Just released: our top 3 stocks to buy in January [PREMIUM PICKS]

Premium content from Motley Fool Hidden Winners UK

Our monthly Best Buys are now designed to highlight three of our team’s favorite, most timely Buys from our growing list of small-cap recommendations, to help Foles build their stock portfolio.

Why we love it: “Polar Capital (LSE: POLR) is a London-headquartered fund management company that boasted £23.8bn in assets under management (AuM) as of December 2024. Although the investment management space often gets a bad rap – it is thought to charge high fees for the poor. performance – we have no problem recommending asset managers with long-term, conservative investment styles, and we believe Polar’s technology and health focus is attractive.

“One of the attractive features of fund management businesses is that they have great operational capabilities. Revenue usually grows at a rate equal to AuM, even though costs remain the same, so profits should grow at a faster pace. In good times, when markets are rising and profits are rising, the company’s profits should grow very quickly – which may make the business owner a representative of the market’s progress. “

Why we love you now: Over the past nine months, Polar Capital’s AUM has grown from £19.2bn to £23.8bn, an increase of 9%. The company enjoyed a modest net inflow of £0.2bn and an increase of £1.8bn due to market activity and investment. This is a very reliable performance compared to other UK asset managers that have seen outflows over the same period. Presumably, if Polar’s investment bias – technology and healthcare – continues to deliver strong performance it should help attract more investors to its funds. Despite the company’s performance putting it at the top of its peer group, it trades at just under 10x expected earnings, while a forecast yield of 9.5% is suitable for income investors.