However, the story’s been quite different when zooming in on individual sectors. So which US stocks are the winners and losers right now? What lies around the corner? And what can investors do to protect their portfolios?

Winners and losers

As skyrocketing oil & gas prices have already made clear, the war in Iran doesn’t bode well for energy-related supply chains. But it’s particularly problematic for industries that rely heavily on fossil fuels.

Most notably, this includes airlines and cruise operators who consume a lot of fuel. American Airlines, United Airlines and Delta Air Lines have already seen roughly 31%, 23%, and 16% wiped off their respective share prices since the start of the year. And it’s a similar story for Carnival Corporation and Norwegian Cruise Line.

On the other side of this equation sit the energy producers such as ConocoPhillips, Chevron, and Exxon Mobil, all of which have enjoyed a 20%+ surge over the same period. Meanwhile, defence contractors including Lockheed Martin and Northrop Grumman have enjoyed even bigger rallies as war expands their order books.

Risk of contagion

With some sectors benefiting and others taking a tumble, the overall impact on the S&P 500 has been fairly muted. But that could change depending on how the situation evolves.

A prolonged conflict risks inflation making a nasty comeback, particularly for energy prices, putting more pressure on consumer wallets. It could even delay or perhaps reverse recent interest rate cuts. And combined, these effects could adversely impact the real estate, automotive, discretionary retail, construction, and industrial sectors.

So what should investors do now?

Keep calm and carry on

While the evolving geopolitical and macroeconomic landscape is concerning, it’s essential not to start panic-selling. Instead, investors should review their personal risk tolerances and adjust their portfolios accordingly.

For investors who can stomach the volatility, using any future dips in stock prices to buy more quality shares at a discount could pave the way for superior long-term returns.

For investors who are more conservative, explosive defensive sectors like healthcare could be the smarter move. In fact, many institutional investors have begun suggesting clients consider pharma giants such as Johnson & Johnson (NYSE:JNJ).

The company’s proven itself to be a reliable compounder with 63 consecutive years of dividend hikes and a revenue stream that’s almost entirely insulated against the ongoing conflict.

After all, even if higher oil prices tip the US economy into a recession, demand for life-saving drugs won’t change. And with a promising pipeline of new drugs, the long-term trajectory of this healthcare giant continues to look rock solid.

Of course, no investment’s ever risk-free. And Johnson & Johnson’s having to tackle growing pressure from rival generic manufacturers as well as shifting procurement regulations in China – both taking their toll on revenue.

Regardless, with a stellar track record of resilience, nervous US stock investors may want to take a closer look.

The post US stocks are sliding, but I’m not worried appeared first on The Twelfth Magpie.

Building the ISA

The first point I’d note is that the investor could do well to house the portfolio within an ISA. This means the investor can benefit from certain tax advantages, with most major brokers allowing UK investors to hold US stocks.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

There’s a £20k cap on the amount that can be invested in an ISA each year. I’m going to assume that someone has £5k in an ISA right now and can afford to add an additional £500 a month, aiming for it to reach £100k in value.

Next, we turn to portfolio allocation. The US is home to most of the major tech and artificial intelligence (AI) companies. Particularly when I look at AI, I think it’s a theme that will keep playing out for years to come.

As a result, I think a good portion of the ISA should be allocated to firms from this sector. For the remainder, I’d look to build a diversified portfolio with a focus on healthcare and consumer staples. These more mature areas of the market should help to reduce the risk associated with some high-growth tech stocks.

Reaching six figures

In terms of numbers, I think it’s fair to target a 10% annual return on the portfolio. Interestingly, over the past decade, the S&P 500’s risen by 366%. So I feel my future estimate’s conservative. Obviously, predicting years in advance isn’t an exact science at all!

Using this assumption, the portfolio could grow to £100k by the beginning of year 10. From that point onwards, the investor could decide not to add funds and just let the pot compound.

The risk is that during this period, we see a sustained stock market correction, which could throw the estimates off and delay reaching the goal.

US shares to analyse

In terms of specific stocks, tech companies like Alphabet and Meta could be considered. I feel they are large enough, with different fingers in various pies, to be able to pivot to whatever part of the AI ecosystem turns out to be the most profitable.

Aside from those stocks, another to consider is Johnson & Johnson (NYSE:JNJ). The share price is up 49% in the past year. At 2.32%, the dividend yield might not be super high, but it has been increased it for over 50 consecutive years.

Fundamentally, I think it’s a healthcare stock that’s well-positioned for the shift as the US population grows older. Further, it’s diversified, given it operates divisions including pharmaceuticals, medical devices, and even MedTech. This gives it a balanced mix of growth and defensive stability, which I think is valuable to have in the ISA alongside tech stocks.

In terms of risks, patent expiries on key products can be a headache. For example, Stelara, a previously high-revenue treatment, has seen sharp declines in sales as exclusivity deals roll off. Yet even with this concern, I still feel it’s a solid US stock worthy of further research.

The post How to try and turn a small ISA into £100k using these S&P 500 stocks appeared first on The Twelfth Magpie.

Revealing the pick

Interestingly, the AI chatbot decided to make a pick from across the pond in the US. It chose Johnson & Johnson (NYSE:JNJ) as the most reliable dividend stock right now. On the face of it, I can see why it made the choice. The company has a whopping 63 consecutive years of dividend increases. It has averaged an annual dividend growth rate of 5% for the past decade, with the share price up 44% in the last year.

In terms of reliability, it has a strong and diversified business model. This ranges from pharmaceuticals to everyday health products, with stable demand. As a result, the wide product spread reduces risk and makes earnings more predictable.

All of this sounds great, but ChatGPT missed one key point, namely the dividend yield. At the moment, the company’s yield is 2.51%. For comparison, the average yield of the FTSE 100 right now is 2.99%. If an investor could buy an FTSE 100 tracker that paid out the income from all the stocks in the index, why would they want to buy just one stock instead and get a 0.48% less annual yield in the process?

Of course, I’m not saying just go for super high-yielding stocks. But to pick a company with a low dividend yield just because it has been paying it for decades doesn’t seem like the best move.

The best of both worlds

Instead, I’d prefer to own a company with a strong track record and an above-average yield. For example, the Supermarket Income REIT (LSE:SUPR). It boasts seven years of consecutive dividend growth, with a current yield of 7.56%.

A plummeting share price isn’t causing the high yield. Instead, the stock has risen by 18% in the past year. The elevated yield is thanks to continued dividend-per-share increases, which is a good sign.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

The latest full-year results presentation showed a 7.3% annual increase in the net rental income, showing demand is strong. Only last month, it announced a £98m acquisition of three UK supermarkets. This move should act to boost income almost straight away, with an anticipated initial yield of 5.5%.

Such details, along with the consistent performance of everyday operations, make it an appealing and reliable income stock. Of course, there are risks, such as the debt exposure it takes on to fund new projects. If interest rates stay higher for longer this year, servicing its debt might become more expensive. Yet even with this, I think it’s a better stock for investors to consider than the pick from ChatGPT!

The post I asked ChatGPT for the most reliable dividend stock for a second income and this is what it said… appeared first on The Twelfth Magpie.

With that in mind, I asked three of the leading chatbots for their ideas about the best passive income opportunities. The results were interesting – but not that useful…

What they said

ChatGPT was the only one to give me an answer at all. Gemini said it isn’t allowed to recommend stocks and Claude said it doesn’t have access to live market data.

ChatGPT however, did give me a name. It actually gave me a few, but the stock at the top of the list was Johnson & Johnson (NYSE:JNJ) – a popular name with dividend investors.

It highlighted a few key points, including the firm’s strong record of rising payments and its strong competitive position in a pretty resilient market. But it missed one important thing: the stock comes with a 2.75% dividend yield. And while ChatGPT rightly noted that this isn’t particularly high, it didn’t realise that I won’t even get 2.75% by buying the stock.

Dividend taxes

Johnson & Johnson is a US business and I’m a UK investor. That means any distributions I might receive from the company are subject to a 30% withholding tax. This is reduced to 15% with a W-8BEN form. So by the time the dividends hit my account, what I’ll get is more like 2.35% – and this highlights something important.

Without knowing everything about my financial situation, it isn’t possible for ChatGPT to give an accurate assessment of my returns. That’s not its fault, but it’s a key limitation.

My tax situation means my income from Johnson & Johnson’s likely to be 15% lower than ChatGPT might think. While I like the stock, I think there are more attractive opportunities.

FTSE 100 dividends

In my view, UK investors happy with a 2.35% dividend should think about buying Howden Joinery Group (LSE:HWDN) instead. It’s another strong business but with a higher yield.

The company is probably less recession-resistant than J&J, but I think it looks like a terrific business. Unlike its rivals, it focuses on trade sales, which gives it some key advantages.

One of these is that selling to trade customers is more likely to generate repeat business. And another is that the firm doesn’t need expensive showrooms – it can operate out of warehouses.

This means it can charge lower prices than its rivals while maintaining wider margins. I see that as a really powerful long-term position to be in, which is why I like it as an investment.

Insider knowledge

There are good reasons why ChatGPT can’t tell me which dividend stocks I should buy. It depends on specific things about me that it’s unreasonable to expect AI to know.

It’s not just about being a UK tax payer, a lot of things determine what’s best for me. So while I think J&J’s a reasonable idea, I don’t think it’s my best passive income opportunity. 

In this sense, I actually think the other chatbots have the right response. In a situation where AI isn’t in a position to make a fully-informed suggestion for me, the best thing to do is hold off.

The post I asked ChatGPT, Gemini, and Claude for the best passive income stock to buy appeared first on The Twelfth Magpie.

The chief analysts at Morgan Stanley, Deutsche Bank, Evercore, Societe Generale, and even several leading hedge funds are becoming bearish about what could be on the horizon. And while there are some varying opinions on severity, the general consensus points towards a 5-15% potential correction.

So what’s driving this negative short-term outlook? And what can investors do to prepare in case these bearish predictions turn out to be true?

Primary concerns

The top concerns right now revolve around the emerging impact of tariffs, economic weakness, and stretched valuations.

The latest inflation data from the US shows that manufacturers are holding off on passing higher input costs to consumers. But this delay is only expected to be temporary, with costs eventually being passed on to consumers – something that’s already started happening in specific sectors like food and electronics.

The fear is that these rising costs will put pressure on consumer spending, leading to slower economic growth and weaker business earnings.

That’s problematic for most companies. But it’s especially dangerous for investors holding shares in businesses trading at enormous premiums based on future growth. And with the S&P 500’s price-to-earnings (P/E) ratio now just over 27 versus its long-term historical average of 16, it’s easy to see why institutional investors are starting to get nervous.

Don’t panic

It’s important to remember that forecasts and never set in stone. The stock market’s notoriously difficult to predict, especially in the short term. And there remains the possibility that production gains from artificial intelligence (AI) investments could deliver wider margins in the coming quarters allowing earnings to catch up with stock prices.

But let’s assume the worst and say a correction’s coming. There are still plenty of smart investments that can be made. Not every US stock is grossly overvalued, and Morgan Stanley has recommended exploring opportunities in defensive sectors like healthcare.

One potential example to consider could be Johnson & Johnson (NYSE:JNJ). The healthcare giant has:

• A diversified revenue stream across medtech and pharmaceuticals that benefits from resilient demand
• A well-funded balance sheet with $18.9bn of cash & equivalents to weather any potential slowdown
• An impressive innovation pipeline of new treatments to support future growth

But importantly, Johnson & Johnson shares aren’t absurdly overpriced compared to other S&P 500 stocks, with its forward P/E ratio sitting at an undemanding 16.5.

To be clear, the healthcare giant isn’t a guaranteed winner. Like many of its peers, Johnson & Johnson has several key patents expiring over the next five years that could put pressure on sales. And tariffs on raw materials like steel and aluminium do have an indirect impact, given they could drive up the cost of critical equipment needed for drug research and manufacturing.

Nevertheless, investors concerned about a US market correction may still want to take a close look at this defensive enterprise.

The post Get ready for a US stock market correction, say the experts appeared first on The Twelfth Magpie.

Investors might wonder whether this means now is the time to look at some US stocks. But while the currency shift is a genuine benefit, I think there are more important considerations.

Currencies

Currency fluctuations are one of those things that investors don’t usually pay much attention to. And a lot of the time, this is justified because the moves are too small to be meaningful.

There are some exceptions. One example is the 75% decline in the value of the Nigerian naira that has given Airtel Africa shareholders something to think about over the last five years. 

Generally, though, movements in currencies tend to be small and not worth considering. But the value of the US dollar against the British pound is down 8% in the last 12 months.

In effect, this means an 8% discount for UK investors looking to buy US stocks. And given the valuation gap between the FTSE 100 and the S&P 500, that sounds quite nice.

Individuality

Over the last year or so, the balance of my Stocks and Shares ISA has gradually shifted towards UK equities. That’s not deliberate, it’s just the way I’ve seen opportunities over that time.

I am, however, very much looking for opportunities to balance this out a bit. So I’m actively looking for opportunities across the Atlantic (as well as elsewhere) that look attractive. 

Unfortunately, I don’t have a particularly strong view on where the dollar is going next. So there is – from my perspective – a very real possibility it could work against me.

This risk notwithstanding, there are one or two US stocks that I think look attractive. And there’s one in particular that I’ve been buying.

Healthcare

Johnson & Johnson (NYSE:JNJ) is a stock I’ve just started buying in the last couple of weeks. In my view, it’s a rare example of a US equity trading at an unusually attractive valuation.

The big challenge facing the company at the moment is the US administration’s desire to reduce the amount the country spends on drugs. That’s a risk for pharmaceutical firms across the board.

Johnson & Johnson, however, might be less exposed to this than a number of its peers. It has a growing medical devices business that makes up around a third of its overall revenues.

Moreover, the company has a strong record of increasing its dividend each year. And analysts are expecting this to continue until at least 2027. 

Buying opportunities

While most of my buying lately has been UK-focused, I have added Johnson & Johnson shares to my portfolio recently. But this isn’t because of currency fluctuations – it’s because of what I see as the strength of the underlying businesses.

I’m not denying that the dollar weakening against the pound makes a difference to UK investors. However, I think there are more important things to consider when it comes to buying shares.

Sometimes stocks have listings in different currencies. In those situations, I prefer to eliminate the risk of shifting foreign exchange rates entirely. But that isn’t always possible, so it’s something I put up with for the right opportunity.

The post As the US dollar falls, is now the time to buy US shares? appeared first on The Twelfth Magpie.

One example is Johnson & Johnson (NYSE:JNJ). As a rule, I stay away from pharmaceutical stocks, but I’m considering making a rare exception for this one. 

Pharmaceuticals

Johnson & Johnson has recently divested its consumer products business. The company now generates around 66% of its revenues from pharmaceuticals and 33% from medical devices.

The main reason I generally stay away from stocks like this is I don’t feel like I can evaluate them accurately. I’m not a medical professional and that means I can’t confidently evaluate drug pipelines. 

That makes it hard to work out which businesses have the best prospects. And in fairness to me, it’s not always straightforward even for people who do have specialist expertise in this sector. 

Johnson & Johnson does have some competitive strengths in this area – most notably its scale and its exceptional balance sheet. But there’s something else that stands out to me about the company.

Credo

A key part of what makes Johnson & Johnson unique is its culture. And this is set out in the ‘Credo’ – a document, which states that the company’s priorities are, in order:

1. Doctors, patients, nurses, and users of its products
2. Employees
3. Communities
4. Shareholders

In other words, focus on putting customers first and doing the right thing and the returns will follow. This ethical outlook is a key part of what has allowed the business to survive and thrive over decades. 

A lot of businesses have codes of conduct or ethical frameworks. But there’s evidence that Johnson & Johnson’s Credo means its culture is more entrenched than it is at other companies.

The firm’s reaction to the 1982 Tylenol crisis is now a well-known case study in ethical leadership. And it doesn’t take specialist medical knowledge to appreciate the significance of this.

A once-in-a-decade opportunity

Right now, shares in Johnson & Johnson come with a dividend yield of around 3.25%. That doesn’t exactly jump out as a passive income opportunity, but it’s the highest it has been in the last 10 years.

This is a sign investors are unusually pessimistic about a stock they normally hold in high regard. And a key reason for this is the situation in the US at the moment. 

The situation is still developing, but potential risks include slower drug approval processes and price controls. Neither of these would be good for companies like Johnson & Johnson. 

The risk is real, but this might be the kind of opportunity that comes around once in a decade. Given the company’s long-term strengths, I think it’s worth taking seriously.

Culture

I think Johnson & Johnson’s biggest unique strength is its culture. Even if I’m wrong, there’s clearly a lot to like about a company that has more than 50 years of consecutive dividend increases. 

Most of the time, the stock market appreciates the quality of the business. But it’s unusually cheap at the moment and on that basis, it’s certainly one to consider right now.

The post Is this S&P 500 stock a once-in-a-decade passive income opportunity? appeared first on The Twelfth Magpie.

I think these two income shares look more reliable than most. Not that past performance is an indicator of future results, nor are dividends guaranteed.

Record order book

Defence giant BAE Systems (LSE: BA.) reported its highest-ever order intake last year as many countries around the world increased military spending. The £37bn of orders it took in throughout the year increased its backlog to £58.9bn.

And just last week, the Czech government approved a $2.2bn deal with the firm to buy 246 infantry fighting vehicles. These kind of deals have become commonplace over the last year, for obvious and unpleasant reasons.

This has been reflected in the share price, which is 66% higher than it was prior to Russia’s invasion of Ukraine. Yet despite this rise, the forward dividend yield stands at a very respectable 3%. Plus, the payout is covered two times by anticipated earnings.

The stock could presumably take a hit if Russia and Ukraine were to enter peace talks. But even if that hoped-for situation develops, I think it’s unlikely that the geopolitical tensions between the US and China would suddenly disappear. Especially considering the ongoing disagreement over Taiwan.

These tensions will likely keep military spending elevated and underpin demand for BAE’S products, which span air, land, sea, cyber and space.

As such, I’m going to keep holding the shares I bought six months ago. The long-term income prospects seem rock solid to me.

Huge scale

Johnson & Johnson (NYSE: JNJ) has increased its dividend for 60 straight years, which gives it the rare status of a Dividend King (at least 50 consecutive years of dividend increases).

While that doesn’t necessarily guarantee future success, it does underline the healthcare giant’s long-standing competitive prowess. Today, it’s the world’s largest, most diversified healthcare products company. And last year, that saw it bring in adjusted net earnings of $27bn.

Now, the company has faced well-publicised lawsuits relating to some of its products in recent years. It recently agreed to pay an $8.9bn settlement over claims that its talc-based baby powder caused certain types of cancer. If more such legal problems emerge, then that could threaten dividend growth.

However, the firm is profitable enough to absorb this huge sum. And despite the undoubted reputational damage from these headlines, J&J still ranked number one this year on Fortune’s most admired companies list for the pharmaceutical industry. Its medicines continue to save countless lives.

This year, J&J is spinning off its consumer health business. That could unlock further value as its two remaining segments (MedTech and Pharmaceutical) are more profitable and growing faster than consumer health.

Plus, the company’s $16.6bn acquisition of Abiomed (a global leader in heart pumps and valves) gives it a very strong competitive position in high-growth cardiovascular markets. This purchase means its medical devices division now includes 12 platforms with over $1bn in annual revenue.

The stock carries a dividend yield of 3%. Supporting the payout is a very stable profit margin of around 19%. I expect plenty more dividends to come yet. And if I had spare cash today, I’d consider investing in this incredible healthcare company.

The post 2 of the safest dividend stocks on Earth appeared first on The Twelfth Magpie.

I’m currently looking for ways to boost my passive income. If I had a spare £10,000 to invest, I think this pair of Buffett shares could help me achieve that goal. By splitting my investment evenly between the two, I’d earn almost £365 in annual dividend payouts at today’s yields.

So, let’s explore the outlook for both companies.

Kraft Heinz

Food and beverage manufacturer Kraft Heinz (NASDAQ:KHC) owes its existence to Warren Buffett, who was the driving force behind the 2015 merger between Kraft and Heinz.

Although the billionaire has said he overpaid for his stake in the tie-up, Berkshire still owns around a third of the company’s shares. A 34% slump in the Kraft Heinz share price over five years means the shares could be better value today for me. Plus, there’s a handy 4.17% dividend yield on offer.

The company’s brand portfolio comprises well-known names including Heinz ketchup, Philadelphia cream cheese, and Capri-Sun drinks. Brand familiarity appears to be helping the firm navigate the inflationary environment.

Following a 7.3% rise in net sales during Q1 to $6.49bn, Kraft Heinz lifted its adjusted earnings forecast to $2.83-$2.91 per share. That’s higher than the company’s previous target of $2.67-$2.75 per share.

What’s more, the business has successfully trimmed its net debt pile over recent years. That’s especially important considering interest rates continue to rise. But there’s still more work to do in this regard.

In addition, inflation remains a key risk. Although the group’s managed this challenge well so far, weighing any further price hikes against the threats posed by competitors like Unilever and Nestlé will remain a tricky balancing act for the foreseeable future.

Nonetheless, this dividend stock looks good value to me. If I had spare cash, I’d buy.

Johnson & Johnson

Healthcare giant Johnson & Johnson (NYSE:JNJ) also features in Buffett’s portfolio, as well as my own. It’s a Dividend Aristocrat with an unbroken 61-year dividend growth streak. Today, the stock yields 3.08%.

Johnson & Johnson is the world’s largest healthcare company. Its business spans pharmaceuticals, medical technology, and consumer products. The company’s widely regarded as a defensive investment due to robust demand for its products and services, even during periods of economic turbulence.

The firm’s Q1 results for 2023 were mixed. Worldwide sales increased 5.6% to $24.7bn and each division reported growth. In addition, the company boosted its full-year adjusted earnings forecast to $10.60-$10.70 per share, up from a previous target of $10.45-10.65.

However, the group also reported a $68m net loss, equating to three cents per share. That’s because of liabilities arising from cancer claims relating to the company’s baby talc products. Johnson & Johnson faces ongoing reputational and legal risks from this litigation, but there are signs the unfortunate saga could be drawing to a conclusion.

Ultimately, I think the business has deep enough pockets to survive its legal troubles. After all, it has a triple-A credit rating. With the share price down 14% in a year, I think the stock could climb higher once these difficulties are in the rear-view mirror.

The post I’d invest £10k in these 2 Warren Buffett stocks for £365 in passive income a year appeared first on The Twelfth Magpie.

As a result, I’m casting my net a bit further afield. By looking over to the US, I’m hoping to diversify my portfolio and find some great investment opportunities.

Berkshire Hathaway

Top of my list at the moment is Warren Buffett’s company, Berkshire Hathaway (NYSE:BRK.B). The business has a lot of qualities that I look for in an investment.

Berkshire is a conglomerate with a number of smaller businesses as subsidiaries. These include insurance companies, a railroad, and a utilities operation.

This means that the business is reasonably well diversified by itself. There’s a common theme in that it’s focused on the US, but it has a number of different revenue sources. 

The key to the company’s success is its discipline. It avoids taking excessive risk in its insurance operations and is careful not to overpay when it makes investments.

I think that the risk with the company is relatively low, but if there is one, it’s growth. Berkshire’s enormous size makes it hard for the company to grow at the rate it used to.

At today’s prices, though, I consider the stock a bargain. And its decentralised culture means that I expect it to continue to do well even without Buffett in charge.

Johnson & Johnson

I also think that there’s a rare opportunity in Johnson & Johnson (NYSE:JNJ) shares. The stock currently trades at a price-to-earnings (P/E) ratio of 16. 

In my view, that’s not at all bad for a business that has consistently grown its earnings over the last decade. And the stock is down 11% since the start of the year.

The reason the stock has been falling is because there’s a risk here, though. The company is dealing with lawsuits relating to its baby powder, which could get expensive.

Johnson & Johnson attempted to sidestep the problem, but was blocked from doing so by the courts. The uncertainty about what costs the company might face is weighing on the stock.

I think there’s an opportunity here, though. The falling share price looks to me like an overreaction. 

Buffett’s success with American Express came from buying the stock when it was dealing with a scandal of its own. I’m looking to buy Johnson & Johnson shares for a similar result.

Polaris

Lastly, I’m looking at a company called Polaris (NYSE:PII). The company is a leading manufacturer of off-road vehicles.

Polaris isn’t as well-known as Berkshire Hathaway or Johnson & Johnson. But I think there’s an impressive business here. 

The company achieves a 70% return on its fixed assets. I think that’s impressive, especially for a manufacturing business.

This is partly the result of strong brand power. Polaris is the market leader in the all terrain vehicles industry, with around 23% of the global market.

Importantly, the stock doesn’t look expensive at the moment. It trades at a price-to-earnings (P/E) ratio of less than 12.

The main risk is that the macroeconomic outlook doesn’t look promising. A recession is a concern for Polaris, with discretionary purchases from customers likely to slow down.

I see this as a short-term headwind, though. Over time, I expect the company’s assets and economic characteristics to prove durable and generate a good return for investors. 

The post 3 shares I’d buy with the FTSE 100 at record highs appeared first on The Twelfth Magpie.