3 stocks Neil Woodford should buy more of

Updated: 
Neil Woodford

Here are three under-the-radar Neil Woodford holdings that I believe are worth buying today. 

Used cars 

BCA Marketplace(LSE: BCA) owns and operates vehicle buying services across Europe, such as the well-known UK brand, We Buy Any Car.

Over the past five years, this company has grown from an upstart, into a multi-billion pound business. For the fiscal year ending 31 March 2018, City analysts have pencilled in a pre-tax profit of £108m, up from a loss of £0.3m for 2014. As profits have flowed, BCA's shares have doubled in value since 2014. 

And even though some analysts are becoming concerned about the current state of the UK car market, I believe BCA's growth will continue.

As new car sales are falling, used car transactions are holding up well. For example, 1.6m new cars joined British roads during the first eight months of the year, down 2.4% year-on-year. However, during the first half of 2017, used car sales grew 1.3% year-on-year to 4.2m. 

As the volume of used car transactions continues to grow, and BCA bolts-on more growth, City analysts expect the company's earnings per share to expand by 15% this fiscal year, and 12% for 2019. The shares currently trade at a forward P/E of 19.8 and support a dividend yield of 3.6%. 

Growth champion 

Speciality pharmaceutical company BTG(LSE: BTG) is projected to grow earnings per share by 29% for the fiscal year ending 31 March 2018 as pre-tax profit surges 370%. 

At the beginning of July, management confirmed that the company is on track to hit this target as it is set to achieve "double-digit product sales growth" for the year ending March 31 2018, driven by growth in its interventional medicines business. As well as growth in the established business, BTG is progressing well with the development of new products, receiving positive outcomes from two clinical trials for its blood clot treatment Ekos, varicose vein treatment Varithena and PneumRx coils products.

Shares in BTG are not cheap, trading at a forward P/E of 22.2 but considering the company's growth rate, and treatment pipeline, I believe this is a premium worth paying. Indeed, at the time of writing, the shares are trading at a PEG ratio of 0.8, implying that they offer growth at a reasonable price. 

Property income 

New River REIT(LSE: NRR) owns and operates a portfolio of shopping centres, retail warehouses, public houses and mixed-use development opportunities.  

Neil Woodford clearly likes New River because of the company's dividend potential. As a REIT, the company has to pay 90% of its rental income out to investors. This year the firm is projected to earn 21.5p and pay 20.7p to investors for a dividend yield of 6%. I believe investors could be in line for a higher distribution however as last year the company issued a 3p per share special dividend at the end of the year, increasing the full-year payout by 24%. 

Over the past five years, shares in New River have produced a return for investors of 87% excluding dividends. Including dividends, the shares have delivered a total return of 111%.

The one downside is that due to New River's generous dividend policy, the shares trade at a 17% premium to the net asset value of 292p as reported at the end of 2016. 

Dividends are the key

Neil Woodford is well aware that dividends are the key to long-term investment success, that's why he has built his portfolio around a core of top dividend stocks. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended BTG. 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.