Scottish Mortgage Investment Trust (LSE: SMT) shares have been one of the FTSE 100‘s high flyers in the last year. Its collection of exciting, future-thinking companies has pushed the share price up 68% since late 2023. With the chance to get some exposure to hot names like SpaceX, TikTok and Nvidia, investors might be wondering whether this is one to consider snapping up today? I believe so, and here’s why.

British investing

An interesting quirk of British investing is how overrepresented a few established companies are. Hargreaves Lansdown releases a report on this every so often, showing where people put their money via their ISA accounts. 

The data is a bit predictable, to be honest. Each time, big FTSE 100 hitters like BP, Aviva and Legal & General dominate. 

The problem? These are largely defensive stocks, and are sometimes unflatteringly called dinosaur stocks. That’s not to say they’re bad companies, but oil majors and big insurance firms don’t expect to have oodles of fast growth ahead of them.

Enter Scottish Mortgage. You could almost view this fund as the anti-FTSE 100, such is its focus on non-British growth stocks. They range from electric vehicles, battery technology, or simply an online Amazon lookalike in Latin America. Many of the companies are unlisted too, so there are shares I can’t buy on the market included. 

Why might this be good? Because it adds diversification. It’s hard to pinpoint any one company that will go on a tear, but with a basket of 30 of them? That’s a lot of chances to strike gold. 

And in a world where many are saying we’re standing on the precipice of a revolution in artificial intelligence, I wouldn’t like to be watching from the sidelines.

The risks

Investors ought to be aware of the risks too. To start with, the firms in this fund run at sizzlingly high valuations. 

The price-to-earnings ratios of Amazon (50), Meta (29), Nvidia (46), and Ferrari (51) look massive compared to the FTSE 100 average (14). That’s par for the course with growth stocks, especially good ones, but it means less safety. 

For example, the reason eye-wateringly valued internet stocks fell so far during the dotcom crash was simply because they had so far to fall. Scottish Mortgage could also sink like a lead balloon in any market turbulence.

Given the international nature of its constituents, the threat of President Trump’s tariffs is also something investors should keep an eye on. But how serious might these be? 

Well, we got a little taste this week. The first day after he slapped tariffs on China, Mexico and Canada, the S&P 500 was down 0.76%. The next day it was up 0.66%. The MCSI world index was up on both days. 

On those numbers, the markets don’t think there’s much of a problem. Just a storm in a teacup then? I’d say it’s too soon to tell. But I think the early signs are this shouldn’t be a red flag for anyone considering investing in Scottish Mortgage shares.

The FTSE 250 index of medium-sized companies does not always get the same level of attention as the blue-chip FTSE 100.

But I own some FTSE 250 shares and like the fact that up and coming firms can offer growth prospects that might be harder to find when looking at mature companies.

Poorer performance than the FTSE 100

So, if I had put £1,000 into the FTSE 250 a year ago, what would that investment now be worth?

During the past 12 months, the index has increased in value by 8%.

Therefore, if an investor had put £1,000 in 12 months ago, it should now be worth around £1,080. That is not bad, in my view, but it is also notably below the 13% capital growth achieved over that period by the FTSE 100.

There are dividends too. The yield is currently 3.3%. Again, not bad I feel, although not quite as attractive as the 3.6% currently offered by the FTSE 100.

Why I don’t buy the index

The FTSE 250 is supposed to contain growing companies, so what might explain its recent underperformance versus the blue-chip index?

All companies face risks, but smaller companies may lack the resources and experience to handle them as well as mature firms that have been around for decades (or in some cases, for centuries).

Also when a FTSE 100 business loses enough value it gets booted into the FTSE 250 and vice versa.

So the smaller index loses some companies that have growing share prices, while FTSE 100 businesses that decline sharply enough move down into the FTSE 250. Ocado is an example.

That means that the FTSE 250 almost by design has some disadvantages compared to the bigger index.

But the main reason I do not invest directly (for example, through a fund) is the same for both: I prefer to try and find individual shares I think can potentially do better than the index overall.

Is that possible? Yes, but it is not necessarily as easy as it may sound.

In the wrong lane

As an example,  consider a share I used to own: Hollywood Bowl (LSE: BOWL).

Over the past year, its price has fallen 5%, substantially underperforming the index. Its dividend yield of 4.3% is better, but even considering that, an investor would have done worse putting £1,000 into Hollywood Bowl shares a year ago than the FTSE 250 overall.

Yet the business is profitable and is growing handily, thanks both to its UK business and to rapid expansion in Canada.

Is this a short-term share performance problem, then?

No. Over five years, the Hollywood Bowl share price has lost 1%. Then again, during that period the FTSE 250 overall has gone down 4% so Hollywood Bowl has done a bit better in relative terms (although not by much, frankly).

With large customer demand, an extensive network of bowling  lanes (and some miniature golf sites) and a proven business model, I see a lot to like about Hollywood Bowl.

But one risk is a weak economy hurting consumer spending on leisure activities like bowling. So although I like the investment case, the current price-to-earnings ratio of 16 is a bit high to grab my attention. I will not be investing again just yet.

Yesterday (4 February), wasn’t a good day for those with a vested interest in the Vodafone (LSE:VOD) share price.

The value of the telecoms giant fell 7%. This was despite it announcing a 5% increase in revenue for the quarter ended 31 December 2024 (Q3), compared to the same period a year ago.

Encouragingly, the improvement in sales has helped the company’s bottom line. Looking back to the start of its 2024 financial year, the quarter saw its highest earnings. Also, there was a net increase of 23,000 mobile customers during the period.

Period	Adjusted EBITDAaL (€bn)
Q1 FY24	2.63
Q2 FY24	2.80
Q3 FY24	2.80
Q4 FY24	2.80
Q1 FY25	2.68
Q2 FY25	2.73
Q3 FY25	2.83

This meant the company was able to reiterate that it was on target to report EBITDAaL (earnings before interest, tax, depreciation and amortisation, after leases) — its preferred measure of profitability — of “circa €11bn” (£9.15m) for the full year (FY25).

This is in line with the forecasts of the 12 analysts covering the stock. Their range of estimates is for FY25 earnings of €10.94bn-€11.28bn, with an average of €11.02bn.

On the face of it, the reaction of investors is surprising to me.

Digging deeper

But revenue in Germany is still falling. In 2024, the government outlawed the sale of bulk pay-TV contracts in apartment blocks. This means residents are now allowed to choose their own providers.

As a result, Vodafone lost over half of the customers affected. Although this was expected, excluding those impacted by the law change, service revenue was still down 2.6%.

This is clearly a concern given that 34% of the group’s revenue comes from the country.

And then there’s the perennial problem of Vodafone’s debt. Telecoms infrastructure doesn’t come cheap, which means the group’s had to borrow enormous sums.

To address the issue, the company’s been selling various divisions and non-core assets to generate some funds to help reduce its level of borrowings.

The sale of its Italian business brought in €8bn of cash. Of this amount, €2bn is expected to be used for share buybacks and the rest for paying down its debt. There was no mention of current net debt levels in the Q3 announcement. This might also explain the apparent investor nervousness.

Frustrating times

However, although I acknowledge these concerns, I struggle to understand the apathy towards the company. It’s not a recent phenomenon. For several years now, the share price has been falling. It’s hard to believe that Vodafone was once the UK’s most valuable listed company.

It exited Italy for 7.6 times EBITDAaL. On this basis, Vodafone should be valued at €83.6bn (£69.5bn). But businesses are usually sold without any debt. At 30 September 2024, the group had net debt of €31.8bn (£26.4bn). Remove this and I think a valuation of €51.8bn (£43.1bn) can be justified.

That’s a 155% premium to its current stock market valuation.

With a yield of 5.6%, the dividend’s not bad either — the average for the FTSE 100 is 3.6%. Although the 50% cut in 2024 is a stark reminder that payouts are never guaranteed.

Looking to the future, regulatory approval has been received to merge its domestic operations with Three. Interestingly, excluding Türkiye — where revenue was helped by rampant price inflation — the UK market saw the biggest increase in Q3 sales.

For these reasons, I think Vodafone’s a stock that value investors should consider buying.

The GSK share price rallied 6% this morning after the company published a surprisingly strong set of full-year results for 2024. Many metrics beat analysts’ expectations, including sales and revenue.

The multinational pharmaceutical and biotechnology company had a tough year, with an extended drop in vaccine sales. However, total sales still rose 8% to £31.4bn, with particularly strong growth in Speciality Medicines (up 19%). 

For the full year, core operating profit climbed 11% to £9.1bn and core earnings per share (EPS) rose 10% to 159.3p. Notably, both metrics were down 10% compared to Q4 2023.

The firm announced a Q4 dividend of 16p, bringing the full-year dividend up to 61p. To top it off, a £2bn share buyback programme was announced, to be carried out over the next 18 months.

2025 guidance

CEO Emma Walmsley said: “We expect another year of profitable growth in 2025, and have further improved our long-term outlook, with sales of more than £40bn now expected by 2031.“

She went on to highlight how the company is increasing and prioritising investment in research and development. A focus on new long-acting and speciality medicines was noted, specifically in Respiratory, Immunology & Inflammation, Oncology and HIV. Last year already saw 13 positive phase-three readouts in these areas, strengthening the company’s pipeline progress.

A key driver in today’s price growth was likely the company’s decision to boost forward guidance. It now expects turnover growth in 2025 to be between 3% and 5%, with core operating profit growth of between 6% and 8%. Core EPS is expected to follow a similar pattern, benefiting from share buybacks.

The sales outlook for 2031 has now been increased to more than £40bn (previously £38bn), reflecting late-stage pipeline progress.

Legal and policy issues

A big factor that ate into profits last year was a £2.2bn settlement regarding ongoing Zantac lawsuits. Despite the payment, not all cases are settled and more may still arise. The threat of product-related lawsuits is a constant risk that pharmaceutical companies must navigate. 

Another key risk is the proposal by the Trump administration to make Robert F Kennedy Jr. the US health secretary. Based on past comments made by Kennedy, some medical professionals feel he is a vaccine sceptic. With the US as one of its key markets, his influence could hurt the company’s profits.

Signs of a recovery

Shareholders have been losing faith in GSK over the past few years, with the share price leaving little to get excited about. Since early 2020, it’s made two impressive recoveries to £18, only to crash again to £13 soon after.

One of those crashes came in July 2022 after the company demerged from its consumer healthcare business, Haleon. Intended to allow the company to focus on pharmaceuticals, the move shook investor confidence. The shock was further compounded by a 27.8% dividend cut that took the 2022 full-year payment down from 80p to 57.7p per share.

With sales up and the dividend growing once again, this may be early evidence that the decision is paying off. It still faces some challenges but I think today’s results make it a stock worth considering.

If you have ever thought about getting into the stock market but not acted on that thought, you are far from alone.

A lot of people let their stock market dreams die without investing a single penny. That might be because the market can seem confusing, or they do not have much spare money to invest.

The market can indeed be confusing, although that is a source of opportunity as well as risk. As for budget, it is possible to lay the foundations for potential stock market success with just a few hundred pounds.

Setting up a way to buy shares

As an example, someone with £320 certainly has enough to get going, in my view. That is also enough to diversify across some different shares.

The  investor needs a way to use that money actually to buy shares, though. That might be a share-dealing account or Stocks and Shares ISA, for example.

As lots of options are available it is wise and financially sensible to compare them. Each investor has different priorities.

Learning how to participate effectively in the market

What about the potentially confusing nature of the stock market that I mentioned above?

To some extent, almost all investors end up learning as they go. As with many things in life, doing something teaches you about things that can work and things that do not.

Still, before investing any of the £320, I think someone would do well to learn about basic stock market concepts, from how shares might be valued to why first-time investors may benefit from focusing on consistency.

Finding shares to buy

Next, what about choosing the right shares to buy?

Long-term wealth creation is partly about putting money to work (maybe adding to the initial £320 over time) and achieving attractive growth. But it is also about carefully managing risks. That is something stock market beginners sometimes do not think about hard enough.

For example, if the £320 was invested in shares that fell 50%, how much would they then need them to rise to get back to their starting point? 50%? No, in fact they would now need to double (grow 100%) just to cancel out that 50% fall.

Clearly, spending time and effort to find the right shares to buy is important.

One share to consider

A share I think a stock market beginner should consider now is FTSE 100 financial services firm Legal & General (LSE: LGEN).

It focuses on retirement-linked financial products. That is a huge, lucrative market and one I expect to stay that way over the long run.

Legal & General is able to compete successfully thanks to a number of commercial advantages, including a large customer base, well-established brand and deep operational experience in the financial markets.

Profits have fallen in the past couple of years, though. I see a risk that volatile stock markets could lead policyholders to pull out funds, hurting Legal & General’s earnings.

More positively, it has raised its dividend per share annually in recent years.

It now offers a dividend yield of 8.8%, meaning that for every £100 invested today a shareholder would hopefully receive around £8.80 in dividends annually, if the dividend is maintained.

GSK (LSE:GSK) shares ended 2024 on a sour note after what proved to be a rollercoaster year.

The pharma giant dropped 7% over the 12 months, as worries over Zantac litigation and potential shake-ups in US healthcare policy shook investor confidence.

Yet the underlying health of the FTSE 100 firm has remained steadfast, as illustrated by impressive full-year results released today (5 February).

GSK’s share price has spiked 5% following the news. Can it keep going?

Forecasts beaten

Helped by what it described as “accelerating momentum in Specialty Medicines“, full-year revenues at GSK rose 7% at constant currencies to £31.4bn. This beat broker consensus estimates by around £300m.

Turnover was up 4% at actual exchange rates.

GSK said that “continued growth across disease areas” pushed Specialty Medicine sales 19% higher at stable currencies, to £11.8bn. Oncology was the standout here, with revenues almost doubling year on year on the same basis (up 98%).

Strength here more than offset a 4% sales decline at the firm’s Vaccines division. Turnover dropped as stricter age rules in the US for respiratory syncytial virus (RSV) treatment caused Arexvy sales to plummet 51%.

At group level, GSK’s operating profit dropped 33% and 40% at actual and constant currencies, respectively, to £4bn. It reflected a £1.8bn charge as the business settled US claims that its Zantac heartburn drug caused cancer.

Core operating profit, which strips out these litigatory headwinds, rose 11% from 2023 levels.

Strong momentum

GSK’s on a roll at the moment. Following a series of guidance upgrades last year, it’s got 2025 off to a bang and is expecting another year of solid progress.

The Footsie firm expects turnover to rise between 3% and 5% at constant currencies, and core operating profit to advance between 6% and 8%.

GSK also hiked its 2031 sales target, which it said reflected “late-stage pipeline progress”. Turnover is now tipped at £40bn, a £2bn upgrade from prior targets.

Today, the company has 71 Specialty Medicines and Vaccines in clinical development. Of these, 19 are at the Phase III testing or registration phases.

GSK also confirmed it expects five “major” new product approvals in 2025, including Blenrep (which tackles multiple myeloma) and Depemokimab (for severe asthma).

What next?

Investing in pharma shares like this can be dicey business at times. As GSK witnessed last year with Arexy, changes to the regulatory environment can cause havoc among certain product lines.

On top of this, developing medicines is highly complex and therefore unpredictable. Setbacks and the testing or registration phases can, through a blend of sales issues and extra costs, leave earnings forecasts in tatters.

But as today’s update shows, GSK’s making impressive strides even though these threats remain. Indeed, its strong record of pipeline execution remains highly encouraging, the business enjoying around a dozen positive late stage clinical updates in 2024 alone.

Its plans to become a powerhouse in the fields of respiratory, HIV and oncology treatments remain well on track.

Despite today’s rise, GSK’s shares still look cheap compared to those of its industry peers. Its forward price-to-earnings (P/E) ratio is a modest 10.2 times.

While nothing is guaranteed, I’m optimistic that GSK’s low valuation and impressive momentum could lead to more impressive share price gains. I think it’s a top FTSE 100 stock to consider.

With a fresh £20,000 Stocks and Shares ISA contribution limit at my disposal this April, I turned to ChatGPT to help me build the perfect FTSE 100 portfolio.

I told the artificial intelligence (AI) chatbot I wanted to balance risk and reward with a mix of growth and income stocks across different sectors. While I’d never treat AI as a stock tipper, I was curious to hear its view.

Its first pick is a share I bought last year (but sometimes wish I hadn’t): spirits giant Diageo. ChatGPT plucked this from the consumer good sector, describing it as a global drinks powerhouse that “offers solid dividends and pricing power in an inflationary environment”.

It admits that the economic slowdown has hit revenues but didn’t mention the thing that really worries me – Gen Z isn’t so fixated on alcohol. That worries me.

A balanced spread from the FTSE 100 

ChatGPT’s second pick is also one I own: insurer and asset manager Legal & General Group, from the financial services sector.

Its shares have idled lately but it does offer a brilliant 8.5% trailing dividend yield. ChatGPT highlights “strong long-term demand for financial planning services” while warning that it’s sensitive to market downturns. I love this one.

AI’s third pick is a share I’ve held in the past, and would like to hold again: Rio Tinto, from the mining and commodities sector. ChatGPT calls it a “reliable dividend payer”, neglecting to mention that it cut shareholder payouts in 2023. To be fair, it does have a 7% trailing yield today.

Rio Tinto shares have been hit by the struggling Chinese economy and volatile commodity prices. But worth considering at a low valuation of just eight times earnings.

The fourth pick is another stock I hold: Scottish Mortgage Investment Trust, from the technology and growth sector. This has been flying lately, although it’s taken a knock from Chinese AI upstart DeepSeek and Donald Trump’s trade wars. But I can’t knock its inclusion as a growth stock, albeit a volatile one.

I also asked ChatGPT to pick one stock it particularly likes. It chose one I don’t hold: pharmaceuticals giant AstraZeneca (LSE: AZN).

AstraZeneca is a top stock, but pricey

Now the UK’s biggest company, my robo-adviser called AstraZeneca the “cornerstone” of its ISA portfolio saying: “It combines resilience with innovation, making it an attractive option for both capital appreciation and stability”.

It said AstraZeneca continues to expand its research and development pipeline and with “blockbuster drugs such as Tagrisso and Imfinzi driving revenues, it’s well-positioned for sustained growth”.

Drug development’s an expensive and uncertain process and my chatty chum warns: “Regulatory approvals and clinical trial outcomes may influence its success”. Meanwhile, patent expirations pose a potential threat to revenue streams, requiring a steady flow of new medicines to offset losses, it adds.

I’m concerned that pharmaceutical companies are in the Trump administration’s firing line, while Astra’s shares aren’t cheap, trading at around 36 times earnings. That’s why I’ve resisted buying. 

But I can’t argue with ChatGPT’s logic. And I won’t dispute its conclusion that “this portfolio offers a blend of stability, income, and growth”.

For investors considering how to build a Stocks and Shares ISA, this wouldn’t be a bad start. But they should research the risks as well as the rewards.

For a long time, I liked the look of drinks giant Diageo (LSE: DGE), but not the price. Then the Diageo share price fell to what I thought was an attractive level and I bought a stake, which I still own.

Since then however, the share has continued to lose momentum. Business problems have mounted. Is this weakness a potential bargain for an investor with a long-term approach like me? Or should I avoid buying any more shares in the Guinness brewer?

Latest results paint a mixed picture

The company released its interim results Tuesday (4 February) and I think they contained both good and bad news. Net sales, operating profit, operating profit margin and earnings per share all declined year-on-year.

On the plus side though, free cash flow grew. Organic net sales grew. That was due to price and the mix of products sold. Volumes actually declined slightly overall, with all regions except Asia Pacific recording lower volumes.

But I think that underlines the appeal of Diageo’s portfolio of premium brands, which gives it pricing power. That is a big attraction of its business model for me.

A long road ahead

Dan Lane, lead analyst at Robinhood UK, pointed to ongoing strength in the performance of Guinness, while he reckoned that the company’s spirits business “should have its day again”.

In the six months under review though, spirits net sales declined in Europe, Asia Pacific and Latin America and the Caribbean. There was, at least, strong growth in tequila sales.

That weak spirits performance overall shows why Guinness (which grew strongly) is a critical counterbalance in Diageo’s portfolio strategy.

Still, that concerns me. Beer sales are in long-term decline globally. Guinness has done a great job marketing itself and growing demand, but I do not know how long it can successfully push forward in a market that is going the other way.

Meanwhile, Diageo’s spirits business performance looks increasingly problematic to me. This is not the Latin American sales wobble seen last year, but now a broader-based decline for many pricy spirits across multiple and varied markets.

That suggests economic weakness is hurting sales. I see a risk that could continue.

Getting Diageo back to strong growth mode is going to take years, in my opinion, and so far current management has not proved it is up to that job. Time will tell.

Potential bargain, but I’m not buying

Diageo has raised its dividend per share annually for decades. The interim dividend was held flat, unusually, so it remains to be seen at the full-year point whether the total dividend continues to grow.

But the flat interim dividend unsettled me, the weak spirits sales and potential for things to get worse concern me, geopolitical risks like tariffs hurting demand for international spirits are high and I remain unconvinced that current management is able to deliver in what seems like a tough market environment.

So while the Diageo share price may yet come to seem like a bargain in retrospect, the risks are increasingly unsettling me as an investor. I will not be buying any more shares in Diageo for now.

I’m still invested in Rolls-Royce (LSE:RR) shares, but it can hurt to write about them. That’s because I had to sell some of my holdings when we bought our family home. In short, I’d have had a lot more exposure to a surging stock.

So let’s take a more detailed look. The stock’s up 445% over the past 24 months. This means that £10,000 invested then would be worth an incredible £54,500. Needless to say, this is a very strong investment return.

What’s changed?

Rolls-Royce’s stock has surged, driven by a dramatic transformation under CEO Tufan Erginbilgiç, who took charge in January 2023. Erginbilgiç, a former BP executive known for his results-oriented leadership, initiated sweeping cultural and operational changes.

Early in his tenure, he described the company as a “burning platform“, emphasising the need for urgent transformation. His strategy focused on improving efficiency, renegotiating contracts, cutting costs, and fostering a performance-driven culture.

Key achievements include a significant rise in profitability and cash flow. In 2023, Rolls-Royce’s revenue grew 22%, and it swung to a £2.43bn statutory pretax profit from a £1.5bn loss in 2022. Free cash flow reached a record £1.29bn, more than double the prior year.

Erginbilgiç’s hands-on approach — personally approving major deals and renegotiating contracts — also reclaimed substantial lost revenue.

The company set ambitious mid-term targets, aiming to quadruple profits by 2027 with operating margins of 13-15%. These early successes energised employees and restored investor confidence, reflected in the stock’s meteoric rise. And finally, this transformation positioned Rolls-Royce as a high-performing, resilient business ready for sustainable growth. It’s now a stable platform for growth.

Still investable?

Some investors might be deterred by Rolls-Royce’s elevated share price, but the company’s rapid growth suggests it remains an attractive investment opportunity. The stock’s price-to-earnings (P/E) ratio has fallen from 85.9 times in 2021 to 31 times in 2024. This indicates improving profitability relative to its market value. Furthermore, Rolls-Royce’s 2026 P/E of 24.1 times suggests continued earnings growth expectations.

Moreover, the company’s price-to-earnings-to-growth (PEG) ratio of 1.17 is 39.1% lower than the sector average of 1.92, indicating potentially better value relative to its growth prospects. Notably, Rolls-Royce appears cheaper than its peer GE Aerospace which is currently trading at 37 times forward earnings and trades with a PEG ratio of 2.1.

While UK-listed companies typically trade with a discount to their US peers, there really aren’t many companies that operate specifically in this aerospace and defence space. The discount to GE appears unwarranted.

Navigating uncertainty

The Rolls-Royce business is booming. However, that doesn’t mean there aren’t risks to the investment hypothesis. For example, rising inflation could harm demand for travel while Trump’s tariffs — if the UK becomes a target — could harm exports to the US. Coupled with shareholder profit-taking, these are risks that need to be considered.

Nonetheless, the consensus is this stock could still trade higher. If my holding wasn’t already substantial compared to the size of my portfolio, I’d buy more. I think investors should consider it.

The DCC (LSE:DCC) share price is falling this morning (5 February) after an uninspiring update. But I hold the stock and it’s also at the top of my list of FTSE 100 shares to snap up imminently assuming the price stays low.

The firm is looking to divest its Healthcare and Technology operations, leaving the Energy division behind. And for the time being, this is probably more important than the latest set of trading results. 

No surprises

According to DCC’s management, trading during the last three months of 2024 was broadly in line with the previous year. Slight growth in operating profits was offset by foreign exchange rates.

The Energy division produced good growth in operating profits. And management reported a strong pipeline of acquisition opportunities going forward to maintain this momentum.

This is arguably the most important bit of the business for long-term investors to pay attention to. It’s the part that the company is planning on retaining, so the latest results are reasonably encouraging.

In the short term though, it’s probably the Healthcare business and the Technology unit that are more important. These are the operations the firm is looking to divest. 

A potential buyer might be able to boost returns through synergies or economies of scale, but strong results from these subsidiaries probably helps DCC’s chances of achieving a good price for them.

The latest update reported a steady performance in Healthcare and a slight decline in Technology. In the context of a largely flat previous six months, I think this is mostly unremarkable.

Divestitures

The big question for investors though, is around the planned divestitures and how things are progressing on this front. And the latest update doesn’t have much to say on this front. 

DCC reported that the process of divesting the Healthcare division is progressing in line with expectations. And the intention is still to complete this in 2025.

There’s a lot at stake here for investors. DCC has announced that the state of its balance sheet means it’s set to return the proceeds to shareholders via dividends – and this could be significant. 

Analysts estimate the Healthcare and Technology subsidiaries together could be worth around £2.1bn. If the firm can achieve this, around 38% of the current market cap could come back to investors.

That would leave the Energy business, which has been the source of the recent growth and accounts for 80% of the company’s operating profits. At the current prices, this could be good value.

Obviously, the risk for investors is that DCC might not be able to achieve the prices analysts are anticipating. And the latest results from the Healthcare and Technology units probably increase this.

Top of my list

I still think the overall business is worth more than the current market cap. So with the company looking to divest some of its operations to realise this, I’m still looking to buy DCC shares.

The latest trading statement doesn’t do anything to change this. A stronger performance from the divisions it’s looking to sell would be welcome, but this is still my top FTSE 100 pick.