T Sligo, Author at The Twelfth Magpie

Searching for the best UK shares to buy? I’d look at these FTSE 250 gems

T Sligo — Mon, 17 Aug 2020 08:43:41 +0000

Making sure you’re buying the best UK shares is a challenge at the moment. The coronavirus crisis has seriously impacted the global economy, plunging the UK into recession. Whole industries have been turned upside down, and are still reeling from the effects of the virus.

However, I believe now could be a great time to buy shares in great UK companies. You just have to pick carefully. Here’s what I’d buy now.

Britvic

Britvic (LSE: BVIC) shares have been on a bit of a downward spiral in the year-to-date, dropping by 6%. This fall in share price means the price-to-earnings ratio is just 14, which I think makes now a great buying opportunity for UK based investors.

The drinks manufacturer has strong brands in its portfolio, such as Robinsons, R Whites and J2O. It also has exclusive agreements to make and distribute drinks on behalf of Pepsico. To give an idea of the size of the company, every minute in Great Britain 17,600 Britvic drinks are bought.

The business has been impacted by the coronavirus outbreak. In its Q3 trading update, which covers the period to the end of June, revenue declined by 16.3% on last year. However, a drop in out-of-home consumption was offset by strong growth in at-home consumption. This meant that the company saw market value share gains in all business units.

As we’re slowly seeing life turn back to normal, I don’t think it will e btoo long before Britvic’s revenue reaches pre-coronavirus levels. I’d buy this UK share now while it still looks cheap.

Another great UK share to buy?

Games Workshop (LSE: GAW) is a company I love, mainly for its unique products, high margins and loyal customer base. If you aren’t familiar with Games Workshop, the company makes fantasy miniatures and licenses its product out.

It is often seen by prospective buyers as a growth gem. The UK-based company’s share price has risen 51% in the year-to-date, despite temporarily closing its doors due to Covid-19. In its latest results, released last month, the company posted a 10% jump in profit for the year ending 31 May. Its sales were up by 5% in the year.

Despite its rapid growth — 1,500% in the past five years — I don’t think it’s too late to buy Games Workshop shares. Although currently on the expensive side, the opportunity to license its product out offers a chance to push its revenue growth further. The business also opened 23 new stores in the financial year.

Although I’d rather buy the shares at a much cheaper level, I don’t think this is a realistic prospect. Following the coronavirus crisis, I think that Games Workshop has proved it is one of the more resilient UK businesses, and for that reason, I believe its shares are worth buying at today’s price.

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T Sligo has no position in any of the shares mentioned. The Motley Fool UK has recommended Britvic. 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.

Buying UK shares? I’d start here!

T Sligo — Mon, 17 Aug 2020 08:28:23 +0000

Buying UK shares can feel like navigating a minefield at the moment. Businesses and whole industries have been impacted by the pandemic in ways that were once unimaginable.

However, for the prudent investor, now could be a great time to buy UK shares. The FTSE 100 has fallen by 18% in the year-to-date. Therefore, I believe it is possible to buy shares in quality companies that should benefit from the economy’s likely recovery.

Here’s where I’d start.

Investing with smaller sums

If you’re investing with smaller sums, you might struggle to build a well-diversified portfolio.

Diversification is especially important at the moment when it’s difficult to predict how different businesses will react to the coronavirus after-effects.

Although it’s difficult for investors to build up a diversified portfolio with small sums, it can be done by investing in an index fund. Index funds aim to track the performance of a chosen market. UK investors could buy shares in a fund that tracks the FTSE 100, for example. You can usually do so with a modest lump sum, such as £100. This will create diversification with ease.

If you invest at regular intervals, you can take advantage of the markets cycles by pound-cost-averaging. This means your money would be invested at both the high and low points of a market cycle.

Although I think index fund investing is a great way to buy shares with low sums, to supercharge your returns, it might be best to buy individual shares.

A great UK share to buy?

When I think of great UK shares, there is always one company that springs to mind. That company is Unilever (LSE: ULVR), with fantastic brands in its portfolio such as Marmite, Ben & Jerry’s and Lynx.

The reason why I rate Unilever shares so highly is due to the low-cost nature of its products. When times are tough, I’m convinced that people will still be purchasing these goods.

This brand loyalty also offers Unilever another benefit. The company can nudge up the prices of its goods, improving profit.

In its latest results, released in July, the company reported that underlying sales fell by 0.1% in the six months to the end of June. Although this might sound disappointing, it was better than the market predicted. The disruption from the closure of restaurants, cinemas and pubs was offset by a surge in sales of goods that can be consumed at home.

As fellow-Fool Paul Summers notes, performance in North America was a highlight for Unilever, with underlying sales growth in the region hitting 9.5% in Q2

With its better-than-expected results, I was a bit surprised to see that its price-to-earnings ratio is just under 20, even though its share price has jumped by roughly 5% in the year-to-date. For that reason, I believe that right now offers a chance to buy shares in this great UK company at an irresistible price.

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T Sligo has no position in any of the shares mentioned. The Motley Fool UK has recommended Unilever. 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.

Is this one of the best FTSE 100 shares?

T Sligo — Tue, 28 Jul 2020 07:33:58 +0000

With the coronavirus outbreak affecting businesses throughout the UK, it’s difficult to determine what the best FTSE 100 shares to buy might be. Since the start of the year, we have seen several big companies collapse, proving that nothing is completely safe. If ever there was a time to be a cautious investor, it is surely now.

However, it is not all bad news. The FTSE 100 index has fallen by roughly 19% in the year-to-date. I believe this has opened up an opportunity to buy shares in some of the best UK companies.

With most garage forecourts reopened, I thought now might be the best time to examine Auto Trader (LSE: AUTO) to see if it’s worth buying the FTSE 100 company’s shares.

One of the best FTSE 100 shares to buy now?

Warren Buffett likes to buy companies with a strong competitive edge — or moat — against its rivals. I’m not going to disagree with arguably the world’s greatest investor, so it tends to be a quality I seek out in shares too. In the past, some of the best FTSE 100 shares have been those well-protected against the competition.

That’s why Auto Trader has got my attention. It’s the first place I look when I’m considering buying a car, and I’d hazard a guess and say that most other people would check its website too.

Auto Trader’s share price has dropped by approximately 10% in the year-to-date. This makes the price-to-earnings ratio of the stock 24. The shares aren’t cheap, then. But are they worth buying?

Time to buy Auto Trader shares?

It’s been a difficult year for the motor marketplace. Uncertainty surrounding Brexit and what Auto Trader calls “significant environmental and technology-driven changes to the automotive industry” have been huge hurdles for the company. And that’s before we consider the devastating effects the coronavirus outbreak has had on FTSE 100 shares.

Unsurprisingly, the closure of car showrooms had a negative effect on Auto Trader’s revenue. In fact, it stomached the blow and didn’t charge its retail customers for advertising during April and May, and offered them a 25% discount in June.

What is surprising is the level of traffic the platform is receiving. In the first three weeks of June, Auto Trader had record levels of audience, with cross-platform visits up by 28% compared with the same period last year. With coronavirus fears putting people off public transport, buying a used car might be seen as a safer alternative.

The company has proved its resilience in this crisis. To raise extra cash, the company issued new shares. This raised £183m.

In addition to the business’s resilience, investors should be excited about its margins. Once a new customer is acquired, there is little in the way of additional capital outlay. In its full-year results at the end of March, the operating profit margin was reported to be 70%, up 1% on the prior year.

With the decline in its share price, I think that Auto Trader shares could offer value for long-term FTSE 100 investors who are betting on the economy’s recovery.

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T Sligo has no position in any of the shares mentioned. The Motley Fool UK has recommended Auto Trader. 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.

Looking for UK shares to buy? I’d start with these FTSE stocks

T Sligo — Sun, 26 Jul 2020 09:59:24 +0000

If you’re thinking about buying UK shares, you have plenty to choose from. The FTSE 100 has fallen by roughly 19% year-to-date, meaning that there is a chance to snap up bargain stocks.

However, there is also a risk of danger. Most industries have been negatively affected by the coronavirus pandemic. Choosing the wrong stock could mean losing money.

I’ve identified two UK shares that I would buy and hold for the long term. I believe they will benefit from the economy’s likely future recovery.

A great UK share to buy and hold now?

When Greggs (LSE: GRG) reopened stores after the lockdown measures were eased, many branches had queues around the block. People were excited to buy its baked products. Such is the love the UK has for its sausage rolls, including the plant-based version.

However, the Greggs share price has fallen by 37% year-to-date, making its price-to-earnings ratio just 16. I think this indicates it is an undervalued UK share and could be worth buying.

We’ll need to wait until the 28 July to see how sales have been affected, when the company releases its latest results for the 26 weeks to 27 June. I imagine the reading will be bleak, as it will cover the imposed UK lockdown period. I don’t doubt it will take a while for sales to return to normal levels. However, I have hope that the market might be pricing Greggs a tad pessimistically.

If investors want to snap up the shares before the latest results are released, it is also worth noting that reopened stores have reduced the range of products being offered, to help with meeting social distancing guidelines.

However, if you are feeling a bit bullish about Greggs’ sales since the reopening of its stores – like I am – this could be one of the best UK shares to buy now before its stock price potentially surges.

ITV share price

While many industries have struggled during the coronavirus lockdown period as people stay at home, one area that has flourished is streaming services. Fellow-Fool Jabran Khan notes that it’s estimated that there were nearly 6m new subscribers to streaming services during the lockdown period.

This might explain why, the ITV (LSE: ITV) share price, has dropped by roughly 58% year-to-date. ITV is more of a traditional TV offering and UK subscribers are buying into online viewing platforms.

As budgets come under strain, advertising revenue will be affected by the coronavirus outbreak. The drop in the studio segment of the business will be due to a halt with much of the production work.

I think the market is pricing ITV unfairly. It has an extensive back-catalogue of shows and formats it can sell or license. The business is also making an effort with its own ITV Hub and launching Britbox with the BBC.

For long-term investors, now could be a chance to buy shares in a great UK company right now, while the stock price is cheap.

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T Sligo has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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’d buy and hold these 2 FTSE 100 shares right now!

T Sligo — Tue, 21 Jul 2020 14:52:27 +0000

With FTSE 100 share prices falling, now is a great time to pick up some bargains. In light of the coronavirus pandemic, the index has slumped by 18% year-to-date.

However, just because something is cheap, it doesn’t mean it’s a bargain. Often there’s a very good reason a stock is cheap, and it should be avoided.

These turbulent markets often favour long-term investors. These investors have the time to ride out short-term fluctuations and to take advantage of the FTSE 100’s likely recovery.

I’ve identified two FTSE 100 stocks that I think might be good shares to buy and hold.

Reckitt Benckiser

In the current market, I don’t think there’s anything better than a company selling small-value consumable items. I see these sorts of companies as relative safe havens, particular given the volatility in the market. I can’t imagine the majority of customers quibbling about spending a few pence extra on their favourite branded items such as those offered by Reckitt Benckiser (LSE: RB).

Reckitt Benckiser’s share price is a testament to its defensive capabilities. Unlike the FTSE 100, its share price has risen by roughly 25% year-to-date. This gives the stock a price-to-earnings ratio of 22. Far from cheap, then.

But with an extensive list of household brands in its portfolio, like Vanish, Durex, and Gaviscon, I think Reckitt Benckiser has an in-built economic moat against rivals. I believe this is worth paying a bit extra for.

With various hygiene products in its portfolio, like Harpic and Dettol, the company will probably see higher revenue for some time to come.

In any case, I think Reckitt Benckiser has proven that it’s a defensive gem in the FTSE 100 and could be a good share to buy and hold.

A cheap FTSE 100 share?

Unlike Reckitt Benckiser, the Legal & General (LSE: LGEN) share price looks cheap to me. Year-to-date, the FTSE 100 financial giant’s share price has slumped 27%. This reduction in price means the price-to-earnings ratio is just 8.

Like most of the FTSE 100, Legal & General has been impacted by Covid-19. However, as fellow-Fool Rupert Hargreaves notes, due to an impressive jump in new business, the company has suffered less than others.

Unlike other companies in the UK index, Legal & General has committed to its dividend. With other FTSE 100 businesses slashing, suspending, or cancelling dividends, this should get potential investors interested. However, what’s seriously impressive is Legal & General’s prospective dividend yield, which is currently 7.5%. I think this indicates that, despite the coronavirus, the business is financially robust.

With Legal & General’s seemingly cheap share price and generous dividend, I think it could be one of the best FTSE 100 stocks to buy and hold right now.

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T Sligo 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.

Are these the best UK shares to buy now?

T Sligo — Tue, 21 Jul 2020 06:47:38 +0000

The Covid-19 pandemic has damaged share prices around the world. The FTSE 100 has dropped by 18% year-to-date. The smaller UK index, the FTSE 250, has had a similar trajectory, falling by 21% year-to-date. I believe this has opened up one of the best opportunities to buy UK shares for years.

Of course, with falling share prices, it’s often difficult to determine whether something is cheap for a reason. I think it’s best to be cautious. With that in mind, here are two shares I’d buy and hold for the long term.

The best UK share to buy now?

I love consumable shares, especially when a business sells low-value items that customers always need. Unilever (LSE: ULVR) is probably the best UK consumable company right now, with brands in its portfolio like Marmite, Ben & Jerry’s, and Lynx. Even in times of economic hardship, I think many of Unilever’s products will make it into customers’ baskets.

Unilever’s share price is roughly level year-to-date. This makes its price-to-earnings ratio just 18. I think this could signal that this is one of the best opportunities to buy shares in Unilever at a bargain price.

With Unilever’s strong list of products, I expect brand loyalty from its customers. In the future, I think this will enable Unilever to nudge up prices to further improve margins.

In turbulent times such as these, I think people will seek out shares in companies like Unilever, due to the dependable revenue and profitability the company normally generates.

Diageo

For similar reasons to Unilever, I think that Diageo (LSE: DGE) shares are currently among the best in the UK. The company’s share price has fallen by 11% year-to-date. Its price-to-earnings ratio is slightly higher than Unilever’s, at 22. With that in mind, the shares can’t be classed as cheap, but I don’t mind paying a premium for a slice of a quality company.

The multinational drinks giant has been hit heavily by the various lockdowns implemented around the world. Unsurprisingly, the closure of bars, restaurants, and hotels has impacted revenues.

However, it’s not all bad news for Diageo. We are slowly seeing a return back to normal, with pubs and restaurants reopening. It might take a while for consumer confidence to return. When it does, I imagine they’ll be returning to their favourite drinks and companies like Diageo will benefit.

The company has a strong portfolio of beverages, including Guinness, Smirnoff, Johnnie Walker, and Baileys. This should ensure that the company has a drink when palates change.

The other thing that makes Diageo one of the best UK shares to buy is its generous dividend yield, which is currently about 2.5%. As my fellow-Fool Edward Sheldon notes, Diageo has notched up its dividend for 21 consecutive years. Edward thinks Diageo is unlikely to slash its dividend any time soon. I’m inclined to agree with him.

With pubs, restaurants and bars reopening, I think now is the time to buy Diageo shares and hold for the long term.

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T Sligo has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and Unilever. 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.

Waiting for the next stock market crash? I’d buy cheap FTSE 100 shares today

T Sligo — Tue, 21 Jul 2020 06:11:21 +0000

Recently, there has been a lot of press coverage over the economic fallout that the coronavirus outbreak will cause. Although the news is certainly worrying, a second stock market crash isn’t guaranteed.

Year-to-date, the FTSE 100 has already fallen by 18%. I think this means that there are already many shares trading at a cheap valuation. Is it worth waiting for a hypothetical second market crash, or to buy shares now?

Second stock market crash

The prospect of a second market crash is far from certain. A future recession is now talked about as an expectation, and we already have indications on how the virus will affect businesses operations.

Declining consumer confidence will impact the economy, and will probably result in job losses. Of course, a lot depends on whether there will be a second wave of the coronavirus, in which case I imagine there will certainly be another market crash, sending FTSE 100 shares tumbling. However, the FTSE 100 index has had a bit of a rally recently, increasing by 24% since its low-point in March.

With a deep recession potentially looming, you should hold off from buying shares, right?

Not necessarily.

Buying cheap FTSE 100 shares

I wouldn’t encourage buying shares in industries that have been on the brink of disaster since the coronavirus outbreak struck, like airlines or international travel companies.

However, I think there is an opportunity to buy cheap FTSE 100 shares if you’re being careful with your investments. There is a chance to buy resilient businesses with a competitive edge against rivals in this market. Companies operating in localised travel or selling cheap consumable items are ticking boxes for me at the moment.

In addition to the resilient companies already in a strong position, we should be aware that consumer habits will possibly change in the future. Other organisations will benefit from this situation.

As well as seeking out the opportunity to buy cheap FTSE 100 shares, there is another way that investors might be able to lessen their risk. This is by pound-cost-averaging, where a set sum is invested at regular intervals. By investing in this way, investments will be made when the market goes up and down. Over time the price paid for shares averages out.

Hunting shares

Would I wait for the next market crash before investing?

No. There are plenty of FTSE 100 companies still trading profitably. Some of these shares look cheap to me, and I feel the market is unfairly pricing them. As a long-term investor, I’m prepared to buy and hold shares for decades.

However, in these times, investors need to exercise caution. We could still be feeling the ramifications from the coronavirus for years to come. Surely we will see more businesses and industries suffer in the short term.

However, with lots of FTSE 100 shares looking cheap, I’d be buying shares now to benefit from the likely long-term recovery of the market.

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Is the Associated British Foods share price too cheap to ignore?

T Sligo — Tue, 14 Jul 2020 06:32:21 +0000

The FTSE 100 index is down by 20% year-to-date. The Associated British Foods (LSE: ABF) share price follows a similar trajectory, with the price slumping by roughly 24% year-to-date. Unsurprising, as the economy is still reeling from the devastating effects of the coronavirus crisis.

Like other FTSE 100 businesses, Associated British Foods has been hit hard by various lockdown measures implemented around the world.

Revenue in Q3 fell by 39% compared to the same period last year. Although the Grocery, Sugar and Ingredients divisions reported positive results, the closure of all the group’s Primark clothing stores led to a loss of roughly £650m in monthly sales.

However, as lockdown measures are eased, could now be the time to buy the ABF shares?

Falling ABF share price

The group’s falling share price means it’s trading at a price-to-earnings ratio of just 14. On the face of it, the shares do appear cheap. But just because something’s cheap doesn’t mean it’s worth buying.

With Primark stores reopening, Associated British Foods shareholders will be relieved. According to its 2 July update, trading in the “reopened stores has in aggregate been reassuring and encouraging.” Stores in retail parks are doing well. However, units in big cities are struggling, due to the absence of tourists and lower commuter footfall.

Unsurprisingly, in the seven weeks following the reopening of some stores on 4 May, sales were 12% lower than last year, on a like-for-like basis. However, sales in the week ending 20 June, with the majority of selling space reopened, trading in England and Ireland were ahead of the same week last year.

As fellow-Fool Harvey Jones points out, Primark was hurt by the lockdown more than some of its competitors, due to a lack of an online offering.

Now that stores have reopened, will its strong sales form be maintained? I think so. I believe the low prices of many of Primark’s products will mean prudent customers watching their pennies won’t be deterred from shopping there.

The fly in the ointment could be government-imposed social distancing measures. This will surely continue to limit how many eager customers can shop in its stores as confidence returns. We’ll have to wait and see how Primark — and the ABF share price — is affected by these measures.

Is now the time to buy?

Potential ABF shareholders are likely to focus on Primark’s business. Indeed, much of group revenue does stem from the retail chain. However, the company also has other divisions performing well. For example, its Grocery division reported Q3 revenues were 9% ahead of last year. An increased home-consumption helped sales of some of its brands such as Jordans, Dorset Cereals, Silver Spoon and Ryvita.

Although I think the shares look cheap, I remain cautious about its Primark brand. Sales might be strong, but it’s yet to be seen whether social distancing measures will affect footfall levels. That said, for a long-term investor, this could be a great opportunity to buy the ABF shares while the price looks low.

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T Sligo has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods. 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.

Is the Rolls-Royce share price too cheap to ignore?

T Sligo — Mon, 13 Jul 2020 06:41:21 +0000

The market crash has sent share prices spiralling. In the year-to-date, the FTSE 100 has lost 20% of its value. Rolls-Royce (LSE: RR) shares have had a more severe trajectory, dropping by 62% in the year-to-date. Are the shares worth snapping up at their bargain price, or are they now a dangerous value trap?

Battered Rolls-Royce share price

The coronavirus crisis has affected business in ways that previously wouldn’t have seemed imaginable. With travel restrictions and lockdown measures implemented around the world, the aviation industry has been hit particularly hard. This has caused a significant problem for Rolls-Royce, and especially its civil aerospace division.

In light of the coronavirus crisis, Rolls-Royce is reviewing options to strengthen its balance sheet. The company is taking action to slash its cash expenditure in 2020 and expects 9,000 job cuts across its global workforce of 52,000. It has announced 3,000 job cuts in the UK alone. Further to the job cuts it’s making, Rolls-Royce is looking to cut expenditure across plant and property.

Rolls-Royce hopes that the planned reorganisation will save the company more than £1.3bn a year and strengthen its balance sheet.

With these cuts being made, and as travel restrictions are eased and airlines are now preparing to fly, could it be worth buying into Rolls-Royce shares now?

In defence of Rolls-Royce

Like my Foolish friend, Roland Head, I feel that with the aviation industry struggling generally, growth in this sector probably won’t match previous levels any time soon. However, I remain hopeful that in the long term, as things turn back to normal, we’ll see the civil aerospace division recover. Of course, this is contingent on lockdown measures being eased further and consumer confidence returning.

I think the real gem for potential Rolls-Royce investors is the defence division of the business. Although the civil aerospace division is facing severe cuts, at this time, the cuts aren’t affecting the defence division. The company reports that this division has been robust during the pandemic and last year it reported a record-breaking performance of £5.3bn of new orders. In light of this, the firm has stated that the outlook for the defence division is unchanged for 2020.

I think the defence division is a key perk linked to owning Rolls-Royce shares. Being a major supplier to the UK and the US governments also gives the business a strong competitive edge against its rivals, I believe.

Worth buying?

There is no doubt that the short term will be turbulent for those who hold these shares.

With the Rolls-Royce stock price falling by roughly 62%, the shares have a price-to-earnings ratio of just 16. In my view, this definitely makes it a bargain share.

A struggling aviation industry needs to get flying again before Rolls-Royce shares fully recover, I believe. But I feel its defence division makes this a robust business. For long-term investors, I think this is a stock well worth buying at today’s bargain price.

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£2k to invest? I’d buy these FTSE 250 shares right now!

T Sligo — Mon, 06 Jul 2020 08:46:38 +0000

The FTSE 250 has dropped by 20% in the year-to-date, as the fallout from the coronavirus outbreak continues. For FTSE 250 investors, this could be a once in a lifetime opportunity to buy shares in great companies at bargain prices. Many industries have been affected in ways that once would have been unimaginable. However, it’s still possible to pick up some real gems.

I’ve identified two shares that could be worth buying now.

A cheap FTSE 250 share?

The National Express (LSE: NEX) share price has fallen by 62% in the year-to-date. As the public was in lockdown for several months, this won’t be a surprise to most investors. This drop means the company is trading with a price-to-earnings ratio of just 5.

However, before the coronavirus outbreak properly hit the stock market, the shares were on an upward trajectory. If we look from January 2010 to January 2020, the National Express share price had increased by roughly 130%.

Is the market pricing this FTSE 250 stock unfairly today? I think so. Undoubtedly, the group has been hugely impacted by the coronavirus outbreak. Revenue in April was reported to be down by 50% compared with 2019. However, the company’s positive EBITDA was ahead of expectations. Cash flow levels were positive, also ahead of expectations. This was partly down to reducing monthly operating costs by £100m.

With coach services set to resume this month, it’s possible that revenues will slowly return to normal levels. Of course, this depends on customer confidence. Will the general public feel comfortable enough to travel on coaches?

With operations around the world, National Express is one of the FTSE 250 companies that has been severely impacted by the coronavirus outbreak. In the long term, I think that customers will continue to use its services, and now could be a great time to buy and hold its shares.

Britvic share price

In the year-to-date, Britvic‘s (LSE: BVIC) share price has dropped by 13%. This slump means the stock now has a price-to-earnings ratio of 12.

Despite the coronavirus outbreak, in May the company reported a good start to the year. Revenue increased by 1.4% for the 26 weeks to 31 March, which was driven by customer favourites, such as Robinsons, Tango, Pepsi and 7UP. Its profit after tax for the period increased by 11.5% to £38.9m

Unsurprisingly, with the shutdown of the hospitality industry, out-of-home sales have dropped. But this has been mitigated by an increase in at-home consumption.

Britvic has deferred its decision on its dividend until later in the year, a move that other FTSE 250 companies have also taken. Although this might be difficult for some investors to stomach, I think this is the right call. The company ultimately wants to protect its liquidity, and given the current situation, this is a wise move.

For me, Britvic ticks the box of having a strong portfolio of brands and economic moat against its competition. I think the company has proved its resilience by weathering the current coronavirus crisis so far. I’d buy now.

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T Sligo has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Britvic. 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.