Neil Woodford is one of Britain’s favourite fund managers having returned an average of 12% per annum for over 25 years. A small £1,000 investment would have been £23,000 25 years later. Today I’m looking at a few of his current holdings to investigate whether I would buy them for the long term.
Exciting prospects
The UK’s largest aggregate company Breedon Aggregates (LSE: BREE) is a very exciting business. The management team has a proven track record as a number of its members were involved in Aggregate Industries, which was sold for £1.8bn to a Swiss company. The company has been growing earnings every year and this looks set to continue. Last year revenue rose 18.1% and earnings per share grew by a huge 63.4%. While focusing on organic growth, the company is also in the process of acquiring Hope Construction Materials. The deal has just passed through the Competition and Markets Authority and looks set to close at the end of the summer. The £336m deal will create a vertically integrated building materials group that owns over 60 quarries and over 200 ready-mixed-concrete plants.
In good health
Spire Healthcare (LSE: SPI) is in a great place to take advantage of the increased need for medical care. The company has been building hospitals and is taking advantage of the increased demand for high quality medical care. It’s trading on a price-to-earnings ratio (P/E) of 21 after making a profit of £60m in 2015. Net debt stands at around £410m but this is manageable for a growing company. The shares are down roughly 10% in the last 10 days on Brexit fears. I think the company should grow in the future regardless of the result of next week’s referendum. City analysts like the stock and have price targets as high as 405p.
Rapid growth
Yesterday Purplebricks (LSE: PURP) released its first set of results as a listed company. Revenue grew by 448% to £18.6m and gross profit also grew by over 400% to £10.6m. The company has had a fantastic year and if momentum continues then shares could fly during 2016. It’s looking to expand quickly and has plans to tackle the £3.3bn Australian market this year. Purplebricks also released an app in April that has had over 11,000 downloads so far and builds on the company’s market-leading technology. But although growing fast, the valuation is eye-watering and there’s scope for a serious crash in the share price if the company disappoints. However, you only have to look across the pond at companies like Amazon to see the premium investors will pay for disruptive businesses.
These three companies all have great growth prospects and it’s no surprise to see a fund manager like Neil Woodford buying shares in each. So if high-flying growth stocks make up part of your portfolio then these three are worth a look as they offer good prospects.