Finding the best stocks to buy in a bull market can be tough, but in any case I’m focusing on the prospects of Diageo plc (LON:DGE) (DGE.L), Glencore PLC (LON:GLEN) (GLEN.L), ITV plc (LON:ITV) (ITV.L), Petrofac Limited (LON:PFC) (PFC.L) and Royal Dutch Shell Plc (LON:RDSB) (RDSB.L). Are they worth adding to my portfolio?
Diageo could deliver impressive share price growth in my opinion. The company seems to be in a strong position to generate improved margins, with it focusing on efficiency gains under a revised strategy in recent years.
Alongside this, Diageo has a loyal customer base and exposure to growth regions of the world economy. As a result, I believe it could offer an appealing risk to reward ratio.
Glencore’s PE ratio of 13 suggests that it could offer good value for money in my opinion. The company’s risks now seem to have been reduced versus a few years ago, with its efficiency having improved and its debt levels moving lower.
While commodity price fluctuations mean the Glencore share price could be volatile in future, I feel that it has a margin of safety given its long-term growth potential.
ITV’s management team is in the process of putting in place a new strategy which could boost the operational and financial performance of the stock. This could lead to improved investor sentiment, as well as a higher share price.
With ITV maintaining its relatively strong position in spite of a downturn in advertising, the stock could have a strong position in future. With a PE of around 12, it seems to offer good value for money.
Petrofac’s investment outlook still seems uncertain in my view. The SFO investigation brings added uncertainty at a time when the energy sector is enjoying more positive performance after a difficult period.
Even though Petrofac seems to offer a margin of safety through its current valuation, I feel that its risk to reward ratio may be unfavourable. Therefore, there could be stronger opportunities elsewhere in the support services space.
Shell’s financial prospects appear to be upbeat in my view. The company is clearly benefitting from a rising oil price, and this could lead to impressive free cash flow over the medium term.
With Shell continuing to move ahead with its asset disposal programme and it seeking to reduce debt levels, it could maintain its sound financial footing. The stock’s dividend yield of around 5% suggests to me that it could offer good value for money.