The Global Smaller Companies Trust seeks to offer investors exposure to small businesses both in the developed markets and faster-growing emerging markets. The trust takes a long-term, conservative approach to investing in good-quality, growing businesses when they become available at a significant discount to intrinsic value.
This disciplined investment process focuses on capital preservation and long-term value creation rather than chasing short-term market trends. We have found exciting opportunities in companies likely to benefit from increased spending on construction, both in the public and private sectors.
Three small companies to invest in
Martin Marietta Materials (NYSE: MLM) is a US-based producer of construction materials, such as aggregates, cement and ready-mix concrete. As the business sells products that have a low cost-to-weight ratio, it effectively operates a series of local monopolies. Materials from the company’s quarries are rarely transported more than 50 miles owing to high transportation costs. The business has a history of raising prices for customers, even in difficult times.
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 infrastructure division is likely to see significant demand from the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) that was passed in 2021. Spending on manufacturing and data-centre facilities and a recovery in construction of single-family homes are also longer-term drivers of organic revenue and profit growth for Martin Marietta. The company benefits from a strong balance sheet and prudent capital allocation, which provides resilience in more challenging market conditions.
Breedon Group (LSE: BREE) in the UK is a similar business. It has exposure to Britain and Ireland and recently entered the US through an acquisition. Construction activity in the UK and Ireland has not yet recovered to levels last seen in the early 2000s, and therein lies the opportunity. From a supply perspective, permitting for new assets is very challenging and this keeps industry capacity tight, reinforcing the company’s ability to raise prices.
Management has a history of creating shareholder value from acquisitions, through implementing the industry’s best practices at the operations of acquired businesses. The company is likely to make further purchases of smaller competitors. There is ample scope for further purchases, especially in the US. Share ownership by insiders is high, aligning management with shareholders.
Canada’s WSP Global (Toronto: WSP) offers engineering services in the areas of transportation, infrastructure, environment, property and power. The company has grown its market share organically by offering a full suite of services to its customers, making it a “one-stop shop”.
WSP’s global footprint and strong relationships with clients also help it to secure repeat business and large-scale contracts, adding to the predictability of its revenue streams. The business has natural drivers behind it in the form of an aged infrastructure base that needs updating, urbanisation, climate change and water scarcity. It supplements this growth through opportunistic acquisitions that bring additional capabilities to the business.
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.
-
MoneyWeek news quiz: Which G7 nation has the most generous state pension?The chancellor “set the context” for the Budget on 26 November this week, and November's Premium Bonds winners were confirmed. The state pension also made headlines. How closely have you been following the news?
-
Have a will? It may not be enough to secure your wishes – here’s what you need tooIncorporating a letter of wishes into your estate planning can provide a unique opportunity to personally guide your loved ones on your final wishes for them and you. We explain how a letter of wishes works.
-
The Stella Show is still on the road – can Stella Li keep it that way?Stella Li is the globe-trotting ambassador for Chinese electric-car company BYD, which has grown into a world leader. Can she keep the motor running?
-
Global investors have overlooked these solid stocks going for growthOpinion Nisha Thakrar, investment specialist at Nedgroup Investments, selects three undervalued stocks with long-term growth potential
-
LVMH is set to prosper as the wealthy start shopping againAfter two years of uncertainty, the outlook for LVMH is starting to improve. Is now a good time to add the luxury-goods purveyor to your portfolio?
-
Japan is still rising to new highs – here's how to investOpinion Political ructions in Japan are no obstacle to gains, and the return of inflation may even benefit stocks, says Max King. What is Japan doing right?
-
Investors need to get ready for an age of uncertainty and upheavalTectonic geopolitical and economic shifts are underway. Investors need to consider a range of tools when positioning portfolios to accommodate these changes
-
Investing in UK universities: how to spin research into profitsUK universities are a vital economic asset, but they are also Britain's 'equivalent of Gulf oil.' There are opportunities here for investors
-
AI is a bet we’re forced to makeIt’s impossible to say yet if AI will revolutionise the world, but failure would clearly be very costly, says Cris Sholto Heaton
-
The MoneyWeek Wealth Summit 2025: how to invest for a volatile eraMoneyWeek's 25th birthday conference’s agenda offers investors a wide array of compelling themes
