Do you dream of being able to get wealthy from your investments? I know I do and so I have picked out three companies in the FTSE 350 that I believe investors can tuck away in their portfolios then sit back and make money.
Money in data Is data really the new oil? Experian (LSE: EXPN) will certainly be hoping so as the credit and analytics company increasingly makes money from the mountains of data it holds. Although primarily still a credit data company, increasingly it is turning its data mining expertise to marketing and analytics as well.
Previous problems in Brazil seem to have improved recently. And another challenge, that of free credit-checking rivals, is not new for the company and is why we are seeing the company innovate and move into new markets. Its future-proofing efforts mean Experian looks set to continue rewarding investors, although expectations are high leaving the shares with a P/E of around 29 and driving dividend yield to a quite low 1.5%. Nonetheless, the share price is on a strong upward trajectory as the business continues to do well. In the year to date the shares have leapt around 19%, so if that continues, an investment now could pay off in the long term, even with that low yield.
Cooking a treat FTSE 100 contract catering company Compass Group (LSE: LON:CPG) is in a league of its own. Although not a high-margin business, the company is a leader in its industry with full-year revenues of over £23bn. This truly global company benefits from generating a very high return on its capital, it achieves about 20%, because it uses client facilities to provide catering services. Low spending needs help create healthy cash flows, that in turn have helped the group grow its ordinary dividend every year for over a decade.
This is great for investors and I believe it is not too late to jump on the bandwagon, even if the shares do now trade on a P/E of over 22 (that shows just how much investors like the shares). Past performance, although admittedly not usually a good indicator for the future, shows why investors have confidence in the company. Over the past five years, the share price has jumped by 69%.
The smallest of the three Self-storage company Safestore Holdings (LSE: SAFE) is another company I think makes a good investment for those seeking steady returns from their investment portfolios. It is growing and in Q1 2019, revenue rose as much as 6% to £37.2m year-on-year. It is adding more self-storage sites both in the UK and France too. Growth has been consistently good and previous quarters saw even larger jumps versus the same period a year earlier, indicating sustained growth.
Alongside these results, the company indicated that it would be willing to invest in further growth and ca do so because the balance sheet is in great shape. This could add investor value in the future if acquisitions or adding new sites boost growth.
The storage company’s share price also has a P/E higher than most at over 25. This is admittedly fairly high, but again, the prospects for growth mean it is a price worth paying in my opinion and it is the long-term potential for the share price to rise that I think is worth paying a premium for.
Andy Ross has no position in any of the shares mentioned. The Motley Fool UK has recommended Compass Group and Experian. 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.
Motley Fool UK 2019