Should I Buy These 5 Shares?

LONDON -- Shopping for shares isn't easy. There's so much on offer these days, I feel spoiled for choice. Here are five stocks I've added to my basket lately, but should I buy any of them?

Going for broke
I blow hot and cold on ICAP  (LSE: IAP  ) . As a global wholesale broking business specializing in derivatives and securities, it has been in the firing line ever since the financial crisis, suffering a slump in trading, profits, and group revenues. Yet there are times when I think this stock could be a great recovery play, if you're the patient type. Trading on a big fat yield of 6.7%, ICAP pays you handsomely for being patient. The market went cold on the stock after last November's dismal results, but it has since floated 16% on a blast of warm sentiment. Earnings per share (EPS) growth looks set to plunge 19% in the 12 months to March 2013, followed by modest rises of 7% and 4% in the two subsequent years, which suggests the recovery could take time. Trading at around 10 times earnings, ICAP is one of the cheaper stocks on the FTSE 100, and it isn't difficult to see why. I'm patient, but I'm not that patient.

Still smokin'
Pocketing a regular dividend from the world's most globally diversified tobacco company, British American Tobacco  (LSE: BATS  ) , could prove a habit hard to kick. Its 3.9% yield isn't spectacular, but it is solid. Can it keep puffing away? I barely know anybody who smokes these days, which can't be good for profits, but then again I don't live in China or India, or any other emerging market, where people are taking up the habit rather than kicking it. EPS growth looks steady this year, with a forecast 9% rise in 2013. For a defensive stock, BAT's share price has been a wee bit volatile lately. As investors embraced risk toward the end of last year, it lagged the resurgent FTSE 100. Trading at 15 times earnings, the market seems to know exactly how to value this stock. In the long term, tobacco could be a dying product. Until then, you can keep drawing on those dividends. And that probably makes it a buy.

Who's next?
Last time I sized up clothing retailer Next  (LSE: NXT  ) ,  I liked its style. In fact, the only thing I didn't like was the price tag. At 39 pounds, it cost 50% more than one year earlier. That's the price of success. I'm impressed by Next's recent strong performance, but I wonder whether life will get harder as the siege tightens on the U.K. high street. I might be tempted by a more generous dividend, but the stock currently yields just 2.2%. I suspect the stock market could be in for a bit of volatility in the next couple of months. If it does, I will be out bargain hunting, and Next will be high on my list.

Aberdeen Anguish
I thought Next had done well, until I checked out Aberdeen Asset Management  (LSE: ADN  ) . The Scottish fund manager is up 70% over the past 12 months, flying high on resurgent markets, so it looks like I have missed my chance. I am coming up against the same problem again and again right now. The FTSE 100 is beginning to look fully valued, with fewer and fewer bargains out there. It might need to take a breather before making further headway, and so might Aberdeen. Trading at 15.4 times earnings and yielding just under 3%, this is a stock to buy on a market dip, should we get one.

From Chile to China
Chilean copper and gold mining giant Antofagasta  (LSE: ANTO  ) is a play on China, which consumes 40% of the world supply of copper. The experts still can't agree whether China is heading for a hard or soft landing, although rising inflation in December dampened hopes of further government stimulus, denting Antofagasta. Brokers can't agree on Antofagasta, either. Last week, Goldman Sachs upped its target price from 11 pounds to 11.20 pounds yet recommended that investors sell. Next day, Exane upped its target price from 14 pounds to 15 pounds and maintained its "outperform" rating. After a 6% drop in EPS in 2012, Antofagasta is expected to recover this year, to deliver growth of 13%. Like so many stocks, recent market growth has left it fully valued. On a yield of less than 1%, you aren't even getting copper-bottomed income. I wouldn't call it investment gold.

Great when it's eight
That's five stocks to consider, but what's that -- you want more? How about eight, then? If you're looking for more opportunities, you might find them in our special in-depth report "Eight Top Blue Chips Held by Britain's Super Investor."

The report by Motley Fool analysts is completely free and shows where Invesco-Perpetual's dividend dazzler Neil Woodford believes the best high-yield stocks are to be found today. Availability of this report is strictly limited, so please download it now.


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