According to those who ‘sell in May and go away’, the time to buy shares again is about now. I don’t go for this strategy, but I am still adding to my portfolio at the moment.

The FTSE 100 and the FTSE 250 have been relatively steady lately. But a couple of quality stocks have fallen significantly and I think this presents an opportunity for an investor like me.

Rentokil

Shares in Rentokil Initial (LSE:RTO) fell sharply in September when the firm issued its latest trading update. In doing so, it highlighted one of the key risks with the stock.

In 2022, the company spent just over £4.5bn to acquire Terminix – a major US competitor. But so far, the expected growth in demand hasn’t materialised, making this expensive.

Despite this, I think the stock looks attractive after a 20% decline. An explanation for this is I expect the pest control market to grow for a number of reasons. 

For a start, climate change – warmer summers and wetter winters providing better breeding conditions for pests – is a big part of this.

I also expect Rentokil’s presence in the US will prove valuable over time. Exactly how soon is hard to say, but I think the company is going to be hard to compete with over the long term.

As an investor, that’s exactly the kind of business I want to own. And while the market is concerned about short-term profits, I’m looking at the bigger picture. 

AG Barr

Honestly, I thought I’d missed my opportunity to buy shares in AG Barr (LSE:BAG). But a 9% drop after the company’s interim results has caused me to change my mind. 

Revenues were up 5%, but profits fell due to costs associated with closing its distribution operation. I’m not expecting these to be repeated though, so I think the issue is temporary.

In its most recent annual report, management outlined a path to reducing costs over the next few years. The guidance was for operating margins to reach 14.5% by the end of 2026.

The company has had a change of CEO since then, which makes relying on previous forecasts risky. But if the anticipated efficiency materialises, profits could grow significantly.

Reaching these targets would boost Barr’s operating profits by 31%, even if sales don’t increase any further. If that happens, I think the stock will go up. 

With the stock having fallen, I don’t think it’s expensive at today’s prices. That’s why I’ve been buying it for my portfolio and plan to continue doing so.

UK opportunities

In terms of my portfolio, I look for shares in quality companies that trade at attractive prices. And I think there are opportunities right now, even with stocks fairly stable overall.

Both Rentokil Initial and A.G. Barr are in that category, in my view. That’s why I’ve been buying both recently and intend to keep doing so.