Investing on your side, fellow investment nerds, here are a selection of stocks some of our contributors have been buying over the past month!
abrdn
What it does: abrdn is an investment company whose clients range from sovereign wealth to individuals.
Written by Andrew Mackie. The latest trading update from abrdn (LSE: ABDN) back in October, highlighted that it continues to struggle to stem its outflows. Year to date, cash generated from its funds has been £2.3bn more than deposits. By 2022, total outflows have reached £25bn.
The reasons for this exit are varied. But one important factor has been the rise of passive investment strategies. As an active investment manager, its funds could not match the stellar returns S&P 500which is where most of the world’s money is drawn.
So, is this a doomed business? I don’t believe it is. Investment strategies work well when markets are rising, but when they fall, they can be disastrous. In such a market, active managers tend to stand out. Indeed, this has been the case in bond markets, where abrdn funds have performed particularly well.
Falling dividend costs mean it now pays a 10.5% dividend. Undoubtedly the road ahead will be tough but I couldn’t sit on the sidelines when shares of a high-profile business were sold.
Andrew Mackie is a shareholder of abrdn.
Chord Power
What it does: Chord Energy is an oil and gas company. It is the largest independent operator in the Williston Basin.
Written by Stephen Wright. Warren Buffett et al have been building Berkshire Hathaway‘s on the pole Occidental Petroleum. In the same spirit, I have been buying stocks Chord Power (NASDAQ:CHRD).
Chord’s operations are in the Williston Basin. The downside to that is that extraction costs are higher than in the Permian – where Occidental has its operations.
On top of this, the depletion rates are very high, which means that new sources must be found or found regularly. Despite this, I think the stock looks like a good opportunity.
The company is expected to return 75% of its free cash flow to investors. And if oil prices average $70 per barrel, that’s predicted to be around $525m in dividends.
With a market cap of $7.8bn, that’s a 6.7% yield. And I expect this to grow over the next decade, making for an attractive income opportunity.
Stephen Wright is a shareholder in Berkshire Hathaway and Chord Energy.
CrowdStrike
What it does: CrowdStrike is a fast-growing cybersecurity company with clients around the world.
Written by Edward Sheldon, CFA. I have had it CrowdStrike (NASDAQ: CRWD ) shares have been on my watch list for years now. And finally I pulled the trigger and bought a few for my portfolio.
The main reason I’m investing here is that the cybersecurity industry is set for massive growth over the next decade. And this is the fastest growing large cap company in the market.
I also think that industry provides a protective factor. Given the devastating damage that cyberattacks can cause, no company can afford to shy away from implementing cybersecurity today.
It’s worth noting that CrowdStrike has been the cause of global IT outages for the past few months. This could result in slower growth (and share price volatility) in the near term as customers renegotiate their contracts. So, I started with a very small position here to reduce my risk.
If I look at five to 10 years, however, I am sure that this company will bring me good returns.
Edward Sheldon is a shareholder in CrowdStrike
iShares S&P 500 Information Technology Sector ETF
What it does: The iShares S&P 500 Information Technology Sector ETF invests in the industry’s largest stocks like the ‘Magnificent Seven.’
Written by Royston Wild. As its name implies, the iShares S&P 500 Information Technology Sector ETF (LSE:IUIT) provides exposure to major US technology stocks.
Therefore, it has great growth potential and the potential to deliver extraordinary capital gains. Over the past five years, it has delivered an impressive annual return of 26.2%.
The three major ETF funds are an apple, Nvidia again Microsoftcomprising about 60% of its total weight. So bad news from these businesses can have a very negative impact on the fund.
However, I am confident that a technology-focused fund like this can deliver excellent returns over the long term. Segments such as robotics, AI, cybersecurity, cloud services, and spatial and quantum computing are all tipped for strong growth over the next decade.
And since the money is spread across 69 different companies, this ETF means investors take on less risk than investing in a single share or two. This is important, in my opinion, given the pace of industry change.
Royston Wild owns the iShares S&P 500 Information Technology Sector ETF.
ITV
What it does: ITV is a broadcaster with a terrestrial and digital business, as well as active production studios and facilities
Written by Christopher Ruane. The market did not like the latest trading update from ITV (LSE: ITV). That reaction was understandable. Revenue in the first nine months of the year was 8% less than the same period last year. Net income in the studios business segment decreased by a fifth compared to the previous period.
There are risks that the demand for advertising may remain weak. Cost-cutting plans involve risks, as I see it. Such cutbacks can damage employee morale and also reduce organizational flexibility, at a time when advertising demand is difficult to predict.
However, I think that the current share price is below this business with fixed profits. The share price is within 1% of where it started the year, but has more than halved in five years.
That means the dividend yield is now 7.9%.
ITV still has a profitable legacy business and has been building its digital footprint strongly. The studio arm provides additional revenue streams.
Christopher Ruane is a shareholder in ITV.
MercadoLibre
What it does: MercadoLibre is an e-commerce business based in Latin America that simultaneously offers digital payment solutions.
Written by Zaven Boyrazian. While Amazon dominates e-commerce across Europe and North America, MercadoLibre (NASDAQ:MELI) reigns supreme in Latin America. The online market has fallen slightly following its recent gains. Although revenue rose 35% to a new high of $5.3bn in the quarter, a 9.4% shortfall in profit due to reduced margins caused concern.
The drop from 18% in operating income to 10% is undoubtedly worrying. The drag on earnings is caused by a jump in credit card debt that has helped bring in higher income but lower margins. Coupled with the strong investment in new distribution centers in Brazil, seeing the benefits go ahead is not entirely surprising.
More exposure to credit card debt comes with a higher level of risk. But, the management seems to act wisely to avoid bad debts. At the same time, MercadoLibre recently added another seven million new buyers to its online marketplace, bringing the total to 60.8 million!
Zaven Boyrazian is a shareholder in MercadoLibre.
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