I’ve got 18 UK stocks in my Self-Invested Personal Pension, but not all of them are pulling their weight.
I’ll name and shame the offenders – Burberry Group, JD Sports Fashion and Ocado Group. Over five years, their shares are down 43%, 53% and 91%, respectively.
I haven’t done quite that badly, having taken advantage of their share price volatility to bag them at a reduced valuation. All three have had their moments, but they’ve failed to sustain them. As of today, I’m down 5% on Burberry, 18% on JD Sports, and 56% on Ocado Group.
Should I sell these three and buy Goodwin shares?
Burberry has rallied as investors decided new management had hit on the right strategy, while JD Sports is cheap and surely has to rebound at some point. Grocery tech specialist Ocado seems to be in perma-crisis, and in need of a total strategic overhaul.
While I wait for the turnaround, other UK stocks aren’t hanging around. I’m tempted to dump all three and pump the proceeds into my favourite FTSE 250 flyer instead.
Engineering firm Goodwin (LSE: GDWN) was on my watchlist for years, but looked too expensive. The family-owned company, based in Stoke-on-Trent since 1883, has really shown its mettle lately.
Goodwin is a global business with 18 manufacturing sites across Europe, Asia, Africa and the Americas. Around 70% of its sales now come from overseas. It’s benefited from the defence boom, boast in crucial partnerships like a critical submarine manufacturing agreement with Northrup Grumman, which provide stable, visible revenues.
Its order is £288m and it’s an efficiently-run business, with an impressive 35% return on equity. The Goodwin share price rocketed last summer as profits accelerated. This little list shows the recent full-year trend:
- 2025 – £54.45m
- 2024 – £34.26m
- 2023 – £24.21m
- 2022 – £22.13m
- 2021 – £19.94m
Is this FTSE 250 stock good value?
Success comes at a price, and last summer the price-to-earnings (P/E) ratio hit a dizzying 65. I decided Goodwin shares were just too pricey. It really had to keep delivering at those levels. Then it hit a bump. The shares plunged on 23 March, when the board tightened its dividend policy after losing two significant mechanical engineering tenders. Combined, they were worth almost £60m. The Iran war was to blame for one.
I waited for the dust to settle, and bought Goodwin twice in May. Just over one month later I’m up 20%. Of course, it’s early days, and there could be more volatility ahead. But Goodwin is already working my money harder than Burberry, JD and Ocado combined. Time to jump ship?
Goodwin is expensive again, with the P/E climbing back up to 50. That prices in substantial future growth and leaves little margin for operational error. It can’t afford to lose any more contracts. I think the shares are still worth considering, but at this price, it’s risky.
I won’t be selling JD Sports and possibly not Burberry either. They’re at the wrong end of the consumer cycle, which will hopefully turn. But I’m taking a very hard look at Ocado. Even at today’s dizzying valuation, Goodwin looks a safer bet than that turkey.
Should you invest £5,000 in Goodwin Plc right now?
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Harvey Jones owns shares in Burberry Group, Goodwin, JD Sports and Ocado Group,.
