The Colonel: Why I am buying this ‘rubbish’ investment

The Colonel: why I am buying this 'rubbish' investment

I do wish politicians would stop trying to change the rules of democracy just because they don’t like the poll results. I’ve said this before but, again, just get on with it.

The first electoral anomaly that gave birth to the vile nomenclature ‘Brexit’ was blamed on us old farts. We so-called baby boomers had accusatory fingers jabbed in our direction because we quaffed all the free school milk and lunches and gobbled up all the university grants.

Then, apparently, we had the impertinence to buy our own homes, enjoy double-digit equity growth year-on-year simply by living in them, and in doing so make nearly all houses completely unaffordable for the younger generation.

Yet the latest electoral cock-up, and I use that phrase deliberately, has been blamed on young people by a Conservative Party that lost its parliamentary majority when the young turned up at the polls in their millions to express their political bias - as I am sure, last time I looked, they were perfectly entitled to do - and ruined the expected increased majority for the Tories.  Still, as Nixon once said, show me a good loser and I’ll show you a loser.

One does wonder which large segment of society is going to cop the blame the next time the establishment gets it so badly wrong.

Angry brigade

One truism of modern politics is that to win elections, one should never annoy the middle classes – not unless you want rivers of blood bubbling down the aisles at Waitrose. But it seems to me, as one who follows the perfectly middle class pursuit of investing, that all this whining, blustering and indecision is doing just that.

However, when house prices are going backwards, there is sometimes money to be made. Housebuilders, as I noted in the April issue, catch the eye from an income perspective, with dividend yields in the 5-6 per cent range.

But no company on my watchlist has impressed over the past quarter. Taylor Wimpey (TW) has spent the past quarter ranging down from above £2 to 175p at the time of writing on 4 July. Meanwhile, Barrett Developments (BDEV) is off its May peak of 615p, falling to 565p.

Looking back to the beginning of the spring, I am glad I backed away from that other middle-of-the-road favourite BT, which is having a shocker, thanks to its pensions deficit and debt, as well as arguably overspending on sports broadcasting rights. It’s really looking like an ill old man rather than a middle-aged thruster now at less than £3, a mile from its £4-plus peak at the outset of the year.

Mind you, companies can turn a corner. Take BP for example, which seems to be keeping its bad news off the front pages. It has restructured, slimmed down and settled most of its liabilities from the massively damaging Deepwater Horizon disaster. BP seems much changed, and it looks to be in much better shape to profit from an upcoming era of low oil prices.

The heady days of early 2017 (does anyone still remember those?), when its shares traded at well above 510p, look attainable again, and I am minded to make a cheeky investment as the price hovers around 450p. Bear in mind that the share yields about 7 per cent, so where’s the gamble?

Fresh ideas

But enough of all this misty-eyed retrospection. In these wishy-washy times, I want to season the celery soup with some fresh ideas.

I still am lingering around this idea of infrastructure. Concrete takes money and, eventually, makes money (think Severn Bridge and the Channel Tunnel), but my ashes will long since have been scattered down the 18th before I make a pound from any of that kind of thing, so I am thinking about what makes money around the peripheries of infrastructure.

Transport is a no-no these days – remember the previously untarnished Volkswagen Group? Healthcare and the care home industry are too complicated and vulnerable to policy swings.

Also, I think the serviced office sector, which has been popular recently, looks to be past its sell-by date. Workspace Group (WKP), for example, has had some decent results and says its customer base is moving to larger companies. The share price has had a stellar year, having risen from £6 to more than £9, but experts warn the sector is overheated and there is nowhere left to go.

So what are the options? I’ve been eyeballing Biffa (BIFF), but I didn’t get in when I should, as it only floated last October at 180p. The key attraction is that this business will never run out of raw material or its ability to profit from it. That’s because Biffa’s business is quite literally rubbish, but the firm’s performance definitely isn’t.

From 177p at the turn of the year, the dumpster of the FTSE has shown a great spike up to better than 220p on the back of profits growth of 18 per cent this year, and it is anticipated by many a City know-who to have a prospective yield of 3.5 per cent. It has a price/earnings ratio of better than 12.5, which isn’t bad for a youngster.


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