We’ve recently started a new ISA year, which means you have until 5 April 2020 to invest your £20,000 Stocks and Shares ISA allowance. Here are three share ideas to research.
Pharmaceuticals
Hikma Pharmaceuticals (LSE: HIK) develops manufactures and markets branded, generic and in-license pharmaceutical products. The share price has been volatile over the past few years but the dividend is around 90% higher than it was five years ago.
Chief executive Siggi Olafsson was appointed at the beginning of 2018 and said in last month’s full-year results report that during the year revenue and profits were “significantly ahead” of the directors’ expectations, which I find encouraging. New blood at the top of a company is also something I see as a positive because it can usher in renewed management vigour and determination.
Around 62% of revenue came from the US, 32% from the Middle East and North Africa with the rest from around the world. So, the American market is important to the company. The injectables business delivered 40% of overall revenue with 33% coming from generics, 26% from branded products and the rest from other lines. The outlook is positive.
Broadcasting
ITV (LSE: ITV) is an integrated producer and broadcaster, which creates, owns and distributes content for multiple platforms. The firm operates a commercial family of channels in the UK delivering content through television broadcasting and on multiple platforms, such as the ITV Hub, pay platforms and via direct content deals. There’s also a studios segment producing content covering travel, drama, entertainment and factual formats.
The share price has been weak since the end of 2015 and the valuation looks compelling, including a high dividend yield. The dividend has risen around 130% over the past five years.
Meanwhile, in February’s full-year results report, chief executive Carolyn McCall warned that advertising income would likely be under pressure through 2019 because of “economic and political headwinds.”
However, the firm is repositioning the ITV brand, developing its data and digital capabilities, increasing its ability to offer addressable advertising and expanding its direct-to-consumer activities. Such initiatives could see the firm through any further difficulties. I think the stock is tempting.
Business software
The Sage Group (LSE: SGE) provides integrated accounting, payroll and payments solutions to all types of companies and organisations. Over the past five years, the share price has risen around 75% and the dividend by about 46%. In an update in January, chief executive Steve Hare said 2019 started well, which he puts down to the firm’s “renewed focus” on high-quality subscription and recurring revenue.
During the trading year to September 2018, 54% of overall revenue came from Europe, 31% from North America and the rest from other regions. I’ve always liked the company because its products seem to be everywhere and used by businesses large and small. I think that once a firm adopts the Sage solution, switching costs and inconvenience are high, so many tend to stick with the firm, leading to generally stable inflows of cash for it.
However, the appeal of Sage hasn’t gone unnoticed and the valuation looks full. But I think the business is a quality outfit and deserves its rating.