A UK share I think matches the Warren Buffett investment style

A UK share I think matches the Warren Buffett investment style

first_imgA UK share I think matches the Warren Buffett investment style Christopher Ruane | Friday, 19th March, 2021 | More on: SPX Our 6 ‘Best Buys Now’ Shares Image source: The Motley Fool Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Get the full details on this £5 stock now – while your report is free. Investing guru Warren Buffett is now worth an estimated $100bn. No wonder so many investors try to apply his straightforward principles in their own investment decisions.Lately I have been considering a UK share I think meets a lot of the investment criteria Buffett typically applies to buying shares. Here I share why.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Little known but much lovedThe stock in question is Spirax-Sarco Engineering (LSE: SPX).If you have never heard of it, you are not alone. The specialist engineering firm is not a household name. That is because its main focus is B2B. It supplies engineering products and services to a wide range of customers around the globe. Its main profit driver is steam, but it also has electric thermal solutions and a well-regarded pump business.Steam hardly sounds like the business of the future! But in fact, all of the company’s offerings have applications in industrial processes such as manufacturing.Warren Buffett talks about a business having a “moat” – a competitive advantage which makes it difficult for other companies to muscle in on its business area. Spirax-Sarco’s proprietary engineering designs, talented team, and extensive customer relationships form such a moat in my view. If a customer purchased a pump from them before, they would be the obvious choice to maintain or replace it.Another characteristic that matches Warren Buffett’s investment criteria is the company’s pricing power. Pumps and valves may sound like a commodity market. But, in fact, a lot of Spirax-Sarco revenues come from bespoke solutions designed for a specific customer situation. If a company is running a factory, oil rig, or power station and has to take it offline because of a faulty component, the loss can run into thousands of pounds an hour in some cases. So the sorts of customers Spirax-Sarco targets tend to value quality over price. That gives the company pricing power.Outstanding dividend recordThere aren’t many UK shares that have raised dividends annually for decades.Spirax-Sarco raised its dividend last week by 7% – a healthy increase. But what impresses me even more is that is just the latest annual raise in an unbroken stretch covering half a century.Of course, to keep raising dividends in the future, the company will need to maintain and grow earnings. Revenue fell 4% last year and the company only eked out a 1% increase in pre-tax profits. A slowdown in business activity is bad for demand, and any future recession could impact the company negatively.Even Warren Buffett makes mistakesSuch a share is bound to have its admirers. That pushes the price up. Even after all those dividend increases, Spirax-Sarco is only yielding 1%. That reflects the fact that the share is so popular and heavily bought.In 2016, Buffett bought a company which made precision engineering components for mission-critical applications. Yet in his insightful letter to shareholders last month, Buffett called the purchase a mistake as he “paid too much”.Could the current price for Spirax-Sarco be too high? It’s just 8% lower than its all-time peak. If it falls out of fashion or the business starts to struggle, it has a long way to fall down. But its business model gives it a lot of the characteristics of a share I’d choose using Warren Buffett investment criteria. Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment.center_img See all posts by Christopher Ruane Simply click below to discover how you can take advantage of this. christopherruane 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. Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. FREE REPORT: Why this £5 stock could be set to surgelast_img

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