Ferguson (FERG), Diploma (DPLM) & SIG (SHI): 3 FTSE stocks to buy

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Ferguson (FERG), Diploma (DPLM) & SIG (SHI): 3 FTSE stocks to buy

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 Ferguson (FERG), Diploma (DPLM) & SIG (SHI): 3 FTSE stocks to buy
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Highlights

  • The growth amongst private firms eased to 12% from 21% in the quarter to December, mainly due to the rise of Omicron variant cases which led to a fall in demand.
  • The distribution sector was the only segment to report growth, which grew at a rapid pace of 38% during the period.

The UK-based businesses grew at their slowest pace since April 2021 in the three months to January 2022 as per the latest survey conducted by the Confederation of British Industry (CBI). The growth amongst private firms eased to 12% from 21% in the quarter to December, mainly due to the rise of Omicron variant cases which led to a fall in demand.

The latest survey was conducted between 20 December to 17 January 2022 and is based on the response from 477 Britain firms. The data showed a growth slowdown in manufacturing (14%) and business & professional services (9%) compared to the previous period.

In contrast, the distribution sector was the only segment to report growth, which grew rapidly at 38%, amid a steady recovery in various industrial segments. Looking forward, as per the CBI survey, the distribution sector growth rate is expected to ease somewhat to 33%, which is still a higher rate of expansion for firms operating in the sector.

3 distribution stocks

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Let us deep-dive into 3 FTSE listed industrial distribution companies that could be benefitted from higher sector growth:

Ferguson Plc (LON: FERG)

FTSE100 listed company is engaged in distributing plumbing and heating products in the UK and other European countries. It serves clients from the industrial and commercial sector as well as municipal & residential customers.

The company is currently undertaking a share buyback program for its shareholders to reduce its share capital. In this tranche of buyback, the company has allocated £275 million for the buyback program. The company plans a share buyback of USD 1 billion in various tranches. The company reported net sales of USD 6,803 million in the three months ended 31 October 2021.

Ferguson Plc currently trades at GBX 11,595, up by 0.91% on 31 January 2022 at 10:45 am GMT+1, with a market cap of £25,252 million. In the last one year, the stock has given a 36.50% return to its shareholders.

Diploma Plc (LON: DPLM)

The company distributes specialised products and services like instruments for diagnostic testing, electrical wiring, and seals to other companies in the UK and other countries.

The company reported solid growth in organic revenue amid strong demand, which resulted in a 16% growth in underlying revenue in the three months to 31 December 2021. Following a good performance in the first quarter, the company is confident of achieving its full-year guidance.

Diploma Plc currently trades at GBX 2,732, up by 1.86% on 31 January 2022 at 10:45 am GMT+1, with a market cap of £3,342 million. In the last one year, the stock has given a 17.91% return to its shareholders.

SIG Plc (LON: SHI)

The UK-based company distributes building materials and products to construction companies in the UK and Europe markets. The company reported 8% sales growth driven by growth in the UK Interiors market for the full year ended 31 December 2021. As a result, the company expects revenue of £2,292 million, with an operating profit of at least £40 million.

SIG Plc currently trades at GBX 40.50, up by 0.40% on 31 January 2022 at 10:45 am GMT+1, with a market cap of £476 million. In the last one year, the stock has given a 36.95% return to its shareholders.

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