Bellway is a housebuilding company, which explains its c.30% fall in value year to date as house sales evaporated in the past few months. Encouragingly, the share price has improved since the initial 50% drop in March.

Some investors may be hesitant to buy a UK share that has started rising back up to its pre-Covid price. However, I believe this is a positive sign. By waiting for this price rise, the stock has demonstrated some optimism, but it has only recovered slightly.

Bellway offers great value based on a variety of metrics, and is a solid business. Despite predictions of many bankruptcies in value stocks, Bellway should avoid this fate. It has only £20 million total debt and £25 million in cash, which should allow the company to survive even if a second lockdown occurs. Bellway also demonstrated confidence and strength last month when the company refused any form of government aid.

Bellway is one of the UK shares that I would buy because of the strength of its balance sheet and its bargain price. Persimmon, a competitor, also recently issued encouraging forward guidance. This is good news for the whole industry. As the housing market inevitably restarts with momentum, cheap stocks like Bellway should soar. That is why it’s one of the UK shares I would buy now at this bargain price.

Whitbread is my second UK share pick. The company owns the Premier Inn chain of hotels, and other hospitality businesses. In recent weeks Whitbread has built a war chest of £1 billion by raising capital. This cash will ensure the survival of the brand and may even create opportunities for expansion according to the CEO. The company has also noted a return of bookings in the UK, which is a very positive sign. Although some areas like London are still lacking in bookings, this should return slowly.

Whitbread’s stock is still down over 45% for the year, making it a bargain UK share. To be clear, the stock will likely have a rough year. Travel will probably not resume quick enough to allow Whitbread to return to profitability by year-end. However, in the long run, I believe that travel will return close to peak levels and Whitbread will profit. There is little evidence to suggest that travel will remain at current levels. I also believe that a poor 2020 is now priced into the stock, so the downside risk is low.

Both of these UK shares are not without risk, but I think that the reward is worth it. The cash in each company should prevent bankruptcies and both have solid business models that should excel going forward. As an investor, one must always remember, to the knowledgeable and thorough risk-taker go the spoils.

The post I’d buy these bargain UK shares to make a fortune from the stock market crash appeared first on The Twelfth Magpie.

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Charles Heighton has no position in any 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.

Institutional investors agree, as all three of these stocks are at least 50% owned by a mixture of active managers. This shows that professional investors are expecting these companies to rally over the coming years.

iomart Group

iomart Group (LSE: IOM) has two major divisions, Easyspace and Cloud Services. Easyspace provides hosting and domain services to small businesses. Meanwhile, Cloud Services targets larger companies and offers cloud computing services. Easyspace revenue has declined marginally this year, due to the nature of its clients. However, revenue in the larger Cloud Services division continues to grow organically.

It’s one of the UK tech stocks I’d buy because it has a diverse and reliable customer base and the business model ensures recurring revenue. The debt level has also declined in recent years and the business has more than enough liquidity to cover all short-term liabilities. This means that iomart should be able to weather the uncertainty of this year and continue to grow going forward.

Concurrent Technologies 

Concurrent Technologies (LSE: CNC) manufactures essential computer hardware for various industries. The company focuses on high-end products, especially boards. Its customers are based in less cyclical sectors, like defence and aerospace. This should ensure that its revenue remains relatively consistent despite the crisis. The share price has mostly recovered from the lows, but Concurrent is a very solid business, which I believe has a bright future and is still a bargain.

It is the second UK tech stock I’d buy today because it has no long-term debt and a comparatively high level of cash. It also has relatively high margins and should continue to see long-term organic growth. The stock has also performed excellently in the past few years and should continue on this trajectory.

SDL

SDL (LSE: SDL) produces language translation tech and has four major divisions. The specifics of each division are not necessary; all you need to know is that the company has suffered little from the current crisis but the stock has still lost value. The company had no hit to revenue in the first quarter and has implemented a cost-saving plan to accommodate any second-quarter loss.

SDL is a UK tech stock I’d buy because of its low level of debt, high cash balance, and solid business model. The company has very few clients in highly damaged industries like retail and travel and, as a result, should continue to grow. The share price is still 18% down from its highs earlier in the year, making this a great opportunity to buy a bargain UK tech stock.

All three of these UK tech stocks that I’d buy should weather the current economic problems and continue to grow. I believe that they could offer great returns for brave investors.

The post 3 bargain UK tech stocks I’d buy now to beat the market appeared first on The Twelfth Magpie.

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Charles Heighton has no position in any shares mentioned. The Motley Fool UK has recommended Iomart 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.

Loan loss provisions represent the money that banks have set aside in preparation for loans that they are expecting to be defaulted on or not paid in full. Due to the coronavirus, these provisions are going to be very high. In the US, JP Morgan Chase alone has set aside $34 billion this year.

In the UK, bank stocks are not as prepared for this huge loss. In the first quarter, UK banks set aside a lot less money than US competitors. Analysts expect the total UK domestic credit losses to be nearly £19 billion in 2020 alone, which is much higher than the current total provisions across the major banks. 

Barclays set aside £2.16 billion in the first quarter for loan losses, which was more than all its major competitors except HSBC. Every UK bank stock will have to report more provisions, but Barclays and HSBC should benefit from the larger sums that they have already set aside. 

Smaller and less leveraged retail banks will also offer an advantage this year, as they will have fewer loans outstanding. Out of the four major UK-listed bank stocks, HSBC and Barclays have the best loan to deposit ratio. This means that their losses should be smaller when compared to their held accounts. 

Barclays also has the largest fixed income trading team, which should help the bank profit handsomely this quarter. Meanwhile, HSBC will probably also perform well as its trading team is only slightly smaller. The other bank stocks have no trading teams of a notable size, which could cause them to have very negative results. 

Out of the UK listed bank stocks, I would avoid Lloyds Banking Group and Royal Bank of Scotland Group . They both set aside significantly less money in quarter one for bad loans, and they have much higher loan to deposit ratios and notably smaller trading teams. I believe that these banks will have results more in line with Wells Fargo, which fell 5% on its earnings release. 

I’d bet on Barclays to have the best performance out of all UK bank stocks, but HSBC should also have results in line with JP Morgan and Morgan Stanley. Either of these UK bank stocks could be worth an investment before results day, in my opinion (Barclays reports on the 29th of July and HSBC reports on the 3rd of August). 

It is important to note that both these bank stocks have other problems that could override any positive results. Other Fools have delved deeper into these problems, for HSBC, and Barclays. In the coming weeks, both bank stocks could also begin to price in US earnings. This makes any attempt to profit off of these results rather risky, but it could also be highly profitable.

The post Based on US Q2 earnings, I’d watch this UK bank stock and avoid the rest appeared first on The Twelfth Magpie.

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Charles Heighton owns shares in Barclays. The Motley Fool UK has recommended Barclays, HSBC Holdings, and 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.

There are many shares in the UK market that I believe Warren Buffett would take an interest in, but the one I like the most is Cineworld Group (LSE: CINE). 

Before I dive into the reasons why, I want to introduce a second quote from Buffett’s mentor Benjamin Graham, another titan of value investing. In his book The Intelligent Investor he wrote, “Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic”. I believe that Cineworld is an opportunity to follow the wisdom of Warren Buffett and Ben Graham. 

Since the beginning of the year, Cineworld shares have fallen 76%. This is a definite example of fear causing the price to fall spectacularly. While it quickly recovered from the lows of in March, it has gained little ground since then. These price movements imply that investors are fearful for the future of Cineworld. I believe this has led to the kind of opportunity that Warren Buffett would capitalise on. 

Cineworld also has a sizeable amount of short interest at 7.5% of all shares. These short positions are held by hedge funds, the alleged experts. On a basic level, professionals short stocks because they are fearful about the future of the company. While funds can profit from short positions, they are also often wrong – so shorted companies should not be avoided, in my opinion. This shows the kind of fear and professional opinion that Warren Buffett and his mentor Ben Graham were talking about. 

Cineworld’s share price has fallen so far because the company lost all its revenue when this crisis began, but when its cinemas reopen at the end of this month, the hardest part should be over. The company’s recovery will not be swift, but it does not have to be for the brave investor to make money. I believe that consumers will return to cinemas after months of being stuck at home. Die-hard fans will certainly return to see the big screen as soon as they can. This kind of captive audience provides a form of defensive moat that would attract Warren Buffett, I believe.

It may take several years for traffic to return to pre-pandemic levels, but the industry should recover. While Cineworld stock has performed poorly in the past few years, I believe the current price offers a high return opportunity. The only downside left in Cineworld stock is the prospect of bankruptcy, which investors should consider. However, the announcement of further lines of credit should enable the company to survive, unless further widespread lockdowns occur.

Cineworld may have a long road ahead of it before it recovers, but I think its shares could be an investment that Warren Buffett and Ben Graham would proud of. However, as other Fools have noted, this investment is not for the faint-hearted. 

The post I’d listen to Warren Buffett and invest in this share appeared first on The Twelfth Magpie.

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Charles Heighton has no position in any 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.

The reputational damage has already been widespread. ASOS and other retailers have dropped Boohoo from their stores. Boohoo’s target customers, who are aged 18 to 30, will also be particularly outraged by this news. As a group, they are known for conscientious buying habits. The industry is shifting away from fast fashion, which Boohoo relies on. So, even if the reports of modern slavery are exaggerated or found to be false, I would argue that owning Boohoo Group stock is risky due to this shift towards more ethical fashion.

This is also not Boohoo’s first strike. In 2018 The Financial Times levelled similar accusations at the company, making the claims of ignorance from executives appear dubious. This pattern indicates to me that there could be serious problems with Boohoo’s supply chain. To prevent further damage, it will have to go through the costly and disruptive process of investigating and replacing its suppliers. This may result in higher costs as it will have to approach more ethical factories to repair its reputation. Any change of this magnitude would raise serious concerns over Boohoo’s business model. That is why I believe that Boohoo Group’s stock has a highly risky and uncertain future.

Boohoo also has other risks that investors should be wary of. The company is currently engaged in a $100 million lawsuit in the US over false promotions and misleading pricing. If this lawsuit results in a fine then the company’s finances could be significantly damaged.

Also, in May of this year Shadowfall, a UK-based hedge fund that specialises in short selling, released some damaging research. Shadowfall claims that Boohoo has overstated and manipulated its free cash flow for the last six years by 67%. If true, this means that the company is producing significantly less cash than it is trying to claim. The research also suggested that Boohoo would have to pay significantly more than it claimed for the acquisition of the last 34% of Pretty Little Things. In response to this, BOO announced the purchase of that 34% a few days later. To some this proved Shadowfall’s research wrong, however, I’m not so sure myself. 

Any accusations of financial impropriety should send investors running, in my opinion. These factors mean that even if the company manages to recover from the current reputational damage, it still has many headwinds that make the future of Boohoo Group’s stock arguably very uncertain.

Boohoo is one of the fastest growing companies in the UK and the stock price may even recover. However, a pattern seems to be emerging of unethical and illegal behaviour, if the allegations prove true. Eventually, I believe that this house of cards will collapse and, when it does, I would not want to hold Boohoo Group stock.

The post Why I don’t think the risk is worth the reward with Boohoo Group stock appeared first on The Twelfth Magpie.

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• Forget Nvidia! This ETF is booming inside my Stocks and Shares ISA
• These cheap FTSE 250 shares could deliver a £1,550 ISA income in just 12 months!

Charles Heighton has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended boohoo 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.

While this may be true for a few years, the industry will recover. Consumers love to travel and memories of traumatic events are short. For instance, despite predictions that the tragic events of 9/11 would significantly reduce air traffic in the US, it had little to no effect in the long run.

While businesses have continued to meet from a distance, this is not viable in the long run. If professionals like consultants do not want to travel any more, they will have to lower their prices to reflect their lower costs. It is unlikely that this will occur. 

While it is impossible, as other authors have noted, to predict when the industry will rebound, it is almost a certainty that flight volumes will increase from their current levels. As revenues increase, airline stocks will increase too, leaving an opportunity for bold investors to profit. Even if flights do not reach 2019 volumes for several years as analysts are suggesting, stocks will still recover from current lows. I believe that International Consolidated Airlines Group (LSE: IAG) is a bargain stock right now, and is the right choice to outperform the FTSE and its competitors. 

Unlike US airline stocks like American Airlines Group and Southwest Airlines, which have experienced high volatility, European airline stocks have remained very low. Out of the five largest European airlines, IAG -which is third in terms of size – has declined the most year to date at 67%. This is despite having an arguably stronger balance sheet! When compared with the year to date return of the FTSE 100, which is currently around -19% at the time of writing, IAG presents a great opportunity. At this price, IAG is a bargain stock that should outperform the market.  

IAG has the second most cash and equivalents out of the same group of airlines, and has a forward P/E ratio significantly above the average. This ratio measures the stock price against the predicted earnings per share. Currently, all five have negative ratios, because analysts are predicting losses this year. This is not surprising considering the lack of revenue in the past few months. However, at -1.8, IAG’s loss should be survivable, unlike Ryanair, whose forward P/E ratio sits at -17.6. This to me demonstrates that IAG is unfairly discounted and is a bargain stock for the risk-taking investor. 

IAG does have the highest level of debt, which at face value makes it seem like a very high-risk investment and explains why the price has fallen so far. However, IAG also has the highest current ratio. So, it has the highest liquidity and ability to pay its short-term obligations (those that are within a year). This demonstrates IAG’s strength, despite its high debt level. At this price even with its debt, I believe that IAG is a bargain stock and I am not the only one amongst my fellow Fools.  

The post As travel resumes, I’d buy this bargain stock to beat the market appeared first on The Twelfth Magpie.

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Charles Heighton has no position in any 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.

As a consumer staples company, any secondary waves of Covid-19 should have a minimal detrimental effect on future revenues. So far, the company has weathered the crisis very well and has refused to furlough any employees, demonstrating the strength of the business. A second wave may even boost revenues, because during the first lockdown period in the UK sales of baking goods increased, and TATE should have profited from this (and could do so again).

Its defensive nature also means that TATE will perform better than the index in the current recessionary environment, which could go on for months if not years. The food and beverage solutions business is also geographically diversified, preventing reliance on a single market, further strengthening revenues. The company also has low levels of debt, which leaves it with options if the economic conditions worsen significantly. These factors mean that Tate & Lyle is an excellent defensive stock to protect your portfolio from the unpredictable and volatile markets.

The dividend yield is also healthy at 4.4% and historically stable. It has grown consistently over the past decade and offers a higher yield than competitors. Tate & Lyle should also have the continued revenue to sustain this dividend going forward even in a recessionary environment. This inflation-beating dividend is highly desirable as many companies have cut or even ceased dividend payments due to the current crisis. While it may offer a lower yield than other cheap FTSE 250 income stocks, Tate & Lyle’s long and stable record of dividend payments makes it highly likely that it will remain unchanged.

Finally, Tate & Lyle has demonstrated its defensive nature this year. It is currently down nearly 13% since January. While in the same period, the FTSE 100 is down 18% and the FTSE 250 is down 21%.

TATE’s significantly smaller loss demonstrates its defensive nature resulting in reliable performance against the index in this part of the business cycle. This performance should continue during this uncertain period. TATE also offers better long-term upside because it has a lower P/E ratio than its competitors and the broader market, indicating that it is currently undervalued. Therefore, I believe the current price offers an opportunity to buy a tremendous defensive stock at a discounted rate.

Tate & Lyle is trading at a great price and is a dependable company that I think would be a perfect defensive addition to any portfolio. While TATE will probably not skyrocket in the next few years, it offers an inflation-beating dividend and should remain stable during an uncertain and possible tumultuous economic period. This pick won’t make you a millionaire, but the cheap FTSE 250 income stock offers stable and reliable growth with a healthy dividend, which is needed in a balanced portfolio.

The post One cheap FTSE 250 income stock I’d buy right now appeared first on The Twelfth Magpie.

More reading

• How investing in a Cash ISA could cost you a comfortable retirement
• How much could Barclays shares pay in dividends by 2028?
• With a 6% yield and a P/E of just 7.4, is this share a screaming buy for a second income?
• Forget Nvidia! This ETF is booming inside my Stocks and Shares ISA
• These cheap FTSE 250 shares could deliver a £1,550 ISA income in just 12 months!

Charles Heighton has no position in any 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.