As UK shares struggle, here’s one top pick to buy for my holdings
I believe there are some quality UK shares to be snapped up amid the current market volatility. One pick I’m taking a closer look at is Advanced Medical Solutions (LSE: AMS).
UK shares continue to fall
Macroeconomic headwinds have pushed down many stocks. This is due to soaring inflation and rising interest rates. As a result of these issues, a cost-of-living crisis has emerged in the UK. All these events have caused many stocks to appear as attractive prospects to boost my holdings.
Advanced Medical Solutions designs, develops, and manufactures wound-care products in the healthcare space. It possesses branded and non-branded products. Some of its products can be used generally, while others are especially used in specific elective surgical procedures.
As I write, the shares are trading for 242p. At this time last year, the shares were trading for 292p, which is a 17% drop over a 12-month period. This is a trajectory that many other UK shares have experienced recently.
The bull and bear case
I’m buoyed by Advanced Medical Solutions’ diversified business model and market position. It operates in over 80 countries, providing both its branded and non-branded products to a plethora of markets and territories. Furthermore, it is one of the leading companies in the wound care market. This position and profile could help boost future earnings and returns.
Next, there is still a backlog of elective surgeries throughout the world. Some of Advanced’s products are key in these procedures. This backlog could offer a long-term revenue stream, in my opinion.
Moving on, it has a good track record of performance. I can see it has recorded revenue and profit growth for the past three years. In addition to this, the shares would boost my passive income. On a dividend yield of just under 1%, there are UK shares with higher yields out there, but I believe Advanced’s yield could grow in line with the business over time. However, I am aware that dividends are never guaranteed and past performance is not an indicator of the future.
To the bearish perspective then, Advanced shares look a bit expensive to me. Trading on a price-to-earnings ratio of 26, the shares could fall if any negative trading news were to be released, for example.
Finally, one big issue that could hinder the company is current inflationary pressures. These rising costs could squeeze profit margins when it develops and sells its products. This is something impacting many other UK shares too.
What I’m doing now
Right now I believe that Advanced Medical Solutions could be a shrewd addition to my holdings. If I had the spare cash to invest, I would be willing to buy some shares for my holdings.
I’m buoyed by Advanced’s market position and profile as well as recent performance record. There is a passive income opportunity on offer too and the business has one eye on growth through product development. For example, it recently announced the launch of its LiquiBandFix8 hernia surgery product. It was granted pre-market approval ahead of schedule and the firm is now in the process of selecting a strategic partner to bring it to market.
To conclude, Advanced Medical Solutions looks to me like a good opportunity right now, and there are lots of other UK shares that look enticing to me too.
The post As UK shares struggle, here’s one top pick to buy for my holdings appeared first on The Motley Fool UK.
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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended Advanced Medical Solutions Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
