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What it does: Datadog offers an observability platform to manage and oversee the movement of data within cloud-based applications.
By Zaven Boyarezian. Datadog (NASDAQ:DDOG) operates as a software-as-a-service enterprise facilitating customers in monitoring their cloud-based applications. The platform interfaces with over 600 industry-standard technologies such as Salesforce and AWS, allowing clients to oversee and inspect data flow across their entire infrastructure from a single platform.
Moreover, apart from enhancing efficiency by identifying bottlenecks, it serves as a robust cybersecurity and regulatory compliance tool utilized by over 25,500 worldwide companies. This also includes the London Stock Exchange.
While there is intense competition in the application performance monitoring sector, a recent report from Gartner identified 19 players operating in this domain. Despite being acknowledged as a leader, Datadog faces fierce competition from the likes of dynatrace and new relic, which might impede future growth.
However, given the group’s outstanding track record and cash-generating business model, I have confidence that Datadog has the potential to significantly increase my portfolio’s value in the long term.
Zven Boyarezian has holdings in Datadog.
Main healthcare properties
What it does: Primary Health Properties leases healthcare facilities in the UK and Ireland, with most of its rental income coming from the NHS.
By Stephen Wright. shares of primary health properties (LSE:PHP) have seen a decline lately. The lower the stock price, the more appealing it is to me.
Increasing interest rates have impacted the company’s asset valuations, resulting in a 19% decrease in share price over the last 12 months.
When this adjustment will take place, I cannot predict – perhaps when the Bank of England starts reducing interest rates. However, this factor does not concern me as my investment is not based on the valuation of its assets.
My focus lies on the cash flows generated by the company, and the management has revealed an additional £3.1 million in earnings during the third quarter, with further increases expected through 2024.
With its rent predominantly funded by the NHS, there is a risk that a change in government could introduce uncertainty to the company. Nevertheless, I believe that the 7% dividend yield justifies the risk associated with buying the stock at its current level.
Stephen Wright has holdings in Primary Health Properties.
What it does: Revolve Group is an internet-based fashion retailer specializing in the sale of premium clothing and accessories.
By Muhammad Cheema. Shares of cruise group (NYSE:RVLV) have faced challenges over the last few years.
After reaching a peak of $86.01 per share in November 2021, they have plummeted by 85.4% to $12.53 at present.
This decline is attributed to a slight reduction in revenues and profits due to challenging global economic conditions, which presents a near-term risk in holding its shares.
However, my investment horizon is long-term.
Between 2017 and 2022, its revenue is projected to grow from $400m to $1.1bn. I believe that once economic conditions stabilize, it will return to this growth trajectory.
Moreover, I anticipate that the utilization of artificial intelligence (AI) will continue to provide it with a competitive edge.
It gathers data analytics on the purchasing decisions of its customers for other brands listed on its platform, enabling it to mimic successful brands based on this analysis.
With a current price-to-sales (P/S) ratio of 0.9, its stock appears too attractively priced for me to overlook, and I have increased my holdings recently.
Muhammad Cheema is a shareholder of Revolve Group.
Move in the correct direction
What it does: Rightmove operates the largest property search portal in the UK, enabling users to browse properties for sale or rent through its website and app.
By Edward Sheldon, CFA. Shares of MoveRight (LSE:RMV) recently experienced a decline following the revelation of the acquisition of rival OnTheMarket by US online real estate powerhouse CoStar Group. I took advantage of this situation to acquire more shares for my portfolio.
Rightmove, in my opinion, is an exceptional company. Not only does it possess a strong brand and a significant market share (about 85% of the UK property search market), but it also has a remarkable history of revenue growth and profitability (it ranks among the most profitable companies in the FTSE 100 index).
After the recent decline in share price, Rightmove shares were trading at a forward-looking price-to-earnings (P/E) ratio of around 18. Given the exceptional quality of the company, this seemed very appealing to me, prompting me to increase my holdings.
It is important to note that the acquisition of OnTheMarket adds some additional risk to the investment. However, I believe that Rightmove is likely to maintain its position as the top player in the UK property search market due to the strength of its brand.
Edward Sheldon holds shares in Rightmove
What it does: SafeStore is the leading provider of self-storage units in the UK, with 131 stores across the country.
By Charlie Keough. Despite a more than 2% increase over the last month (at the time of writing), shares of buffer stock (LSE: SAFE) have declined by over 20% in 2023. This prompted me to increase my stake in the company.
There are several factors that appeal to me about this stock. Firstly, it appears attractively priced, with a price-to-earnings ratio of less than 6, which is significantly below the FTSE 250 average.
Furthermore, the stock offers a dividend yield of over 4%, with its dividends having surged by an impressive 400% over the last decade.
The company has exhibited robust growth in recent years. After consolidating its position as a leader in the UK, it has now turned its focus towards expansion in Europe to continue its growth trajectory.
The debt on its balance sheet and the possibility of aggressive increases in interest rates and asset prices could potentially impact the company’s operations.
However, considering its expansion plans, attractive valuation, and strong dividend yield, I decided to acquire more shares.
Charlie Keough has holdings in SafeStore.
Scottish American Investment Firm
What it does: Scottish American Investment Company is an FTSE 250 Investment trust aiming to grow capital and dividends at a faster pace than inflation.
By Ben McPoland. I’ve recently bolstered my position in Scottish American Investment Firm (LSE: SAIN), commonly referred to as Sant, a trust with a 150-year history. This was driven by my growing confidence in the trust’s stock-picking expertise.
Why, you ask? Well, the top two holdings are Microsoft and Novo Nordisk, both companies that are currently firing on all cylinders.
The enthusiasm surrounding AI has propelled Microsoft’s share price (owning a stake in OpenAI, the creator of ChatGPT) by 48% this year. Meanwhile, Novo Nordisk reported third-quarter sales of its weight-loss drug wegovy, which surged more than eightfold year-over-year to nearly $900 million.
Remarkably, SAINTS has not reduced its dividend since 1938! Furthermore, payments are projected to increase for the 49th consecutive year in the near future.
Admittedly, the yield at present is rather modest at 3%, potentially causing some investors to overlook the stocks for more lucrative payouts. However, I am content aiming for sustainable, long-term dividend growth over prioritizing the size of the yield here.
Finally, the shares are trading at a 9% discount to the trust’s underlying assets, a rarity historically.
Ben McPoland has holdings in the Scottish American Investment Company.
What it does: ZoteFoams is a prominent producer of specialized foams utilized in products such as Nike running shoes and airline seats.
By Roland Head. After appearing in a search, I recently acquired shares in Zotefoams (LSE:ZTF), finding reasonably priced growth stocks with healthy current trading trends, according to company management fulfilling the City’s earnings forecasts for 2023. ZoteFoams has also recently expanded its special deals with Nike, which could support further growth.
Looking ahead, there is potential for the company’s new resource from recyclable packaging material, used in beverage cartons, to become a major earnings driver.
My primary concern is the possibility of weaker demand from some of its top customers if the global economy decelerates. Furthermore, long-time chief executive David Sterling has announced his retirement. Mr. Sterling has led the company since 2000.
Nonetheless, the balance of risk and reward appears promising to me at the moment. I believe ZoteFoams can perform well from its current levels.
Roland Head holds shares in Zotefoams.
The post 7 Stocks That Fools Are Buying! appeared first on The Motley Fool UK.
The Motley Fool UK recommends Datadog, Microsoft, Nike, Novo Nordisk, Primary Health Properties PLC, Revolve Group, Rightmove PLC and SafeStore PLC. The views expressed on the companies mentioned in this article are those of the author 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 wide variety of insights can make us better investors.
Motley Fool UK 2023