Top-quality stocks poised to benefit from long-term global growth
Three fund managers at Alliance Trust tell us what stocks they'd invest in.
Most economists and analysts were wrongfooted by macroeconomic developments in 2023, with many expecting a recession that didn’t materialise. This highlights the difficulty of basing an investment strategy on predictions of top-down factors such as GDP growth, interest rates or foreign exchange rates.
It is far better to focus on analysing the fortunes of individual companies. However volatile the macroeconomic environment, it should pay to look to the long-term fundamental strengths of businesses and build diversification into a portfolio through different ideas that pay off at different times.
Top air travel stock to buy
Andy Headley at Veritas highlights European giant Airbus (Paris: AIR), one of two key manufacturers of airframes, operating in a duopoly with US firm Boeing. Air travel remains robust and continues to grow, with an estimated 80% of the global population yet to set foot on a plane.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The company’s most important product is its short-haul, single-aisle plane – the A320 – which competes with Boeing’s version, the 737. This new generation of planes is flying off the shelves on account of 20% greater fuel efficiency when compared with older planes, as airlines seek to reduce their carbon emissions.
We believe Airbus’s products are currently superior to Boeing’s. The group’s plan to increase production capacity by 50% should pave the way for strong growth and share-price performance over the medium- to long-term.
Top equipment rental to watch out for
Meanwhile, Jonathan Mills at Metropolis examines Ashtead (LSE: AHT), a large industrial and construction-equipment rental company, operating in the US, Canada and the UK. It buys a wide variety of equipment such as cranes, diggers, floor cleaners and even film-studio equipment, renting it to businesses for industrial and commercial purposes.
For individual firms, rentals usually reduce costs as equipment tends to be fairly specialised and therefore infrequently used, and storage and maintenance is expensive. What’s more, if equipment can be shared and more efficiently used, it’s friendlier for the environment.
An important part of the business model is that Ashtead is able to use its scale to purchase equipment in bulk at attractive prices and, therefore, rent it out on good margins. Ashtead is one of two leading companies within this sector, and with around 13% market share, there is plenty of room for growth.
A revolution in diabetes management
Finally, Sunil Thakor at Sands Capital highlights the medical device company Dexcom (Nasdaq: DXCM). It is a high-quality growth business and a leader in the field of continuous glucose monitoring. Diabetes affects an estimated one in eleven people around the world and is a potentially deadly disease.
Dexcom is one of the leading manufacturers of continuous glucose monitoring (CGM) devices, which are attached to the skin and track glucose to an app on your phone on an ongoing basis. These devices are revolutionising the management of diabetes, leading to fewer complications, greater longevity and a higher quality of life. Within this oligopolistic market, Dexcom offers a particularly strong product and associated software, and distributes them effectively through strong marketing and sales. As a result, Dexcom boasts a steadily growing market share, and we believe the company has strong and improving financials.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Both Jonathan and co-Founder & Portfolio Manager Simon Denison-Smith met whilst working as Strategy Consultants for Bain & Company. Jonathan brought this same analytical mindset and proactive spirit with him to Metropolis – co-founding the firm with Simon, and co-managing its global equity strategy since its launch in 2008.
-
8 of the best properties for sale with smallholdings
Eight of the best properties for sale with smallholdings – from a 17th-century farmhouse in the Deben Valley, Suffolk, to a property set in 36 acres on the slopes of the Preseli Hills, Pembrokeshire
By Natasha Langan Published
-
US election – is the Trump Trade back?
The US election is around the corner. How does Trump influence US markets?
By Alex Rankine Published
-
James Halstead is a family firm going cheap but should you buy?
James Halstead will rebound from a weak patch, while tax changes would be a buying opportunity
By Jamie Ward Published
-
Should you invest in Canada?
Canada presents a compelling opportunity for investors who want to look beyond the US. Greg Eckel of Canadian General Investments highlights four favourites
By Greg Eckel Published
-
Overlooked European stocks that offer income and growth potential
Professional investor Alex Wright highlights three European stocks with recovery potential and value
By Alex Wright Published
-
8 dividend super aristocrats to look out for
Share Tips Consider these dividend super aristocrats that have increased their payout for up to 60 years in a row.
By Dr Mike Tubbs Published
-
Ocado shares jump by a fifth
Ocado takes a turn for the better after attractive profit forecasts were announced
By Dr Matthew Partridge Published
-
Three European stocks set for sustainable profit growth
Marcel Stötzel, co-portfolio manager of the Fidelity European Trust, selects three European stocks to invest in
By Marcel Stotzel Published
-
Three high-quality global companies for growth
James Harries, a senior fund manager at STS Global Income & Growth Trust highlights three favourites.
By James Harries Published
-
Four high-quality stocks set for decades of dividend and earnings growth
Charles Luke, an investment manager for Murray Income Trust, highlights four favourite high-quality stocks.
By Charles Luke Published