Rolls-Royce (LSE: RR.) shares have turned £4,160 — or just £80 saved per week — into more than £48,000 in the past five years. That’s a gain of more than 1,115% and ranks among the best FTSE 100 recovery stories in recent memory.

If you managed to spot the opportunity in June 2021, when the share price was sitting at just 107.3p, you’d be sitting on a tidy little profit right now.

But beyond the extraordinary growth since, what’s actually driving the stock higher? And could there be more to come for investors sitting on the sideline today? 

How does the maths break down?

Five years ago, the shares were trading at 107.3p, during one of the most turbulent periods in the company’s long history. As I write on Wednesday morning, the stock is trading at 1,253.8p and up nearly 5% year to date.

Here’s a quick breakdown of how the maths works out for an investor who bought shares five years ago and still holds those same shares today:

• Starting investment: £4,160

• Starting share price (4 June 2021): 107.3p
• Shares purchased: 3,877
• Current share price (3 June 2026): 1,253.8p
• Current investment value: £48,610
• Total estimated gain: 1,068% or £44,450

If you had put that same £4,160 in a cash savings account at a 4% annual rate, it would be worth just over £5,000 today.

That difference shows the potential of buying high-quality stocks at the right price, and backing them in for the long term. The big question is what really drove such a dramatic turnaround? 

From near-collapse to FTSE 100 giant

The company develops and delivers power and propulsion systems across civil aerospace, defence, and power systems. With a market cap of approximately £107bn, today it’s a true giant of the Footsie.

The transformation has been extraordinary under CEO Tufan Erginbilgiç has been impressive. He launched an aggressive cost reduction programme, boosted margins, and re-focused the company’s strategy. Those initiatives, combined with strong civil flight hours and surging defence and energy spending, have helped boost the stock in recent years.

Is the best already behind it?

I don’t currently hold shares in the company, but I’m actively considering whether now might be the right moment to add them to my portfolio. I personally think that in an increasingly uncertain investment and geopolitcal environment, Rolls-Royce could be just what my portfolio needs.

With a price-to-earnings (P/E) ratio just shy of 19, it doesn’t feel overvalued to me right now. The 0.7% dividend yield is modest, so I think investors really need to believe in the the growth story from here.

That all sounds great, but what about the risks involved?

Risks to consider

There are some real risks to the stock that are worth highlighting for long-term investors. Civil aerospace revenues are still tied to engine flying hours and the ongoing Middle East conflict could be a real swing factor here.

The business has confirmed full-year guidance remains unchanged despite the conflict, but there is still some element of uncertainty there. Supply chain risks are always front of mind in the defence sector, and I think the company’s push into new power markets carries some execution risk as a more recent addition.

The company’s half-year results release is on 30 July, which I’ll be watching closely. Management’s view of the world and latest growth expectations could be the key factor that determines whether I see this is stock as a good buy in 2026.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce Plc made the list?

Ken Hall does not hold any positions in the companies mentioned.

The post How much just £4,160 invested in Rolls-Royce shares 5 years ago is worth now appeared first on The Twelfth Magpie.

More reading

• Is the best still to come for Rolls-Royce shares?
• Can the Rolls-Royce share price reach £15.97 by the end of August?
• Could 282,693 investors be wrong about Rolls-Royce shares?
• Rolls-Royce shares are up 1,334% in three years — so why am I buying more as soon as possible?
• How can brokers still be tipping Rolls-Royce shares for even more growth?

Six months ago, BAE Systems (LSE: BA) shares were quietly building momentum.

Investors who spotted the opportunity and committed £19,469 in early December — just shy of the annual ISA allowance — would now be sitting on an investment worth £24,550. That’s a handsome return on paper of more than £5,000 in half a year, before dividends.

For a leading European defence stock that many traditionally think of as a slow and steady compounder, those gains warrant a closer look. So what’s actually going on?

Crunching the numbers

Six months ago the shares were trading at around 1,609p. As I write ahead of Monday’s market open, the price stands at 2,029p — an increase of 26.1%. Based on a £19,469 starting investment, the maths looks like this:

That capital gain of 26.1% in six months puts the stock comfortably ahead of the broader FTSE 100 index. But what’s driving such a strong performance from a business that’s been around for decades, and is there still more to come?

From defence stalwart to growth story

With a market cap of £61bn and roughly 111,000 employees worldwide, the defence contracting giant is one of the most significant businesses in the FTSE 100.

I don’t currently own any of its shares, but a market-leading position in European defence and an increasingly favourable global spending backdrop are making me take a much closer look.

The past six months have seen an acceleration of government defence spending commitments and flaring tensions in the Middle East.

That has translated into commercial success for the company. Chief Executive Charles Woodburn highlighted this in the company’s 2025 annual results:

“With a record order backlog and continuing investment in our business to enhance agility, efficiency and capacity, we’re confident in our ability to keep delivering growth over the coming years.”

The numbers support this, with a record £83.6bn order backlog and 2026 sales growth guidance of 7%–9%.

The stock has a modest 1.8% dividend yield versus more income-focused names in the Footsie. Investors have been willing to pay a premium, however, as the stock’s price-to-earnings (P/E) ratio has climbed to 29.8.

Is the valuation still justified?

I keep asking myself the same question on valuation. At 2,029p today, the premium versus the broader market is significant and investors need to ask whether the market has already priced in the positive outlook.

An investment isn’t without risk. A P/E ratio of nearly 30 leaves little room for disappointment such as missed earnings guidance or a slowdown in orders. 

Government spending decisions are fundamental to order book growth, which could come under pressure, and supply chain risks are always lurking in the background.

Time to consider buying?

The company is a clear leader in the defence sector and has enjoyed significant recent share price growth as the defence sector has stolen the limelight.

The key question for me is whether the current valuation represents the right entry point. The next earnings release is scheduled for 30 July, and I’ll be watching closely to see what management has to say on orders and margins before making any decisions.

Should you invest £5,000 in BAE Systems right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if BAE Systems made the list?

Ken Hall does not hold any positions in the companies mentioned.

The post £19,469 invested in BAE Systems shares 6 months ago is now worth… appeared first on The Twelfth Magpie.

More reading

• Down 19% to under £20! Is now exactly the right time for me to capitalise on BAE Systems’ bargain-basement share price?
• How have BAE Systems shares become a dividend powerhouse? 5 reasons why!
• 2 hot FTSE 100 shares brokers are tipping for June
• 3 FTSE 100 shares to consider buying in June and holding for a decade
• Are Babcock, BAE Systems and Rolls-Royce shares suddenly screaming buys?

For investors looking to build a second income from shares, the good news is that big risks aren’t necessary to earn a meaningful return. One FTSE 100 stock is quietly offering a forward yield of 5.96% and I think it’s well worth a look.

But how much could a £10,000 investment in this consumer-focused company actually generate?

What the numbers tell us

Here’s the maths. Put £10,000 into this stock at the current forward dividend yield of 5.96%, and that’s roughly £596 a year landing in a portfolio.

Hold that for a decade, assuming the yield is held constant, and the cumulative dividend income alone comes to approximately £5,960. That’s before any share price growth and before reinvesting dividends, which could push the total return considerably higher.

I’ve included a bit of a snapshot for investors below:

• Forward dividend yield: 5.96%
• Market cap: £90.7bn
• Price-to-earnings (P/E) ratio: 11.8

Those are compelling for a single FTSE 100 holding. But which stock is behind it and does the income actually stack up?

A high-yielding defensive giant

The stock in question is British American Tobacco (LSE: BATS).

The company has been one of the most reliable income stocks in the Footsie for years. The shares are essentially flat year-to-date yet up over 30% to 4,181p in 12 months, as I write ahead of the weekend.

Given its low double-digit P/E ratio and sizeable market cap, I think this is a business trading at a meaningful discount to the broader market. It’s a controversial sector, of course, and investors need to weigh that against their own beliefs.

But from a pure income perspective, the numbers speak for themselves. Tobacco has historically been one of the most cycle-resilient industries around with consumption historically holding up even when economies wobble.

A 5.96% dividend yield sounds attractive. But is it built to last?

Does the dividend look sustainable?

That’s the key question for mine. The long-term picture for traditional tobacco volumes isn’t pretty. Cigarette consumption is falling in most developed markets as regulation tightens and habits shift, including the recent UK ban for those born after 2008.

However, the company is investing in next-generation products including vaping and heated tobacco. Profitability in those categories is still developing, and the regulatory outlook remains uncertain.

A sharper-than-expected decline in traditional volumes could put the dividend under pressure down the line.

The risks are real but does the yield still make the case for investors to consider buying?

My verdict

For income-focused investors comfortable with the sector, I think the company makes a genuinely interesting case right now.

Diversification is often the key to generating a long-term income, but there is a lot to like about British American Tobacco.

There aren’t many stocks out there boasting a 5.96% forward yield, a P/E ratio just shy of 12, and a dividend history built on resilient cash flows through the economic cycle.

I’d want to see continued momentum in next-generation products before going in heavily, but at current levels it’s well worth a closer look.

The post How to earn £596 a year in second income from 1 FTSE stock appeared first on The Twelfth Magpie.

More reading

• 4,898 shares in British American Tobacco return £12,000 a year in dividends. Worth it?
• British American Tobacco’s share price slumps 4%! How’s that happened?
• As British American Tobacco shares dip, is this a hot buying opportunity?
• I’m targeting a yearly income of £6,898 from £20,000 in this FTSE heavyweight!
• What’s the right age to think seriously about a SIPP?

The Motley Fool UK has recommended British American Tobacco P.l.c. 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 Rolls-Royce (LSE: RR) share price has been one of the great comeback stories of the past three years. So after watching it drop more than 10% in the space of a month, I thought I’d dig deeper.

As I write ahead of Tuesday’s (7 April) market open, the company’s shares are sitting at 1,191.5p — down sharply from the recent highs that had made it a FTSE 100 darling.

So, what on earth’s going on?

Primed for growth?

On the surface, the investment case looks stronger than ever.

Geopolitical tensions are rising. NATO members are scrambling to hit the 2% of GDP defence spending target, with several committing to go further.

The UK government has pledged to lift defence expenditure to 2.5% of GDP by 2027. Defence contractors have rarely had a more favourable political environment.

Given the company’s strong market position as a manufacturer of engines for military jets, nuclear submarines, and power systems for naval vessels, it seems to be in a great position.

Surely the company should be riding this wave? And yet the price-to-earnings (P/E) ratio has contracted, not expanded, in recent weeks.

The civil aerospace complication

Here’s the part of the story that gets overlooked. The majority of the company’s revenue doesn’t come from defence at all.

Civil aerospace is the biggest money-maker, underpinned by long-term service agreements tied to its wide-body aircraft engines.

Under this model, the company earns fees based on the number of hours those engines fly. More flight hours mean more revenue. Fewer hours mean less.

That’s created a problem in recent weeks as conflict in the Middle East has hit the aviation industry hard.

Travel hours have been significantly reduced as airspace remains restricted. Airlines operating routes between the US, Europe, and Asia are already reassessing capacity. 

Iran’s control over the Strait of Hormuz has sent crude oil prices soaring and created uncertainty over global aviation supplies.

All of this has clearly worried investors. The Rolls-Royce share price has fallen 12.6% in the past month as investors try to price in the uncertainty and potential impact on the company’s future prospects.

My verdict

The Rolls-Royce share price has been under pressure of late. However, it’s worth zooming out from the current uncertainty to see the bigger picture. 

The company’s shares are still up nearly 1,000% in the past five years and it’s a Footsie top performer with a market cap over £100bn. The company remains on a compelling turnaround journey with a strong order book and a credible management team.

Sure, the outlook is less clear than it was a month ago. However, I think the recent turbulence and broader market uncertainty is understandable.

For patient investors with a long-term horizon, the recent pullback could be a chance to consider snapping up some shares for a cheaper entry point and it could be worth a closer look.

The post What on earth’s going on with the Rolls-Royce share price? appeared first on The Twelfth Magpie.

More reading

• How much just £4,160 invested in Rolls-Royce shares 5 years ago is worth now
• Is the best still to come for Rolls-Royce shares?
• Can the Rolls-Royce share price reach £15.97 by the end of August?
• Could 282,693 investors be wrong about Rolls-Royce shares?
• Rolls-Royce shares are up 1,334% in three years — so why am I buying more as soon as possible?

Ken Hall has no position in any of the shares mentioned. The Motley Fool UK has recommended Rolls-Royce Plc. 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.

Market volatility has ramped up in recent weeks and we’ve seen many penny stocks take a hit. There’s one name that has caught my eye as it’s surged 25% higher since the start of the year.

Pharos Energy (LSE: PHAR) shares are on the charge at the moment. I wanted to know if there’s more to this little-known energy stock with a £106m market cap than meets the eye.

Red-hot penny stock

The company is a small oil and gas producer with assets in Vietnam and Egypt, where its strategy is largely focused on squeezing more value from existing fields.

In a market that can swing hard on oil prices and headlines, its fortunes tend to move with both operational updates and the wider energy landscape.

The company’s share price has rocketed 25% higher in 2026 to 25.4p as I write on 23 March despite an 8% drop on Monday morning.

What’s happening in the energy sector?

The Iran war has disrupted global energy supply lines, with repeated warnings about the ongoing impact around the situation in the Strait of Hormuz.

The International Energy Agency has even called the conflict the greatest ever threat to global energy “in history”. Many analysts are tipping even higher crude oil prices, while oil and gas stocks like BP have hit all-time highs.

The company’s producing assets are in Vietnam and Egypt, so it’s not drilling in the Gulf. But higher realised prices can still mean stronger cash flows, which can swing a penny stock like Pharos quickly.

More than meets the eye?

That brings me to the company itself, which matters once the current headlines fade away.

In December, Pharos said it was running a fully funded six well infill and appraisal drilling programme in Vietnam. Management called it the most significant investment in those assets since original development.

It also said initial performance from the first Te Giac Trang (TGT) well was ahead of pre-drill expectations. Throw in the fact that it’s debt-free and has cash of about $16.6m and it’s easy to see why its valuation is climbing.

Valuation

After it’s recent stellar run, this red-hot penny stock doesn’t come cheap. The company’s shares trade on a price-to-earnings (P/E) ratio of around 31 with a 4.5% dividend yield.

That does feel quite punchy for a small company in a notoriously cyclical sector. However, if oil prices stay elevated, the company’s potential outsized earnings could help to support that strong yield.

That said, it pays to be cautious, particularly during these uncertain times.

Small producers can see their fortunes swing quickly with oil prices, and the current price action is heavily tied to a geopolitical shock. If the war premium falls away quickly, I wouldn’t be surprised to see a share price correction or crash.

Key takeaway

The Iran war has turbocharged interest in anything oil-linked as investors position themselves for the potential economic fallout.

Pharos has been a beneficiary as a micro-cap stock that has shown some recent signs of promise. However, big risks remain including a potential commodity price drop or operational headaches.

That said, the company’s positive Vietnamese drilling programme means it’s more than just a headline play. I think the company’s preliminary results release on Wednesday will be a must-watch for investors interested in the energy sector.

The post Up 25% YTD! Is this red-hot penny stock still ‘cheap’? appeared first on The Twelfth Magpie.

More reading

• 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!
• How much in dividends will these high-yield shares generate in 2026?

Ken Hall 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.

Tesco (LSE: TSCO) shares have looked fairly steady lately, but there’s one big risk that has me worried.

The supermarket chain is heavily exposed to rapid food price inflation, sparked by war-driven costs. My concern is that things could turn really nasty ahead of the company’s upcoming annual results release on 16 April. 

For me, the question is simple. If input costs jump, can the company effectively pass them on without scaring off shoppers?

The big risk of inflation

Recent headlines have been focused on a looming energy shock from the war in Iran. I can see why.

One-fifth of the world’s oil passes through the Strait of Hormuz, which remains effectively shut. However, it’s not just oil that should be on investors’ minds.

The risk of a food inflation shock is growing. This part of the world is vital for other key commodities including fertiliser and urea. Prices for the latter have surged as much as 50% in recent weeks.

That might sound distant from the UK weekly shop, but fertiliser and fuel costs don’t just stay on farms. Cost increases make their way through production, processing, packaging, and transport. Eventually, they turn up in everyday staples that we purchase from the likes of Tesco.

That to me creates both an opportunity and a risk for the company. The ability to pass on costs to consumers is critical given the tight profit margins in the grocery sector.

However, it’s not easy to do, particularly with consumers already feeling the pinch. Holding back price increases could help to increase market share but at the expense of profitability.

In a sector where promotions get matched fast, it’s easy to look competitive while quietly taking a hit.

Valuation

Tesco shares are currently trading on a trailing price-to-earnings (P/E) ratio of 21 ahead of the market close on 20 March.

Arch rival J Sainsbury is sitting a touch higher at around 23.7 as I write. Both sit above the FTSE 100 average of around 18, which reflects the non-cyclical nature of their businesses.

This sort of valuation is broadly in line with the long-term average. Investors have been keen to back Tesco recently with the stock up 46% in the last 12 months to 473p.

There’s also the dividend to think about which can be valuable in uncertain times. The company has a 3% dividend yield right now. That’s less attractive than the 4.3% offered by Sainsbury’s but nothing to sneeze at.

Verdict

For me, war-driven food inflation is a huge risk. If the company can’t fully pass on cost increases to consumers then margins could get squeezed.

However, it’s not all doom and gloom. The company has gone through various other supply chain shocks and managed well.

Investors interested in knowing more should be watching the Tesco results carefully for management’s views and the company’s outlook. 

And if this risk is building for Tesco, what does that say about the next earnings season across the wider UK consumer sector?

The post Tesco shares: 1 huge risk investors can’t ignore before April results appeared first on The Twelfth Magpie.

More reading

• No longer just a grocer: here’s how a shift in strategy could help Tesco shares hit new highs
• Have Tesco shares got anything more to give?
• Can Tesco shares break through the £5 barrier again?
• Here are the latest dividend and share price forecasts for Tesco
• Prediction: 12 months from now, £5,000 invested in Tesco shares could be worth…

Ken Hall has no position in any of the shares mentioned. The Motley Fool UK has recommended J Sainsbury Plc and Tesco Plc. 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.

Passive income can look especially appealing when a stock market correction puts investors on edge. After all, watching the value of a share portfolio fall is never easy.

But for long-term investors, weaker markets can create a rare chance to pick up solid businesses at lower valuations, and potentially lock in stronger dividend yields.

Opportunity during a correction

Let’s be clear here: not every falling stock becomes a bargain. Some shares drop for good reason, and a correction can still turn into something uglier.

I think the real opportunity lies in cutting through the noise, staying diversified, and focusing on businesses built to handle tougher conditions.

Of course, income investing during a correction is not about chasing the biggest yield on the screen. A chunky payout can be a warning sign if earnings are weakening or debt is rising.

In my view, the better approach is to focus on dividend durability, balance sheet strength, and whether a company is likely to remain relevant.

Events hit markets all the time and the stock market does tend to move in cycles. The key is picking companies that can battle through inflation, weaker confidence, and fiercer competition to still deliver strong returns over time.

Why Sainsbury stands out

One place I keep coming back to is the less cyclical end of the market. These are businesses that sell everyday essentials, which tend to hold up better when the economy wobbles.

Supermarkets are not immune to pressure, but demand for food and household basics tends to hold up better than demand for holidays, luxury goods, or other discretionary spending.

A good example is J Sainsbury (LSE: SBRY). In its 2025 annual report, the company said retail sales excluding fuel rose 3.1% and retail underlying operating profit climbed to £1.036bn, up 7.2% year on year.

It holds around a 16% UK grocery market share and has a dividend yield of around 4.3% as I write on 20 March. 

There is a simple reason this matters in a correction. If a steady dividend payer falls with the wider market, the yield can rise, assuming the payout remains intact.

That can improve the passive income equation without requiring heroic growth assumptions. It also helps explain why many investors look again at dividend shares and diversification when markets turn shaky.

Of course, there are still risks. Grocery retail is brutally competitive and margins are thin.

A sharp increase in essentials like fertiliser and urea amid the Iran war could impact food prices and pressure the company’s margins.

However, a combination of a strong dividend, solid market position, and provision of essential goods is a nice place for passive income investors to start their research.

Building a steady passive income

A stock market correction could be good news for passive income investors with the right approach.

Investors looking to establish a strong financial future should cut through the noise and focus on long-term returns. Snapping up durable businesses with steady demand and cash flow can be a powerful strategy.

J Sainsbury is just one example. If market nerves get worse from here, the most interesting passive income opportunities may come from the shares many investors stop watching at exactly the wrong moment.

The post Could a stock market correction be good news for passive income? appeared first on The Twelfth Magpie.

More reading

• Sainsbury’s share price looks 53% undervalued to me, and here’s what the market may be missing…

Ken Hall has no position in any of the shares mentioned. The Motley Fool UK has recommended J Sainsbury Plc. 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.

Barclays (LSE: BARC) shares look remarkably cheap compared to many UK banking stocks right now.

The company’s shares trade on a price-to-book (P/B) ratio of 0.7 as I write on 17 March. Meanwhile, HSBC shares are sitting at roughly 1.4 by the same metric.

It’s a similar story for the likes of Lloyds and NatWest, both trading at multiples of around 1.2. 

So on paper, Barclays shares look to be an absolute bargain in the sector. But is there a reason behind the steep discount or is it a bargain hiding in plain sight?

Recent stock price fall

Barclays shares have been on an impressive run of late. The stock price is still up 33% in the last 12 months and 115% in the last five years.

However, it’s clear that some doubts are starting to creep in. The stock has been hit hard despite strong profitability and returns to shareholders.

Recent worries about what might be lurking in its loan book seem to be the problem. Investors have been spooked by the company’s exposure to failed lender Market Financial Solutions (MFS).

One reason for the steep discount could be concern about the actual book value of its assets.

Are the concerns overblown?

While the stock has been under pressure, it’s not all doom and gloom for investors. In fact, the headline numbers remain strong.

The company reported a 12% increase in 2025 profits, with an 11.3% return on tangible equity (ROTE) and 14.3% Common Equity Tier 1 (CET1) ratio.

Compare those key ratios to HSBC. That bank reported an average 13.3% ROTE for 2025, with a 14.9% CET1 ratio. Both ratios look stronger, which could justify a premium relative to Barclays, but the discount on a P/B basis looks steep.

Of course, HSBC is not risk-free either. The company’s 2025 results showed an uptick in expected credit losses, and management is embarking on its own operational restructure.

The question for investors to consider is whether the perceived stability of HSBC is worth the significant premium relative to Barclays.

Shareholder returns

Then there’s the shareholder-friendly policies. Barclays is targeting more than £15bn in capital distributions by 2028.

Those types of figures aren’t what I would expect from a company under pressure and with a weak balance sheet.

A 0.7 P/B multiple as I write means that investors are valuing the company at a steep discount to its peers as well as the book value of its net assets.

If there are no further issues with the loan book, this could represent a huge opportunity for investors to capture that value.

However, discounts often exist for a reason and deteriorating asset quality could create more headaches.

My verdict

Barclays shares are trading at a steep relative discount to other banking stocks including HSBC.

However, the price-to-book multiple is not the only metric to consider. Investors are clearly spooked by the MFS exposure and worried about asset quality. I certainly think the stock is one for investors to consider further given the valuation gap.

Should further credit quality issues emerge that would justify a discount to peers. However, if the loan book does hold up, the company could be temporarily cheap, which makes it an interesting potential opportunity.

The post Are Barclays shares really 50% cheaper than HSBC right now? appeared first on The Twelfth Magpie.

More reading

• How much could Barclays shares pay in dividends by 2028?
• Up 41% in 12 months are Barclays shares still worth buying?
• £20,000 invested in Barclays shares a year ago is now worth…
• Barclays shares are 11% below their 52-week high. Could they be a bit of a bargain to consider?
• Barclays shares tipped to rise 30% as £15bn shareholder return strategy takes shape

Ken Hall has no position in any of the shares mentioned. HSBC Holdings is an advertising partner of Motley Fool Money. The Motley Fool UK has recommended Barclays Plc, HSBC Holdings, and Lloyds Banking Group Plc. 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 escalating Iran war is naturally raising fears worldwide. It also has many investors worrying about a stock market crash. The crisis has caused global markets to wobble in recent weeks.

Iran has closed the vital Strait of Hormuz to the US and its allies. That has wreaked havoc in global oil markets, as the passageway is responsible for about 20% of the global oil trade.

There’s no doubt this could hit the global economy hard if the deadlock persists. However, I think there is another hidden risk that is looming large in the shadows of the conflict.

What’s happening with oil prices?

The closure of the Strait of Hormuz has rattled markets. Governments around the world are scrambling to find a solution to unblock this arterial trade route that carries about 20% of the world’s oil supplies.

The impact on oil prices has been immediate and large. As I write on 17 March, Brent crude is trading at over $100 a barrel. That’s a fair cry from the pre-conflict price of $66 a barrel just one month ago.

A hidden danger?

Oil isn’t the only important commodity that could be impacted by the conflict. More than 30% of the world’s nitrogen fertiliser exports and components like sulphur ordinarily pass through the Strait.

The knock-on effects from the closure to global economies could be massive. Hormuz is responsible for around 45% of global sulphur exports, while neighbouring Qatar accounts for nearly one-third of global helium output.

A protracted conflict could seriously impact fertiliser availability. In turn, that could impact food production and food prices. The economic and humanitarian impacts of such a situation could be enormous.

Sulphur is vital for fertilisers, chemicals, and chipmaking, while helium matters for medical imaging, semiconductors, and aerospace. In other words, the conflict isn’t just about oil.

Large-scale supply chain disruption could squeeze earnings across multiple sectors at once. That sort of scenario could feasibly create the risk of a stock market crash in 2026. 

One fertiliser stock to watch

One stock I am keeping an eye on here is Wynnstay Group (LSE: WYN).

That’s because this AIM-listed company with an £86m market cap could give investors more direct exposure to the fertiliser industry than many other UK shares.

The company is by no means a global commodities giant. However, it is a well-established agricultural supplies business with a dedicated Fertiliser & Seed division and its own fertiliser blending operations.

Its latest results suggest it is in decent shape. It reported revenue of £583.4m, adjusted profit before tax of £9.2m, and net cash of £25.7m, while also extending its long record of dividend growth.

There are still big risks. The company is small, and the impact of the conflict on the company’s fortunes is not immediately clear.

If costs rise too far, for example, farmers could cut or delay spending and actually hurt the company’s earnings.

My verdict

While markets are worried, none of this means a stock market crash is inevitable.

As always, it helps to take a long-term view. Investors who are fixated on just oil prices may be missing the bigger commodity picture and supply chain story here.

If the war rages on, I think other areas like fertiliser, sulphur, and helium could present some real opportunities for investors.

The post Why I’m worried about this hidden risk causing a stock market crash appeared first on The Twelfth Magpie.

More reading

• These 3 ‘secret’ dividend shares could be top stocks to buy in May!

Ken Hall 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.

It’s hard to find cheap shares. For one thing, it’s often only in hindsight that a company can look ‘cheap’.

There’s no doubt 2026 has been a bumpy ride for shareholders. Whether it’s trade tariffs, oil prices, or war, there are plenty of things to keep investors up at night.

However, uncertainty also creates opportunity. As Warren Buffett said: “Be greedy when others are fearful, and be fearful when others are greedy”.

Two FTSE 100 names have been smashed lately. Here’s why I think the market could be wrong about both of them.

Barclays bargain?

The first stock on my list is Barclays (LSE: BARC). I think the current risks are overblown, and the bank’s growth trajectory remains on track.

The worry around it is easy to understand. The shares were knocked after reports linked it to potential losses from the collapse of UK mortgage provider Market Financial Solutions.

Investors are clearly worried about hidden credit problems. Still, I think the sell-off has gone too far. After all, the price-to-book (P/B) ratio of 0.7 is a steep discount to the likes of HSBC (1.4) and NatWest (1.2).

In its full-year 2025 results, Barclays reported an 11.3% return on tangible equity, a 14.3% capital ratio, and said it aims to deliver more than £15bn of capital returns to shareholders between 2026 and 2028.

In other words, it remains profitable, well-capitalised, and willing to return cash to investors.

That doesn’t make it risk-free. If the economy weakens, bad debts rise, or the private credit story worsens, it could spell trouble. But when a large bank is still producing solid numbers, I think a 20% year-to-date drop looks harsh.

Even after the recent wobble, the stock is still up 114% over five years as I write, ahead of the market open on 16 March.

Is Sage oversold?

The other Footsie stock I’ve been watching is Sage (LSE: SGE). The recent weakness looks like a different kind of opportunity.

The concern is that advances in artificial intelligence could undercut existing software providers and impact future earnings.

The Sage share price has been under pressure, falling 20% year-to-date to 840p as I write on Sunday (15 March). It’s not alone. AI concerns have weighed on software stocks around the world in recent months.

However, Sage’s underlying business still looks strong to me. Its full-year 2025 results showed 11% growth in annual recurring revenue, 10% revenue growth, and a 17% rise in underlying operating profit. Management also reiterated guidance for 9% or more organic growth in FY26. That’s not what I’d expect from a business in imminent trouble.

Of course, there are risks. If AI tools put pressure on pricing, or if customers move faster than expected towards newer software options, the shares could still fall further.

But with recurring revenue, healthy margins, and steady growth, I think the market may be panicking unnecessarily.

Why the market could be wrong

I think both of these companies are cheap shares right now. The recent repricing, amid wider uncertainty in the market, could be overdone.

Both companies are facing genuine risks. But neither business looks fundamentally broken to me and so could be worth considering.

That doesn’t mean either stock will bounce back quickly. It just means that when fear causes a sharp 20% decline, it makes me wonder about a potential buying opportunity.

The post Down 20%! I think the market’s got these 2 cheap shares all wrong appeared first on The Twelfth Magpie.

More reading

• How much could Barclays shares pay in dividends by 2028?
• Up 41% in 12 months are Barclays shares still worth buying?
• £20,000 invested in Barclays shares a year ago is now worth…
• How has Sage become one of the FTSE 100’s best bargain shares?
• Barclays shares are 11% below their 52-week high. Could they be a bit of a bargain to consider?

Ken Hall has no position in any of the shares mentioned. HSBC Holdings is an advertising partner of Motley Fool Money. The Motley Fool UK has recommended Barclays Plc, HSBC Holdings, and Sage Group Plc. 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.