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LONDON -- Last week, I spoke of occasionally turning our back on the big Foolish cornerstone of long-term buy and hold, and suggested there is nothing wrong with going for an occasional shorter-term investment if you think you see a good opportunity. That generated some discussion, with suggestions that it's a dangerous thing to say to beginners.
It can be dangerous, and I do support the strategy of finding great long-term investments and holding them for decades. But I don't think we need to be puritanical about it. And I'm not going to be hypocritical, either. I don't know a single experienced investor who has never tried a short-term punt, and I'm not going to try telling beginners they can't have a bit of a gamble when I have done, and occasionally do, exactly that myself.
New watchlist additions
Anyway, I've come up with two more companies that I think are worth watching. At this stage, I'm not going to be too critical in my selections, but I'm going to build the watchlist the way I did my very first one in real life -- by adding companies that look interesting even if I might not keep them for long, and then when the list starts to get a bit too cumbersome, compare the entries more critically and prune it. It's the way I'd recommend a beginner go about it.
I'm quite keen on engineering, and I'm looking at engineering and design consultancy WS Atkins (LSE: ATK.L ) . It's a company I first really noticed when Maynard Paton noted its rising dividend back in June, and yesterday the company delivered a comfortable trading statement ahead of its interim results. Everything is going as expected.
Current forecasts put the 702 pence shares on a forward price-to-earnings ratio of 9 with an expected dividend yield of 4.6%. There's net cash on the books, and the dividend keeps being steadily raised. Sound cheap? It does to me, so it goes onto the watchlist.
Time for travel?
The other company I'm going to add to the watchlist is TUI Travel (LSE: TT.L ) , one I've been keeping an eye on since the downturn hurt the travel sector so badly. A crunch like that was just what the market needed to shake out the dead meat, such as Thomas Cook, which came very close to going bust.
But TUI is one of the strong players that should head into the recovery well, and there was a pre-close update today ahead of full-year results -- I'll take a look at that in our next portfolio update. What we have is a forecast dividend of 5.1% from a share on a P/E of 10, and no debt.
So this is what our watch list looks like now:
|WS Atkins||700 million pounds||702 pence||9||4.6%|
|BAE Systems||10.7 billion pounds||321 pence||8.1||5.7%|
|Ricardo||199 million pounds||382 pence||13||3.3%|
|TUI Travel||2.6 billion pounds||231 pence||10||5.1%|
|Unilever||29.4 billion pounds||2,273 pence||16.5||3.6%|
|United Utilities||4.9 billion pounds||723 pence||18||4.7%|
This week, I was intrigued by the woes hitting the share prices of fashionists Burberry (LSE: BRBY.L ) and Mulberry (LSE: MUL.L ) , both of which look like they could be oversold. But I remembered the old Foolish advice to buy what you know. It's often badly understood, and I've seen many people get it wrong and buy what they know even if what they know is junk.
No, to me it really means don't buy what you don't understand -- and after years of watching the likes of ASOS booming and busting, I've learned that I very definitely have no idea how the fashion business works. So these two are out for me.
I'm hoping to make a new purchase decision next week, so stay tuned.
In the meantime, a big part of the Beginners' Portfolio is based on a strategy of buying strong dividend-paying shares, and Neil Woodford is an acknowledged expert on that subject. The free Motley Fool report "8 Shares Held by Britain's Super Investor" takes a look at some of his major winners. Click here to get your free copy, while it's still available.
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