As an avid follower of many FTSE 100 shares, I have been closely watching the index’s recovery from the gilt market collapse. However, the green shoots of recovery are far from evenly distributed. Some of Britain’s listed behemoths find themselves underpriced and ripe for me to potentially make moves.

The workman

My first pick is industrial equipment supplier Ashtead Group (LSE:AHT). This entity makes much of its profit Stateside but also has an entrenched presence in the UK. 

Its share price has been rising for the last week (up 5.71% at the time of writing), as is only fair for a company with such impressive financial fundamentals. 

Ashtead has a high operating profit margin (24.11%), meaning that it has passed the bulk of its inflation-induced expenses onto its customers.  This suggests that it will remain fairly insulated from further price rises. Reflecting this nous, its returns on invested capital outperform the majority of its rivals. 

Moreover, its growth potential makes it more than a safe store of wealth. Industrial businesses squeezed by inflation tend to rent new equipment rather than cough up for expensive new machinery. 

Consequently, Ashtead’s clientele is expected to grow, a feat that will undoubtedly be reflected in its share price. 

The aristocrat

Up next is the blue-blooded asset management company Schroders (LSE:SDR). 

Despite its illustrious reputation and more than 200-year-old pedigree, Schroders has fallen into something of hard times.

The whole British financial sector suffered from the recent financial turmoil, but Schroders in particular was exposed as swimming without trunks on when the tide retreated.

It was somewhat overexposed in its pension positions; serious injury was only averted by an emergency intervention by the Bank of England to rescue pension funds. 

Consequently, Schroders shares have declined amid questions of the company’s risk management.

While in the doghouse, I for one am inclined to give the private equity giant a second chance.

Its profitability is not to be scoffed at; indeed, its operating margin and profitability are outperforming half of its industry peers, (20.72% and 19.4% respectively). It is also posting steady earnings and revenue growth to boot.

This suggests that when the dust settles, Schroders will return to its natural position as part of the FTSE 100 furniture, its share price climbing with it.

The wildcard

Hargreaves Lansdown (LSE:HL) is a financial juggernaut, selling funds and shares to retail investors while also managing assets.

Its fortunes have been in freefall, shedding some 45.2% of its shares’ value this year. This has been attributed to the shellacking its reputation took after the Woodford fund collapse. As legal storm clouds gathered, its share price tanked amid uncertainty about its trajectory.  

However, despite the rout, Hargreaves Lansdown has impressive profit margins and revenue that is not reflected by its share price. It is expected to grow by 11.3% over the next year, beating its three-year average by 4.6%. 

Its large cash reserves and low debt means that it will likely weather its legal travails. A big perk of me holding this share is its dividend payments, which are expected to grow to 5.6% next year, above the 3.7% FTSE 100 average. 

Additionally, this dividend has been paid consistently for 15 years. Overall then, this volatile share could be a great source of passive income and financial returns. 

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Tom Hennessy has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown and Schroders (Voting). Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As an investor with a vision for the long term, my buys lean more on the dull and banal than the flashy tech stocks splashed across the FT’s headlines that capture people’s imaginations.  My favourite shares are very much bland, solid entities that deliver good returns without being the next Apple. More Crystal Palace than Manchester City. The FTSE 250 possesses such shares in abundance.

My pick of the bunch very much fits this characterisation. Diploma (LSE:DPLM) is a specialist component manufacturer and distributor with a large UK and overseas presence. It makes and ships implements like valves and pipes across the globe for industries such as life sciences.

Its share price is currently down 1.95% over the past five days, as is the overall FTSE 250 index (-1.05%). Indeed, the fate of the two seem linked. Since Brexit and the current British political instability, investors have turned their noses up at FTSE 250 assets. This is somewhat unfair, as they are far from financially underperforming by and large. Diploma is a glittering source of value amid this shamefully overlooked exchange. 

Hidden value

The company has remarkably strong financial fundamentals, giving me much confidence that it will weather the coming economic storms. Despite supply chain chaos and inflation, it is poised to deliver a low double-digit increase of revenue. That this will swell its coffers is demonstrated by the fact that its operating margins are up by 0.2%. This is because it managed to pass on inflationary costs to its consumers, thus insulating it from the scourge of price increases that frequently eat into businesses’ bottom lines.

It also has a low debt-to-earnings ratio — its borrowing costs are covered 10x by its profits, giving it much financial headspace should it run into trouble. Therefore, at the very least it is a reliable store of value at a time when are savings are eroded by inflation. That in itself is valuable, but that is not why I wrote this article.

In my mind, Diploma will emerge from bitter economic conditions in better shape than it is now. This is because of its aggressive growth strategy. Diploma has achieved this by ruthlessly snapping up competitors or suppliers. It acquired 10 companies last year and three so far this year. Its range of services mean that its list of potential companies to buy is very long.

As competitors wilt, Diploma’s sound finances could enable it to buy them at cut-price deals. Its low debt ratio means that it can afford to borrow in order to swallow even meaty entities. Consequently, it could find itself in a position to capitalise on the next uptick of the economic cycle. 

Risk vs reward

In spite of this rosy outlook in the long term, Diploma is not immune to the wider economic climate. It is likely that its growth will slow as its operating conditions are adversely affected, hurting its revenue stream. Its share price will also likely suffer volatility over the coming months as the energy crisis and the fluctuating pound pummels British assets.

However, its long track record of growth, sound numbers and potential for expansion mean that I am buying for the long run.

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Tom Hennessy has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Up 22% in the last six months to a lofty £414.19 at the time of writing, Biffa (LSE:BIFF) shares are certainly a world apart from the rubbish that is the company’s raison d’etre. Indeed, they are one of the highest risers on Britain’s FTSE 350, as British markets are pummelled by a plummeting sterling and spooked investors. 

To us investors, it is a timely reminder that there is value to be found amid British assets. Even as bonds are discarded faster than the trash that Biffa deals with.

However, should I buy Biffa during its finest hour? Alternatively, perhaps wait for its price to settle into the dependable banality of its service? Or simply give it a pass?

The giddy share-price rise came as Biffa was acquired for a handsome sum of £1.1bn. Albeit, that’s £300m less than the £1.4bn that was mooted in June. This reduction has been attributed to the weakness of sterling in relation to the jacked US dollar and the economic chaos wrought by U-turns made by the British government recently.

Overvalued?

That the takeover was the cause for the soaring share price rather than strong performance data, for instance, suggests to me that the rise will not be repeated tomorrow or any time soon.  Buying now would be acquiring an asset at the crest of a breaking wave driven by human hype rather than giddy business performance, in my opinion.  That rules out purchasing immediately, lest the swell of optimism that propelled it quickly plummets.

The choice for me then, Fools, is whether to buy the company’s shares in the immediate future or pass. 

The long-term vision of ECP (Energy Capital Partners), which bought Biffa, is compelling.  It believes that patient, sustained investment will enable Biffa to thrive in its key markets of waste collection and sustainable disposal.  It is certainly aided by the UK government’s target to increase plastic recycling and eliminate avoidable waste. Future initiatives to do so will likely play into the hands, or wallets, of Biffa shareholders. This is especially true given its entrenched position. It operates from 195 locations nationwide and servicing a diverse range of industries, from construction to retail. 

However, an immediate threat is the wider economic picture of inflation and labour unrest. Biffa is vulnerable to workers striking to prevent their pay being eroded by inflation. Particularly so as their discontent will quickly result in piles of trash on our streets. The subsequent PR crisis would leave Biffa investors sweating, I’d suggest.

My future approach to Biffa shares

Overall, the long-term prospects of this company enable me to gaze beyond the immediate economic gloom and envision an asset that will reliably appreciate.  I’d contemplate buying its shares, but not right now.

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Tom Hennessy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.