior personnel, debt and critically attitude to debt.

Advertisement - Article continues below

We believe owning quality companies, especially during periods of heightened uncertainty and volatility, pays off over the long-term. As the famous American investor Peter Lynch pointed out, "more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves".

Halma: a finger in several tasty pies

Halma (LSE: HLMA)

Halma operates in sectors benefiting from structural growth, medical regulation and the urbanisation of the developing world. The company spent 11% of sales, £63m, on R&D and £29m on capital expenditure (principally driving automation through the business). It is worth noting that in the last 40 years Halma has only had three chief executives.

Diageo: pulling ahead of the competition

Diageo (LSE: DGE)

Diageo has also committed itself to various endeavours that make it all the more attractive. For instance, the "grain-to-glass" project, which emphasises the company's awareness of responsibility to consumers and overall sustainability, has resulted in a marked improvement in its carbon emissions and water efficiency.

LVMH: the leaders in luxury

LVMH (Paris: MC)

LVMH's broad range of products gives it a strong advantage over other leading brands. It manufactures and sells wines and spirits, fashion and leather goods, perfumes, cosmetics, watches and jewellery. Its operations are geographically diverse with a third of sales in each of Asia, the Americas and Europe.

Recently the group added to its product base with the purchase of Belmond, which offers hotels, safari camps, trains and cruises. Recent interim results saw sales grow by 15% and profits from recurring operations up 14%.

Advertisement
Advertisement

Recommended

Visit/investments/stocks-and-shares/share-tips/600641/share-tips-of-the-week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
17 Jan 2020
Visit/519913/share-tips-8-stocks-for-robust-returns
Share tips

Share tips: eight stocks that should deliver robust returns

Ryan Ermey of US publication Kiplinger’s Personal Finance chooses his favourite stocks for the next decade, which should be able to grow for years.
28 Dec 2019
Visit/519724/share-tips-of-the-week-166
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
20 Dec 2019
Visit/519436/share-tips-of-the-week-165
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
13 Dec 2019

Most Popular

Visit/economy/eu-economy/601422/heres-why-investors-should-care-about-the-eus-plan-to-tackle-covid-19
EU Economy

Here’s why investors should care about the EU’s plan to tackle Covid-19

The EU's €750bn rescue package makes a break-up of the eurozone much less likely. John Stepek explains why the scheme is such a big deal, and what it …
28 May 2020
Visit/investments/commodities/industrial-metals/601401/money-printing-infrastructure-base-metals-copper
Industrial metals

Governments’ money-printing mania bodes well for base metals

Money is being printed like there is no tomorrow. Much of it will be used to pay for infrastructure projects – and that will be good for metals, says …
27 May 2020
Visit/investments/stockmarkets/601423/as-full-lockdown-ends-what-are-the-risks-for-investors
Stockmarkets

As full lockdown ends, what are the risks for investors?

In the UK and elsewhere, people are gradually being let off the leash as the lockdown begins to end. John Stepek looks at what risks remain for invest…
29 May 2020