2 reasons why I think the Lloyds share price could crash in 2020

first_img2 reasons why I think the Lloyds share price could crash in 2020 “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images. Simply click below to discover how you can take advantage of this. Royston Wild | Saturday, 11th January, 2020 | More on: LLOY I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. See all posts by Royston Wild Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.center_img 2019 proved to be a year of both fist-pumping and head-holding for Lloyds Banking Group (LSE: LLOY).On the plus side, the FTSE 100 bank could finally wave goodbye (or possibly gesture something more impolite) to the saga that has cost it billions of pounds over the years: the PPI mis-selling scandal. The actual costs, which already stand at a whopping £22bn for Lloyds alone, will continue to rise over the medium term as the claims pipeline is cleared. However, last August’s deadline allows the banking sector to finally look forward to an end to the colossal bills.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…What’s been less encouraging for Lloyds, though, are signs that the UK economy continues to lose steam. The latest survey from the British Chambers of Commerce showed “protracted weakness across most indicators of economic health” during the final quarter of 2019, a situation that threatens to spread through the new year as Brexit-related uncertainty likely persists.More rate cuts?Despite the subsequent drop in profits that these difficult trading conditions has created for Lloyds, last year proved a period for its investors to savour. The bank’s share price boomed 23% by close of business on New Year’s Eve.I fear that the Footsie firm may find it hard to repeat the trick of monster share price gains in 2020, however. The effect of a stagnating economy is that the Bank of England may be forced to cut rates again, the odds of which rocketed this week following comments from bank head Mark Carney.He said that Threadneedle Street has been mulling the possibility of “near term stimulus” to get the economy firing again, adding that a “relatively prompt response” might be in order too. Low interest rates have been a millstone around the neck of the high street banks’ profit performance for more than a decade now, so the threat of more monetary loosening should fill the sector with dread.A bursting consumer debt bubbleThe growing pressure on the British economy has caused the number of bad loans on the books of Lloyds et al to leap of late, and I sure I’m not alone in predicting that impairments could continue to grow in 2020.Fears of a consumer credit time bomb have long been doing the rounds, and data from trade union federation TUC this week has done nothing to dampen such concerns. It says that the average UK household now owes around £14,540, and that the amount of household debt has ballooned to record levels of £400bn.Renowned economist John Maynard Keynes once opined that “the market can stay irrational longer than you can stay solvent,” and, while I’m not seeking to insult any recent buyers of Lloyds stock, I reckon the bank’s share price spurt is built on some quite shaky foundations.Given the prospect of sustained and painful pressure on revenues and growing credit repayment failures, and with interest rates threatening to be cut again, I can’t help but fear for Lloyds in the new year. It’s a share I’m happy to continue avoiding.  Our 6 ‘Best Buys Now’ Shares Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!last_img read more

Investment trusts: the advantages and disadvantages

first_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images. Investment trusts are often regarded as one of the best-kept secrets in the investment management industry. Traded on the stock market like regular stocks, these collective investment funds enable investors to gain exposure to a broad range of companies or assets in a cost-effective way.However, like any investment, such trusts have their pros and cons. With that in mind, here’s a look at the advantages and disadvantages of them.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…AdvantagesOne of the main advantages of investment trusts is their cost-effectiveness. While you do have to pay trading commissions when you buy or sell (usually around £10 or so), what you avoid are the fund platform fees that investment providers charge when you hold regular open-ended funds. Hargreaves Lansdown, for example, currently charges 0.45% per year on open-ended funds for accounts with balances up to £250,000. Avoiding these kinds of fees can make a big difference to your wealth over time.Investment trusts’ ongoing charges also tend to be quite attractive. For example, the City of London Investment Trust currently has a low ongoing charge of just 0.39%. There are not many open-ended, actively-managed funds with fees that low. Overall, investment trusts can be very cost-effective.Another advantage of investment trusts is that they are closed-ended. This means that the portfolio manager of the trust has a fixed amount of capital to invest (although some trusts can use leverage). This is beneficial for a number of reasons. Firstly, because investors can’t suddenly demand their money back, portfolio managers don’t need to worry about holding cash for redemptions. This can minimise cash drag and potentially boost performance. Portfolio managers can also take a longer-term view. Investment trusts also have advantages when it comes to dividend payments as they are able to retain 15% of the income they receive each year and use the retained income to boost dividends in leaner years. As a result, many investment trusts have outstanding long-term dividend growth track records. City of London, for example, has increased its dividend every year for over 50 years now.Finally, investment trusts are structured so that they have an independent board that is responsible for safeguarding investors. This is advantageous as it protects investors from issues such as poor-performing portfolio managers.DisadvantagesOn the downside, one issue to be aware of with investment trusts is that because of their closed-ended structure, they can trade at premiums or discounts to their net asset value (NAV). This can add complications. For example, a top-performing investment trust may trade at a significant premium, meaning you have to pay extra to acquire the assets in the trust. Similarly, a poor-performing trust may trade at a significant discount, which is not ideal if you’re already an owner of the trust (although it could be beneficial if you’re looking to buy).Gearing (the ability to borrow to invest more) is another issue to consider with investment trusts. Not all of them use gearing, but plenty do. While gearing can boost gains when the market is rising, it can increase losses when markets are falling.Overall, weighing up the advantages and disadvantages, investment trusts have considerable appeal, in my view. For those looking for cost-effective exposure to the stock market, I think they’re a great way to invest. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Sharescenter_img Investment trusts: the advantages and disadvantages Enter Your Email Address Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. 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. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Edward Sheldon, CFA | Friday, 14th February, 2020 See all posts by Edward Sheldon, CFAlast_img read more

How to take big market falls in your stride

first_img Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. Paul Summers | Saturday, 29th February, 2020 Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Few people like seeing their wealth go down, even when it’s just numbers on a screen. Prepare yourself mentally, however, and you can learn to take sell-offs such as the one we experienced last week in your stride. You might even grow to like them!Here’s a few things to remember over the next few weeks and, quite possibly, months. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Crashes are commonBig market falls happen more often than you might think and yet this fact isn’t being mentioned much by the media as it focuses on the financial impact of the coronavirus. From May 2015 to February 2016, for example, the FTSE 100 lost around 20% of its value. Between May 2018 and October 2018, the index fell again, by 14%. In addition to being far from rare, corrections tend not to last all that long, at least relative to the bull markets. In the two examples mentioned above (picked for being the most recent), things bounced back within a few months. Sure, it’s possible we could see a repeat of the Great Recession as supply lines are disrupted and businesses suffer. The end of the world as we know it? Probably not. You’re in controlThe list of advantages that private investors have over the professionals is usually regarded as very small.  There is, however, one thing that all Fools should appreciate: their freedom to buy and sell when they please. Contrast this with money managers whose careers depend on them being seen to be taking action on behalf of their clients. Heavily-leveraged short-term traders may also need to close positions before losing their shirts, incurring costs in the process. If you don’t wish to sell a holding but hate seeing it fall in value, the solution is simple: turn off your laptop and delete broker apps from your phone. History shows that taking a long-term view has always been a winning strategy.A reality checkIt’s easy to become complacent about investing when most, if not all, of your stocks are rising and your wealth is steadily increasing. A bout of market volatility, however, can be a useful reality check. Falling prices help investors discover who they really are. Do you really intend to hold for a long time? Were you buying in the expectation that a share price would rise and not because the underlying business is worth owning? Should you be allocating your money more cautiously and investing in, say, bonds and property?If you’ve found the last week unbearable, it’s likely you’ve misjudged your own risk tolerance. While you can’t turn back the clock, you can make the necessary adjustments as and when a recovery sets in. Stocks on saleA final reason to embrace market falls is that it gives those with cash a chance to buy quality stocks at lower prices. That may sound obvious, but it’s easily forgotten as people relentlessly ruminate over where markets might go next.I don’t know whether the coronavirus will bring forth the next bear market or whether it will be overcome within a few months and forgotten about (just like all the other events that haven’t stopped stocks from increasing in value over the last few years). What I do know is that capital risk is reduced when share prices are lower. This is an opportunity you might not want to miss.  “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Image source: Getty Images. Our 6 ‘Best Buys Now’ Sharescenter_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. How to take big market falls in your stride Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Simply click below to discover how you can take advantage of this. See all posts by Paul Summerslast_img read more

The gathering storm: should I ditch all my shares?

first_img According to the BBC last Thursday, UK health officials are moving towards the second phase of their response to the COVID-19 coronavirus outbreak – the delay phase.Citing chief medical adviser Prof Chris Whitty, the BBC reported that the government will aim measures at slowing down the spread of the virus. Although what those measures will be remains unclear (at least to me!)5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Economic disruptionBut one thing seems certain: we’re going to see a lot more economic disruption before COVID-19 eventually fades from public consciousness. This thing looks like being a long job. And casualties such as Flybe, which plunged into administration last week could start piling up.Indeed, one of the special measures the media and others are talking about is that the government could restrict usage of public transport in an effort to control the virus. That may not happen, of course, but if it does, several publicly-quoted businesses could suffer badly.For example, I wouldn’t want to be holding shares such as those of Wizz Air, Go-Ahead, Dart, National Express, easyJet and Stagecoach. Those stocks have already dropped, maybe with very good reason and not just because of investor sentiment. It seems to me that all firms in the travel sector face the real possibility of significant disruption to their businesses in the months ahead.If you are a contrarian-minded investor, you could be interested in scouring the sector for potential bargains, but I’d rather look elsewhere. And my main area of interest would be the shares of companies that I consider to have a high degree of defensiveness in their businesses. In other words, for me, they need to be cash-generative and less susceptible to the ups and downs of the macro-economy than more cyclical shares may be.Some of the shares I likeI’m thinking of companies such as Unilever, SSE, Smith & Nephew, Sage, Reckitt Benckiser and GlaxoSmithKline to name but a few. I’d keep a close eye on companies like those and be ready to pounce at opportune moments, such as if we see another general downwards lurch in the markets.One way of thinking about such investments is by leading with the shareholder dividend. I’d ask myself whether it’s sustainable and whether it has the potential to keep rising a little each year. So I’d be considering things like the strength of the incoming stream of cash flow and how much debt the company carries. Indeed, the interest on borrowings is in direct competition with the shareholder dividend for the company’s cash flow!Am I worried about COVID-19. Yes, on a human level, I am. But I’m still investing and haven’t yet succumbed to the temptation to stock up with extra food. Although I did linger longer than usual at the baked bean shelf on my most recent visit to the supermarket! I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Our 6 ‘Best Buys Now’ Shares Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Enter Your Email Address See all posts by Kevin Godbold Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended Wizz Air Holdings. 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.center_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Simply click below to discover how you can take advantage of this. Kevin Godbold | Sunday, 8th March, 2020 The gathering storm: should I ditch all my shares? “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images. last_img read more

Forget Bitcoin! I’d buy cheap FTSE 100 dividend shares to make a million

first_imgSimply click below to discover how you can take advantage of this. “This Stock Could Be Like Buying Amazon in 1997” I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Global equity indexes, such as the FTSE 100, aren’t the only asset class to have experienced significant falls in recent weeks. The price of Bitcoin has dropped by over 10% since mid-February, with investors apparently becoming increasingly concerned about its future prospects.While this may encourage some individuals to purchase Bitcoin, due to its lower price, buying FTSE 100 shares instead could be a better idea. They may offer better value for money, have more dependable recovery potential, and could improve your chances of making a million.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…ValuationThe FTSE 100’s recent decline means the index now yields 5%. This is among its highest ever levels, and suggests it offers good value for money. In addition, many of its members currently trade on ratings that are substantially below their long-term averages.This may make them attractive buying opportunities, since their valuations include wide margins of safety that factor in the potential for a worsening in the global economic outlook.By contrast, assessing whether Bitcoin offers good value for money following its recent fall is much more challenging. The virtual currency doesn’t have any fundamentals, so potential buyers cannot use data to determine whether it is undervalued or overvalued.Moreover, having a limited size and likely to experience competition from other virtual currencies in future, it may be unable to live up to current investor expectations. As such, its prospects could be somewhat challenging.Recovery potentialThe FTSE 100, however, has a long track record of delivering successful recoveries following its corrections and bear markets. It has been in existence for over 36 years and, in that time, has experienced challenges such as the 1987 crash, the tech bubble bursting, and the global financial crisis.It has been able to recover from all of those crises, and many others, to post new record highs. Therefore, while it’s not known when a recovery will commence, it seems likely the FTSE 100 will ultimately deliver a turnaround after its recent decline.Bitcoin, on the other hand, has a history of volatility. Certainly, it’s  risen by an exceptional amount over the past decade. But, its performance over recent years suggests it has lacked a clear direction, and has been subject to sudden changes in investor sentiment. Therefore, there can be no guarantee that it will recover to the $20,000 price level which it was close to achieving in 2017.Buying opportunityAlthough buying FTSE 100 shares right now may seem to be a highly risky move, in the long run they could deliver strong returns. Long-term investors who are able to overcome paper losses in the near term may be able to buy high-quality FTSE 100 shares while they trade on low valuations. This could increase their chances of making you a million in the coming years. Peter Stephens | Sunday, 8th March, 2020 Forget Bitcoin! I’d buy cheap FTSE 100 dividend shares to make a millioncenter_img Our 6 ‘Best Buys Now’ Shares Image source: Getty Images Enter Your Email Address Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. See all posts by Peter Stephenslast_img read more

£5k to invest? I’d buy these cheap FTSE 100 shares today

first_img Our 6 ‘Best Buys Now’ Shares TomRodgers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Cheap FTSE 100 shares are out there if anyone is willing to do the hard graft of finding them. And with all the weakness in the stock market right now, there are some super bargains to be had. Now, when we do our research on cheap FTSE 100 shares, we’re looking for value. 5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Not just bottom-of-the-rung prices, but share prices that are cheap relative to the company’s long-term future prospects. Value, profits, paybackOne standard way of finding good value shares is to compare their P/E ratio. This takes a company’s share price and divides it by earnings per share. It’s not perfect, but it is a quick way of comparing lots of different industries all at once. The average P/E ratio across the whole FTSE 100 is 15.7. Any number below that denotes relatively cheap FTSE 100 shares — but it is up to us to find quality too. So we need to consider profits, how likely a company is to survive another downturn, and long-term growth as well. Let’s begin.Permission to buyWith a P/E ratio of just 9.4 Persimmon Homes (LSE:PSN) looks to be in our sweet spot for cheap FTSE 100 shares. Net cash of £828.9m is certainly a very strong balance sheet for the UK’s largest housebuilder. What about the short-term outlook? Sentiment among construction firms in September 2020 was at its strongest since before the Covid outbreak, with business flying in at its fastest rate all year. This is according to the IHS Markit Purchasing Managers’ Index for the sector. Analysis of the wider market is positive too. Local lockdowns have not impacted the rate of construction, while asset manager Jeffries recently rated the sector “too cheap to ignore”. “We see current share price weakness as presenting a great entry point for our key picks,” said Jeffries, naming Persimmon alongside Berkeley and Barratt Homes. I’d stick with Persimmon for its profitability: the company’s return on capital employed of 22% destroys Barratt and Berkeley and is in the top five of the entire FTSE 100. High-double-digits usually means a company has a strong edge over its competitors. There’s a reason why it’s famed fund manager Terry Smith’s favourite metric. Future perfectAs an investor I’m very interested in the company’s forward order book. This tells me in depth what the company’s strength is likely to be.Half-year results for the six months to 30 June 2020 showed Persimmon’s forward orders 21% ahead of last year at £2.5bn. CEO Dave Jenkinson brought back a “modest” 40p per share interim dividend on the back of this sales strength. This only represents a 1.5% dividend yield, sure. However, the City is expecting Persimmon to reinstate its full dividend of 125p per share: a healthy 5% dividend at today’s prices.And Persimmon has not always had such cheap FTSE 100 shares. Look back to 2016 and the company’s P/E ratio was knocking on the door of 15. So I’d say now is a good time for me to buy.Clearly, the fact that Persimmon shares have rebounded 60% since the Covid stock market crash indicates that there is optimism in the air. Glass-half-full investors are fewer and further between these days with all the threats on the horizon. So with five grand burning a hole in my pocket, these would be my top cheap FTSE 100 shares to buy.  £5k to invest? I’d buy these cheap FTSE 100 shares today Image source: Getty Images I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. “This Stock Could Be Like Buying Amazon in 1997”center_img Simply click below to discover how you can take advantage of this. Tom Rodgers | Saturday, 24th October, 2020 | More on: PSN Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! See all posts by Tom Rodgerslast_img read more

3 Investment themes I’d buy into for 2021 and beyond

first_img3 Investment themes I’d buy into for 2021 and beyond James J. McCombie | Saturday, 9th January, 2021 James J. McCombie owns shares of Palace Capital plc. The Motley Fool UK has recommended Learning Technologies. 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. There are three big investment themes that I am looking to invest in for 2021. These are in no particular order:Online shoppingRemote workingOnline securityI like these because they are important in their own right. But, they also reinforce each other. Spending more time online shopping increases the need for software solutions to keep safe online. Remote working means more days are spent at home, which makes scheduling deliveries from online shopping easier and boosting the need to secure laptops against hackers.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…I have identified one or two UK stocks or types of companies that I think are well-positioned to capitalise on each of the three investment themes.Ordering onlinePeople who might not have shopped online have, and those that already did have done it more during the pandemic. What’s more, there are and will be generations of people that have grown up having never known life without the Internet. For them, online ordering is a natural option, perhaps even the default one. Those people are filling up the UK’s quota of adults.I believe online shopping had around a 21% share of the UK’s retail market in 2019. It went up last year. I don’t think a 50% share is unreasonable in a decade. So, Ocado seems like a good online shopping play. It benefitted enormously from the shift to online shopping in the UK last year, and surveys suggest this will persist. Ocado is also selling its automated fulfilment centre technology to overseas retailers looking to scale up their online offerings.Investing in delivery and logistics companies would also be in keeping with an online shopping investment theme. Also, commercial real estate companies and trusts that own lots of warehousing in good locations might see demand for their properties rise in a world that increasingly shops online.Working remotelyPeople have been forced to work from home in the pandemic. When asked, many do not desire a return to a full five days in the office week. Employers are eyeing the benefits of an at least partially remote workforce. For one thing, if only a percentage of the total workforce is in at a particular time, you don’t need as big an office. That office might not have to be a single centrally located one in a big city but somewhere cheaper perhaps.Palace Capital is a REIT with a focus on commercial property in the UK’s regions. I think it might do well if a restructuring of the office landscape does happen and from the Tory government’s pledge (if realised) to level up the regions. Learning Technologies Group is a workplace digital learning provider that should benefit from the increased willingness to get things done remotely rather than in person. Online securitySpending more time online to shop, work, or learn means more time exposed to the Internet’s dangers. Avast, one of the world’s largest cybersecurity companies, is a UK share I have looked at before. It offers online security solutions for individuals and small and medium-sized enterprises. GB Group has data-driven solutions to help quickly validate and verify their customers’ and employees’ identity and location. If interactions are shifting from face to face to remote, then demand for ways to check entities are who they say they digitally should grow, to GB Group’s benefit. See all posts by James J. McCombie Image source: Getty Images Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.center_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Shares I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.last_img read more

Cineworld and easyJet shares: should I buy the reopening trade?

first_img Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Roland Head | Tuesday, 23rd February, 2021 | More on: CINE EZJ Image source: Getty Images See all posts by Roland Head I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Cineworld and easyJet shares: should I buy the reopening trade? FREE REPORT: Why this £5 stock could be set to surge Simply click below to discover how you can take advantage of this.center_img Prime Minister Boris Johnson has promised us an “incomparably better” summer than 2020. Even nightclubs might be able to reopen by July. So, I’m not surprised to see the Cineworld (LSE: CINE) and easyJet (LSE: EZJ) share prices up by as much as 10% this morning.Airlines and cinemas are among those that have been hardest hit by coronavirus. I’ve been wondering whether it’s the right time to buy into these stocks, as a trade on reopening the economy.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…easyJet shares: well supportedDuring the final three months of 2020, easyJet flew 23,428 flights, compared to around 130,000 during the same period in 2019. I suspect traffic has fallen since December, although the airline hasn’t yet provided any update on this.However, easyJet’s financial position actually looks fairly safe to me. The airline has raised £4.5bn since the start of the pandemic, through a mix of loans, aircraft sales and by selling new shares. As of 25 January, the company still had access to £2.5bn of unused funding.Management says that cash costs have been reduced to £40m per week with all aircraft grounded. That suggests the airline could stay afloat for at least a year without needing to raise additional funds.Fortunately, I don’t think that’ll be necessary. Assuming a gradual return to normal flying this summer, I don’t expect easyJet to need any further funding.What would I pay?easyJet’s share price has been fairly volatile over the last year. The stock’s 52-week low of 410p is 70% below its 52-week high of 1,377p. The price, as I write, is 937p — roughly in the middle of this range.However, easyJet issued new shares in June, increasing its share count by 15%. That means a share price of 940p today is equivalent to around 1,100p before the fundraising. In addition to this, easyJet has more debt than it did a year ago — debt that will need servicing or repaying at some point.Consensus forecasts suggest the stock is trading on around 15 times 2022 earnings and about nine times 2023 earnings. For me, that’s high enough for an airline stock at this time. I don’t think easyJet shares look especially cheap and won’t be buying at current levels.What about Cineworld shares?I’ve written about Cineworld (LSE: CINE) in these pages a few times before. The founding Greidinger brothers have built the world’s second-largest cinema chain, with 787 cinemas and 9,500 screens.I admire Cineworld’s scale and success. But I think that the group’s $8bn net debt is probably unsustainable. I expect the company will need an equity refinancing at some point, which could cause heavy dilution for existing shareholders.The Greidingers control around 20% of Cineworld’s stock, so they have an interest in refinancing the business without wiping out shareholders. My guess is they plan to delay a full refinancing until cinemas are open again. This would probably justify a higher share price, reducing any dilution.Cineworld shares currently trade on around 10 times 2022 forecast earnings. That’s a lower multiple than for easyJet shares, but I think the situation is quite different.Whereas easyJet’s borrowings look manageable to me, I think Cineworld’s debt looks problematic. For that reason, I’ve ruled out Cineworld as a potential buy. Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. Get the full details on this £5 stock now – while your report is free. Enter Your Email Address Our 6 ‘Best Buys Now’ Shares Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.last_img read more

Here’s the best-performing UK banking stock from February. Should I buy it now?

first_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by Jonathan Smith Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” UK banking stocks have started to recover over the past few months, having taken a beating for much of 2020. A mixture of bad debt that was thrown up by the pandemic, along with a low interest rate environment are seen as the main drivers. The bounce-back in the short term has been led by NatWest Group (LSE:NWG). Over the course of February, the share price rallied by almost 25%, making it the best-performing UK banking stock in the FTSE 100. That said, over a one-year period, the share price is down close to 5%.Full-year resultsThe extent to which NatWest endured a tricky 2020 was shown by the full-year results that were released last month. The post-tax loss of £753m contrasted sharply to the profit of £3.13bn from the previous year. The losses were understandable, largely due to the impairment of loans that it had to take on the balance sheet throughout 2020. This figure stands around £3.2bn, so I can easily see how this can completely change the accounts for the year.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…So what were the positives? Operating expenses reduced, and ended up being lower than 2019 and 2018. It also proved its digital banking capabilities, with 67% of commercial banking sales done via online channels (2019 figure 52%). I think this is a key reason why it was the best UK-performing banking stock last month, with this digital transformation. Other banks are trying to follow suit, but NatWest is leading the charge. From a regulatory standpoint, NatWest also grew the CET 1 ratio requirements during 2020 to 18.5%. This ratio is a measure of financial resilience, looking at the difference between the bank’s capital versus assets. 18.5% exceeds the needed level, and so this shows me the bank is in a strong position to navigate any future choppy waters.The best UK banking stock for the year?One month is a fairly short time frame to judge a stock. Could this be the pick of the bunch for 2021 and beyond? I see a few risks to this view.Firstly, remember that the UK Government is still a majority shareholder, with 62%. This was carried over from the change of business from RBS to NatWest. As such, the share price could experience much higher volatility in coming years as the Government reduces its stake. If NatWest buys back shares, then this risk lessens. But if the stock is simply sold into the market, then a larger percentage of NatWest becomes public float. This means the share price will become more volatile as a larger proportion of the overall business is being traded by the public. Secondly, NatWest has limited overseas operations. I feel this limits its ability to grow when I look for the best UK banking stock in general. For comparison, I look at Barclays. The scale of its worldwide reach should allow it to benefit more from economies of scale, especially as the UK comes out of recession. Overall, I do think NatWest has outperformed its peers in the short term. I wouldn’t buy the stock for long-term gains though, and would prefer to own Barclays. I wrote more about that in detail here. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays. 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.center_img Our 6 ‘Best Buys Now’ Shares Here’s the best-performing UK banking stock from February. Should I buy it now? Image source: Getty Images. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Simply click below to discover how you can take advantage of this. Jonathan Smith | Tuesday, 2nd March, 2021 | More on: NWG last_img read more

This FTSE 250 share’s rocketed 18% to new record highs! This is why

first_img Enter Your Email Address Investor appetite for UK shares remains flattish on Wednesday. Both the FTSE 100 and FTSE 250 are more or less unchanged from last night’s close. But soggy market sentiment hasn’t stopped the Softcat (LSE: SCT) share price from soaring following the release of fresh financials.This FTSE 250 share was last trading at £18.35 each, up 18% from Tuesday night’s close. It is also the latest in a string of repeated record highs recently and means the Softcat share price has jumped 77% during the past 12 months.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…A FTSE 250 flyerSoftcat’s share price has exploded after the firm released strong interims and upgraded its forecasts for the full year.The IT services giant said that revenues jumped 10.1% during the six months to January, to £577m. It’s a result that — along with Covid-19-related cost savings — propelled pre-tax profit in the period 41% higher to £57m. Meanwhile gross profit, Softcat’s preferred measure of income, rose 20.4% year on year to £134.5m.The UK tech share claimed that “continued investment in our people and technical proposition throughout the pandemic has driven double-digit growth in average gross profit per customer from both new and existing customers.” This grew 11.5% year on year to £26,900. Softcat’s customer base edged 1.5% higher to number 9,600 too.Unlike many British firms, Softcat has continued to boost its headcount during the Covid-19 crisis. Employee numbers stood at 1,658 at the end of January, up 12% from six months earlier. The business also declined to take financial support from the government during the pandemic.Thanks to the strong first-half performance and healthy cash generation Softcat hiked the half-time dividend to 6.4p per share. This is up almost a fifth from the 5.4p dividend it shelled out the year before.What they saidSoftcat chief executive Graeme Watt commented that “we are pleased with the strong performance in the first half of the financial year in which we continued to grow and take share in a market that has remained relatively resilient during the pandemic.” He added that sales declines amongst some of the FTSE 250 firm’s customers during the final quarter of the prior fiscal year had “diminished” in the current period.Watt said that the temporary cost savings enjoyed during the first half of fiscal 2021 would normalise during the final six months. But he added strong trading has prompted the business to continue its recent habit of upgrading its full-year forecasts. Softcat said that “the second half has begun well and the Board is confident the Company will deliver a full-year result significantly ahead of its previous expectations.”As I type City consensus suggests that Softcat’s earnings will rise 10% in the fiscal year to July 2021. This leaves the FTSE 250 company trading on a premium price-to-earnings (P/E) ratio of around 44 times. Simply click below to discover how you can take advantage of this. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Royston Wild | Wednesday, 24th March, 2021 | More on: SCT See all posts by Royston Wild “This Stock Could Be Like Buying Amazon in 1997” Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Softcat. 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.center_img Our 6 ‘Best Buys Now’ Shares I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. This FTSE 250 share’s rocketed 18% to new record highs! This is why Image source: Getty Images I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.last_img read more