10 Shares Our Writers Might Buy Today

Published in Investing on 29 February 2012

February's best share buys, as chosen by expert Fools.

After January's 2% gain, the market has continued its strong performance in 2012 by reporting a further 4% uplift during February. Indeed, the FTSE 100 was at times approaching 6,000 this month -- a level last seen a year ago... and first achieved way back in April 1998!

Just so you know, the blue-chip index has rebounded from 5,572 to beyond 5,900 in the last 60 days to recoup all the losses recorded during 2011.

As always, the market's ups and downs during February provided numerous share ideas from your favourite investment website and, just in case you missed them the first time, we've rounded up a selection to help you profit in the months and years ahead.

Once again, we're providing a range of ideas and we hope all the names prove rewarding during March -- and beyond!

1. Royal Bank of Scotland

Stephen Bland looked through the 2011 accounts of Royal Bank of Scotland (LSE: RBS) with his "guff filters running full blast" -- which, translated, meant he focused on the bank's 50p per share tangible book value and ignored pretty much everything else. With the share price at 29p, Stephen liked the 0.57 price-to-book ratio, claimed RBS remained "a good value proposition" but cautioned "investors must be prepared to exercise patience".

2. RSA Insurance

A dividend yield forecast to surpass 9% attracted David Holding to RSA Insurance (LSE: RSA) at 107p. David highlighted the general insurer's "conservative investment profile, overseas diversification, notes of optimism... and stated intention to prudently increase the yield further from here". With earnings expected to improve during 2011 to help sustain the payout, David viewed RSA as a deserved part of a "balanced high-yield diet".

3. AstraZeneca

David Holding's second appearance this month comes courtesy of his liking for AstraZeneca (LSE: AZN). David reckoned these £30 shares were in "bargain territory" after the pharmaceutical group reported 2011 figures that supported a price-to-earnings (P/E) ratio of 8 and a twice-covered yield of 6%. David also highlighted Astra's net cash position, large buyback programme and commendable practice of providing medium-term turnover projections.

4. BAE Systems

"Pretty decent value for the longer term" was how Alan Oscroft summed up BAE Systems (LSE: BA) at 324p. Alan pinpointed some hints of optimism within the defence contractor's annual figures, including the 7% dividend raise and director talk of "modest growth" to underlying profits for 2012. Alan also felt BAE's payout was likely to be maintained, with a 5.5% income offsetting the risks of further reductions to global defence spending.

5. Ladbrokes

Onto some mid-caps now, and G A Chester's liking for Ladbrokes (LSE: LAD) at 153p. According to G A, Britain's second-largest bookie is a "very interesting growth-and-income play". Potential growth comes in the form of various digital developments -- including 'automated algorithms' for calculating lucrative 'Bet In Play' odds -- while the income side of things is emphasised by a 5% yield that is almost twice covered by earnings.

6. Carillion

Kevin Godbold said Carillion (LSE: CLLN) could make a "decent medium- to long-term investment" at 324p. Kev revealed the construction and services specialist had performed well during the crunch, with both earnings and the dividend up 72% between 2006 and 2010. Indeed, since Carillion demerged from Tarmac in 1999, the payout has been upped every year without fail. Kev noted the impeccable track record could now be acquired for just 7 times earnings.

7. Spectris

Roland Head debuts on our monthly round-ups with two selections. One of his choices is Spectris (LSE: SXS), which makes high-quality precision instruments and boasts customers and facilities across the globe. Operating margins at a high 18% emphasise the group's pricing position, while profits advanced a sizeable 37% last year -- albeit helped partly by acquisitions. Roland spotlighted a moderate P/E of 11, too.

8. Avanti Communications

This month's sole AIM share comes courtesy of Tony Reading. Avanti Communications (LSE: AVI) caught Tony's eye when the satellite group raised £74m from investors at 280p. Although loss-making for some time, Avanti says it is now fully funded to launch a second and third satellite and extend its residential broadband coverage from just Europe to Africa and the Middle East. Tony said Avanti is just about to turn a profit and presumably believes the share offers a bit more than just 'blue sky'!

9. CLS

"40% discount, no dividend but you still get an income" was how Tony Luckett described CLS (LSE: CLI), a European property group with the unusual habit of returning cash to shareholders through regular tender offers rather than ordinary dividends. Tony outlined how these 560p shares carried in excess of 1,000p per share of assets, and that the chairman's family were admirable long-time investors that controlled 53% of the share count.

10. Punt of the month

Roland Head's other February selection was turnaround punt RM (LSE: RM), where a new management broom is trying hard to sweep clean. Public-sector budget cuts have thumped profits at RM, which sells computers and services to schools, but Roland noted the firm remains in the black, pays a "solid" dividend and carries net cash. He also revealed RM's new boss had spent £1m buying RM's shares, which suggested the chances of a long-term recovery were "good".

What next?

We hope you liked this round-up of share ideas from February. As always, don't buy blindly, but instead use the articles as starting points for your own further research. However, if you can't decide what to buy, or don't like this particular selection, then you may wish to read Malcolm Wheatley's article about backing a broad spread of blue chips via 3 Awkward Questions To Help Build Your Wealth.

We'll be back this time next month for another round-up of our favourite investment ideas. Until then, happy investing... and good luck!

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> The Motley Fool owns shares in AstraZeneca.

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

JustFisk 29 Feb 2012 , 1:52pm

Great idea for an article! Could be a seasonal occurence to post such.
thanks,
JF

Tykethat 29 Feb 2012 , 2:18pm

I've seen worse HY portfolios than this, bit skewed to financials I suppose.

And ..... no sign of Halfords!

DashingDave123 29 Feb 2012 , 2:21pm

Did your last set of 10 shares beat the index?

Mike10613 29 Feb 2012 , 2:28pm

Pay attention to the word "might" in the headline!

DashingDave123 29 Feb 2012 , 2:45pm

Halfords EPS growth is about zero or a bit negative. Its current ratio is low suggesting they are close to liquidity problems. Its only good point is the yield, which has good cover. But the yield is high because the price is low and that's because there is no growth. There are better prospects.

Guy5pd 29 Feb 2012 , 6:42pm

I hold Carillion, amongst several others on this list, and note that today they announced pre-tax profits are down and their finance director just dumped about 40% of his holding - let's hope he just needed the money!

nextstock 02 Mar 2012 , 8:09pm

I read that Astra Zenica should be avoided. Difficulties of getting new drugs to market means that forward projections are looking weak, I understand.
As for BAE...they seem to be going through some major restructuring, with factories closing and loads of redundancies. I`d also guess that defence spending will be held very tight.
And why did they scrap Woodford and trash those `next generation` spy planes, upon which zillions had been spent. Surely that technology could have been put to better use. A very desparate measure reflecting the truely horrible economic mess we`re in.

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