Every day we face choices. And in the world of long-term investing, the decisions we make now can have a profound effect on how financially comfortable our lifestyles may be in retirement. So which are the best UK shares to buy now?
One way of getting inspiration is to examine the moves of other well-known and successful long-term investors. I wouldn’t buy shares just because they have bought them. But watching others can lead to decent jumping-off points for your own research and analysis.
This may be one of the best UK shares to buy now For example, Nick Train has comfortably out-performed the market over the past two decades or so. He co-founded Lindsell Train in 2000 with Michael Lindsell, and is managing director and an equity fund manager.
But for around nine years, he didn’t find a UK-listed investment to buy. However, that all changed near the end of 2019 when he bought a 1.6% stake in the FTSE 250’s PZ Cussons (LSE: LON:PZC). The company deals in fast-moving consumer goods (FMCG) and owns well-known brands such as Original Source and Imperial Leather.
It’s no secret that until recently, the PZ Cussons’ share price has been sinking. Revenue, earnings and cash flow have been trending broadly down for at least five years and the shareholder dividend has gone essentially nowhere. The firm had been struggling with poorly performing operations in Africa.
But I reckon the relentless decline in the share price over the past six years has taken into account poor profitability in the Nigerian operations. With the stock near 186p today, the forward-looking earnings multiple for the trading year to May 2021 is just below 16. And the anticipated dividend yield is about 4.5%.
Turnaround and growth potential Meanwhile, Cussons has options. For example, it can sell underperforming parts of the business such as the recent disposal of Nutricima in Nigeria. And I reckon new chief executive Jonathan Myers will do everything he can to stem Cussons’ losing streak and restore the company to a growth trajectory.
Myers started on 1 May, so it’s early days, but he is an experienced fast-moving-consumer-goods executive. He was previously chief operating officer at Avon Products with global responsibility for the supply chain, marketing, digital, research & development and IT. While there, Cussons reckons he was “a core member of the executive team delivering a successful turnaround of the business.” Prior to that, he spent 21 years with FMCG giant Proctor & Gamble.
I’m optimistic that Myers can lead a turnaround at PZ Cussons over the years ahead. Right now, I think the stock is attractive. But I’m also keen on some of the other London-listed FMCG companies.
Previously, for example, Nick Train has bought large stakes in drinks giant Diageo (LON:DGE) consumer goods behemoth Unilever (LON:ULVR). Other shares I’m watching closely within the FMCG theme include AG Barr, British American Tobacco (LON:BATS), Britvic (LON:BVIC), Nichols and Reckitt Benckiser. To me, these could be some of the best UK shares to buy now.
The post Hunting (LON:HTG) for the best UK shares to buy now? I’d start with these appeared first on The Motley Fool UK.
Kevin Godbold owns shares in PZ Cussons. The Motley Fool UK owns shares of and has recommended Britvic, PZ Cussons, and Unilever. The Motley Fool UK has recommended AG Barr, Diageo, and Nichols. 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 2020
First published on The Motley Fool
