It’ll soon be September and the advent of autumn. I’m sure summer’s getting shorter as I age! Anyway, I’ve already got a handful of stocks down as potential buys for my ISA. Here are three of them from the UK.
Diageo
Firstly, I’m tempted to add to Diageo (LSE: DGE). The FTSE 100 drinks giant has had a torrid time, shedding over 30% of its value in the past two years.
The reason I’m just considering this one rather than running out to invest is because there’s a lot of uncertainty surrounding Diageo at the moment.
Last year, volumes declined 5% and sales were down in both North and Latin America. Cash-strapped drinkers in Brazil and Mexico have been opting for cheaper alternatives to the company’s premium brands. Organic operating profit fell 4.8% to $6bn.
Consumer spending remains weak, particularly in its key US market and we don’t know when that’ll recover. Diageo’s management doesn’t know either and is warning that this year will also be tough. In other words, things may get worse.
However, the company’s brands, from Guinness and Johnnie Walker to Smirnoff and Baileys, are still what I’d consider timeless. Meanwhile, tequila’s a bright spot in the global spirits market. Diageo owns two leading brands in Don Julio and Casamigos.
The shares are trading near multi-year lows and now offer a 3.2% dividend yield. I may have just talked myself into buying more!
Legal & General
Failing that, I may go for an old trusty stalwart, Legal & General (LSE: LGEN). Unlike Diageo, which is just about clinging onto its global premiumisation growth story, this is a pure income stock.
The forecast dividend yield’s currently a lip-smacking 9.5%. While this yield isn’t guaranteed, I’m reassured by the insurance firm’s recent commitment to increasing the payout by 2-5% over the next couple of years. That isn’t particularly eye-catching, but I don’t mind when the starting yield’s so high.
One risk would be an economic downturn, which could hurt profits and knock the value of its assets under management.
Looking forward though, I’m optimistic the company’s strong cash flows and excellent balance sheet will enable the dividends to keep flowing.
DP Poland
Finally, we have a new stock for me and that’s DP Poland (LSE: DPP). This is a small company with a market-cap of just £107m. It has the exclusive rights to operate and sub-franchise Domino’s Pizza in Poland and, more recently, in Croatia.
The share price is down 80% since early 2017. However, it’s surged around 73% over the past year as Domino’s takes off in Poland and expansion continues.
Last year, revenue jumped 25% to £44.6m. That’s forecast to rise to around £63m by the end of next year.
The main risk here is that DP Poland’s still loss-making. The firm’s making progress towards profitability, but this issue cannot be ignored. Therefore, I’d only be looking to take a small initial nibble here.
The company now has over 100 locations in Poland. But it’s barely scratched the surface of the opportunity in Croatia, where it has just five Domino’s. It’s aiming for 500 retail units in total by 2030.
I reckon the stock has a lot of potential at just 11p today.
This post was originally published on Motley Fool
