Investors in individual companies are spoilt for choice, with more than 1,300 trading on the London Stock Exchange alone.
Of course, a well-constructed portfolio should contain many holdings so investors do not have all their eggs in one basket.
But for a bit of fun – and to test the strength of their conviction – we asked a group of experts what single company they would invest in if they could pick only one.
They considered factors such as potential growth, income and track record – and then revealed their choice. This is what they told us.
Hot property: Experts favour Rightmove, games firm Team17, and The Restaurant Group
Insurance company Aviva is the top choice of Ben Yearsley, an investment director at Shore Financial Planning.
He believes the FTSE100 company has been unloved for many years, but is coming back into fashion. Its strategy is also likely to benefit investors looking for an income.
‘The chief executive Amanda Blanc has done a great job of realising value by selling off non-core assets to the tune of £7.5billion,’ Yearsley says. ‘This is going to lead to a big capital return to shareholders.
‘It will also allow management to focus on the core business, which has arguably trod water for many years.’
Yearsley points out the company has announced a £750million share buyback and predicts further buybacks, as well as special dividends.
‘Recent results showed good progress in the core business, too’ he adds. ‘The final cherry is that the dividend yield from normal earnings is a healthy 5 per cent.’
Aviva shares (£4.11) are up an impressive 55.4 per cent over one year, and 8.8 per cent over three.
ID CODE: 0216238 Ticker: AV.
Alexandra Jackson, manager of the Rathbone UK Opportunities Fund, says her top pick would be FDM, which recruits, trains and deploys IT and business professionals to work with clients around the world. She believes demand for its services is set to grow.
‘When questioned, the chief financial officers of some of Britain’s biggest businesses said that recruiting staff with IT and digital skills is the biggest hurdle right now,’ she says.
Jackson adds that FDM has long offered a classy solution to this recruitment problem.
‘They train graduates, returners and ex-Forces personnel with the most relevant and up-to-date IT skills, who then get a two-year placement with one of FDM’s clients,’ she explains. ‘They usually stay on with the client after that.’
Recruiting staff with IT skills is a big challenge for British firms, according to Alexandra Jackson, manager of the Rathbone UK Opportunities Fund
She notes that FDM has a gender pay gap slightly in favour of women in the UK, thanks to an increase in women in senior leadership positions and the success of its programme to support people returning to the workforce after a break.
‘Not only do leading companies get well trained software testers or data engineers on a flexible basis, they also get access to a genuinely diverse and representative workforce,’ she adds.
FDM’s dividend yield was 4.1 per cent last year and its share price (£12.94) rose by 27.7 per cent. Over three years, shares are up 55.5 per cent.
ID CODE: BLWDVP5 Ticker: FDM
Online property portal Rightmove is the preferred choice of Darius McDermott, managing director of investment scrutineer Chelsea Financial Services. In fact, he describes it as a ‘money printing machine’.
‘It is the dominant UK property portal and estate agents are totally dependent on it to get their properties seen,’ he says.
‘The UK is obsessed by property and Rightmove reaps the benefits.’
McDermott points out that neither the website nor the app require much capital to run.
This means the company generates huge amounts of cash, which it can return to shareholders.
The company has also been a beneficiary of the recent property market boom, Darius adds.
‘Rightmove has rebounded strongly and recently announced underlying earnings up 93 per cent for the half year to the end of June,’ he says.
‘Despite all this, the stock still trades around where it was before the pandemic started.’
Rightmove’s share price (£7.26) is up 14 per cent over one year and 47 per cent over three years.
ID CODE: BGDT3G2 Ticker: RMV
Leigh Himsworth, a portfolio manager at Fidelity International, is impressed by the ‘amazing’ games created by Team17 – especially one called Worms Rumble.
Team17 makes premium computer games and educational apps for children under the age of eight.
Himsworth suggests Covid-19 has accelerated the trend towards gaming, but it was already an area with broadening appeal.
‘Faster download speeds lend themselves to greater interactive and collective gaming,’ he says. ‘This content need will grow with 5G and perhaps autonomous driving.’
Himsworth believes Team17 will benefit as it has a wide geographic reach, is available on most tech platforms, and could continue to enjoy an annual growth rate of near 20 per cent for the foreseeable future.
Shares in Team17 (£8) are up 22per cent over one year and 233 per cent over three. It did not pay a dividend last year.
ID CODE: BYVX2X2 Ticker: TM17
Wagamama is one of the brands owned by The Restaurant Group – the chosen stock of AJ Bell’s Danni Hewson. It also owns Frankie & Benny’s, Chiquito and Coast to Coast
The Restaurant Group
The Restaurant Group is top of the menu for Danni Hewson, financial analyst at wealth platform AJ Bell.
She believes there is a lot to like about the business, which owns brands including Wagamama, Frankie & Benny’s, Chiquito and Coast to Coast.
‘It is in the midst of a restructuring plan, has shed underperforming restaurants, negotiated rent cuts and secured new long-term debt facilities,’ she says.
The Restaurant Group has had a difficult few years, with shares down 36 per cent over three years. However, it has benefited from a bounce as hospitality has opened up again following national lockdowns. Shares (£1.20) are up 122 per cent over one year.
However, it is Wagamama – the jewel in the crown – which interests Hewson the most.
‘From home delivery to home cooking, the brand has become a firmly entrenched consumer favourite, plugging nicely into the healthy eating, healthy living vibe,’ she says.
Hewson believes there are still opportunities for expansion in the UK and US. ‘It won’t be a shortterm winner, but there does appear to be plenty of soul left in this particular bowl,’ she adds.
ID CODE: B0YG1K0 Ticker: RTN
Roddy Davidson, media analyst at Shore Capital, believes WPP is extremely well placed to benefit from the strong growth in advertising spending following the pandemic. The FTSE100 company is an expert in communications, advertising and marketing.
‘Its deep resources, digital expertise, comprehensive international service offering and diverse blue-chip client base make for a very strong competitive position,’ says Davidson.
He adds that the management team is currently introducing initiatives that should strengthen it even further, including simplifying operations, investing in technology and reducing debt.
WPP shares (£9.98) are down ten per cent over three years. However, they were up 62 per cent over one year, and the dividend yield was three per cent.
‘Although its stock has performed well of late, we see good scope for forecast upgrades and strong medium-term returns.’
ID CODE: B8KF9B4 Ticker: WPP
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