Ashtead

Ashtead (LSE: AHT) is a British industrial equipment rental company. It has networks in the UK, US, and Canada. It also trades under the name of Sunbelt Rentals. The industrial firm is expected to report earnings for its financial year 2022 on Tuesday, 14 June 2022. The earnings preview indicates a positive trend in both its top and bottom lines as it recovers from its pandemic woes.

• Market cap: £17.5bn
• Price-to-earnings (P/E) ratio: 18
• Dividend yield: 1.1%

• Earnings per share estimate (FY 2022): £2.47
• Earnings per share (FY 2021): £1.56
• Total revenue estimate (FY 2022): £6.47bn
• Total revenue (FY 2021): £5.0bn

Halma

Halma (LSE: HLMA) is a British global group consisting of safety equipment companies. These firms make products for hazard detection and life protection. The FTSE 100 group is expected to report earnings for its financial year 2022 on Thursday, 16 June 2022. The earnings preview indicates slight growth from the previous year.

• Market cap: £8.0bn
• P/E ratio: 30
• Dividend yield: 0.9%

• Earnings per share estimate (FY 2022): 63.1p
• Earnings per share (FY 2021): 58.7p
• Total revenue estimate (FY 2022): £1.5bn
• Total revenue (FY 2021): £1.3bn

FirstGroup

FirstGroup (LSE: SSE) is a British multi-national transport group. The company operates transport services in the UK. The transport company is expected to report earnings for its financial year 2022 on Tuesday, 14 June 2022. Earnings preview indicates a drop in revenue and a return to unprofitability.

• Market cap: £1.0bn
• P/E ratio: 2
• Dividend yield: –

• Earnings per share estimate (FY 2022): -0.4p
• Earnings per share (FY 2021): 2.4p
• Total revenue estimate (FY 2022): £4.52bn
• Total revenue (FY 2021): £6.8bn

The post Earnings preview: Ashtead, Halma, FirstGroup appeared first on The Twelfth Magpie.

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John Choong has no position in any of the shares mentioned at the time of writing. The Motley Fool UK has recommended Halma. 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 we draw to the end of another, shall we say, ‘interesting’ year on the markets, the masochist in me always makes a point of looking to see what stocks I really should have bought at the beginning of 2021. Here are three from the FTSE 100.

Croda International

Consumer Care and Life Sciences company Croda International (LSE: CRDA) has gained 51% in value in the year to Christmas Eve. That makes the stellar 12% rise in the FTSE 100 look almost pedestrian. Much of this momentum has been due to the company managing to exceed analyst expectations on profit over the year. The question is, can this continue?

I’m certainly optimistic. Having now agreed to sell the majority of its Performance Technologies and Industrial Chemicals businesses, Croda intends to move into “faster growth areas” such as healthcare and become a leader in the cropcare market. These moves, according to CEO Steve Foots, will see the company generate “consistent sales growth and an even stronger profit margin”.

The only problem is that Croda now trades on a punchy valuation of 39 times forecast FY22 earnings. As such, I’d be very surprised if the company manages to replicate 2021’s gains.

Nevertheless, this remains a great stock, in my opinion. If I were looking to build a FTSE 100-focused portfolio for the long term, CRDA would easily make the shortlist. One to buy on dips perhaps?

Glencore

Next up is mining and commodities trader Glencore (LSE: GLEN). Its shares have climbed 52% in 2021, so far. Again, this is evidence that picking your own stocks has at least the potential to vastly outperform the market. It also shows that winners can come from multiple, very different sectors.

Glencore’s streak can be attributed to the growing demand for commodities like copper and, more recently, oil. In fact, the company’s interest in the former could continue to be very lucrative in the years ahead as the adoption of electric vehicles and renewable energy gathers pace.

Of course, one issue with Glencore is that its fortunes are, to some extent, beyond its control. Commodity prices can quickly reverse and this leaves me skeptical that the stock will repeat this year’s performance in 2022.

Then again, it might be argued that the potential income on offer more than makes up for this. A 6.8% yield for FY22 is currently forecast. Shares also trade at just 7 times earnings. 

Ashtead

A final FTSE 100 stock that’s done the business for holders in 2021 has been equipment hire business Ashtead (LSE: AHT). Its value has climbed a stonking 72% year to date as rental revenues have soared to record levels.

Naturally, such a run of form could lead to some profit-taking in 2022. The seemingly never-ending pandemic could also cause a slowdown in trading if projects end up being delayed due to safety concerns. However, a forward P/E (price-to-earnings) ratio of 25 doesn’t feel excessive, given the consistently high margins Ashtead achieves.

The outlook is bullish too. With the construction industry in rude health following a post-lockdown rise in demand (not to mention Joe Biden’s infrastructure bill), I don’t doubt the good times can continue for the £27bn-cap.

Another 72% next year? Probably not. However, this is another stock worth keeping in the bottom drawer, in my opinion.

The post 3 FTSE 100 stocks I wish I’d bought in 2021 appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International. 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.

Booming demand

I sincerely doubt the company’s next set of numbers (due in November) will be anything other than robust. Thanks to the global shortage of computer chips for new cars, the second-hand vehicle market is doing very well indeed. Actually, that’s something of an understatement. Based on a recent report from the Society of Motor Manufacturers and Traders (SMMT), the used car market has more than doubled over the last three months.

As the self-styled ‘go-to destination for car buyers’, it’s hard to imagine Auto Trader not benefitting from this activity. It lists around 485,000 cars on any day and estimates that more than 75% of all time spent looking at automotive classified sites is done via its platform.

Now, saying that trading has likely been good isn’t the same as saying that the share price will fly. It really depends on what the market is expecting. Based on recent performance, I wonder if it could be underestimating AUTO. 

FTSE 100 laggard

Auto Trader’s up 12% in the last 12 months. That’s certainly not a bad result. However, it’s a lot less than other FTSE 100 stocks. For comparison, Royal Mail has delivered a whopping 162% gain. Construction equipment supplier Ashtead is also up 107%.

Sure, this is like comparing apples with oranges. Nevertheless, it does provide an illustration of ‘opportunity cost’ in investing. It shows the sort of gains I could potentially lose out on when picking one stock over another.

In fact, even those adopting a passive approach and buying a FTSE 100 tracker would have done better. The top tier is up 16% since August 2020. Oh, and there would have been a dividend stream too. And, yes, this would have been higher than the yield on offer at Auto Trader. 

Notwithstanding all this, I’d still buy this stock for my own portfolio today for a number of reasons.

High-quality stock

Auto Trader’s shares trade on 27 times earnings. That’s certainly not cheap, but nor do I think it’s ludicrously expensive. As highlighted above, this is a business with a dominant hold on its industry. It’s been estimated by the company that 90% of consumers know what it does. If true, that’s very hard to replicate.

Moreover, this FTSE 100 constituent scores high for quality. Profit margins and returns on capital are seriously good, thanks to the relatively low cost of keeping a digital-only operation going. 

Third, AUTO’s finances are robust. As intended, the company has paid down its debt pile and now boasts a net cash position. That might not bother some investors, but it’s something I like to see. When the bad times come again, I want the stocks I own to be in a position of strength, not weakness.

No guarantees

Of course, this is the stock market and nothing can be guaranteed. A slowing economy could make AUTO’s share price volatile. One also needs to bear in mind that there will come a time when the chip shortage subsides and demand probably softens.

Then again, I don’t think this will be for while. As such, AUTO would definitely be among those shares I’d buy if I were creating a FTSE 100-focused growth portfolio today. 

The post 1 FTSE 100 growth stock I’d buy now appeared first on The Twelfth Magpie.

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Paul Summers 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.

Return to form

At the end of last month, I said I’d be prepared to snap up FTSE 100 equipment provider Ashtead (LSE: AHT) based on my belief that there wouldn’t be any nasty surprises in today’s Q4 trading update. Positively, this has proven to be the correct call — the share price is up almost 3.5% as I type, on some very attractive numbers.

Revenue jumped 23% to £1.27bn in the final three months of Ashtead’s financial year as the company returned to growth. Understandably, the vast majority of this came from rental revenue. For FY21 as a whole, a 3% rise was logged at constant exchange rates (£5.03bn).

All told, Ashtead reported a pre-tax profit of £220m for Q4. That’s a stonking 158% jump compared to the same period in 2020. Nevertheless, a final figure of £936m for the entire year was 1% down due to the impact of Covid-19. 

Other highlights from today’s statement include the 75% jump in free cash flow to record levels (£1.38bn) helping to reduce leverage from 1.9 times to 1.4 times. Although most definitely not a high-yielding stock, the 3.7% increase to the total dividend was also indicative of a company recovering well.

So, would I buy?

Actually, yes I would. In addition to already-excellent operating margins and an international presence, Ashtead begins its new financial year “with clear momentum”, according to CEO Brendan Horgan. With leaders including President Joe Biden intending to spend big on infrastructure, this doesn’t sound like hyperbole. In fact, I think Ashtead is, quite literally, one of the best picks and shovels plays around.

Of course, there’s no sure thing in investing. A rise in the number of infections in Ashtead’s key markets may cause delays to projects, as might a shortage of materials. One also wonders if the company’s valuation — 28 times forecast earnings before the market opened — might prove too rich for some. 

Naturally, Ashtead isn’t the only option. Another of the best British stocks to buy in this sector, in my opinion, can be found lower down the market.

Growing flat-out

I’ve been bullish on laser-guided equipment manufacturer Somero Enterprises (LSE: SOM) for ages now. Some of this is probably down to old-fashioned bias (I hold the stock). However, recent stronger-than-expected trading in the US provides some substance. Assuming the company reports more good news in today’s annual general meeting, previous guidance could be exceeded again. 

Somero products ensure concrete is perfectly level. This may sound dull, but it’s essential for buildings like warehouses. And thanks to the explosion of online shopping following multiple lockdowns, those warehouses will be in even greater demand from retailers going forward.

Again, there are risks. Like Ashtead, Somero could be impacted by a slowdown in projects. Its minnow status also means the latter’s share price could prove more volatile than its FTSE 100 peer.  

Then again, on 17 times forecast earnings, Somero is considerably cheaper. It also generates far higher returns on capital (ROCE), has net cash on its balance sheet, and frequently showers its investors with cash. As such, I’d have no issue buying more today.

The post Top British stocks to buy for the infrastructure boom appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Somero Enterprises. The Motley Fool UK has recommended Somero Enterprises, Inc. 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.

Here are three examples from the FTSE 100 I’d be happy to buy, regardless of what they say in June. 

Halma

Safety products firm Halma (LSE: HLMA) reports full-year numbers on 10 June. Based on its most recent trading update, I don’t think there’s much for existing holders (or prospective buyers) to worry about.

Back in March, the FTSE 100 member said it had made “good progress” over the previous six months. Thanks to a recovery in markets such as China, it predicted adjusted pre-tax profit would come in around the same level achieved in the previous financial year. It had previously expected it to be 5% below FY2019/20’s level.

Sure, value investors will baulk at the valuation (42 times forecast earnings). The opportunity cost of not investing elsewhere also needs to be considered. However, the essential nature of its various products and services gives Halma a defensiveness many firms in the FTSE 100 arguably lack. As such, I’m confident it’ll still outperform its index over the long term.

Factor in strong cash generation, sound finances and dependable dividend hikes and I continue to think this is a company to tuck away in the bottom drawer. 

Auto Trader

Also reporting full-year results on 10 June is online vehicle marketplace Auto Trader (LSE: AUTO). If recent new car sales are anything to go by, I think these could make for pleasant reading.

Of course, the prospect of good news doesn’t mean the share price won’t continue trading within the 500p-600p range it’s been stuck in. The potential for coronavirus variants to disrupt things going forward also can’t be ruled out.

Notwithstanding this, the beauty of Auto Trader is that everything’s online. Its status as a portal gives it the ability to navigate inevitable economic setbacks far more easily than bricks and mortar dealerships.

What’s more, a price-to-earnings ratio of 26 for FY22 looks reasonable. After all, Auto Trader consistently generates sky-high margins and returns on capital (ROCE). A commitment to focusing on the latter is one reason why star fund managers such as Terry Smith and Nick Train consistently outperform the market. 

Ashtead

A final FTSE 100 stock I’d have no issue buying next month is Ashtead Group (LSE: AHT). The construction and industrial equipment rental giant reports on trading on 15 June. Again, I don’t expect any nasty surprises. Back in April, the company said it expected full-year results to be “slightly ahead” of management’s previous expectations. 

When it comes to share price performance, the £22bn-cap takes no prisoners. Over the last year, Ashtead has more than doubled in value. By contrast, the FTSE 100 is up ‘just’ 14%. Some short-term profit-taking can’t be ruled out, but I wouldn’t expect this to last for long. Trading can only improve as more construction projects get the green light as economies open up from their coronavirus-induced slumber.

At 28 times forecast earnings, Ashtead can never be labelled ‘cheap’. As billionaire investor Warren Buffett suggested, however, it’s “far better to buy a wonderful company at a fair price than a fair company at a wonderful price.“

The post 3 FTSE 100 stocks to buy in June appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Auto Trader and Halma. 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.

For a long-term investor, future gains are the silver lining to the stock market doom and gloom. And since higher returns can be made from lower share prices, a bear market is a much better time to be building your wealth. Cheap FTSE stocks are safer investments than those made at the height of a bull market.

Long-term investors need to find good cheap companies that will thrive in any market. Investing £1,000 in each of the two shares below could be a great place to start.

Ashtead

Ashtead Group (LSE: AHT) is a provider of industrial equipment rentals. Its main business is in North America where it operates as Sunbelt, supplying many types of customers from construction to the entertainment industry.

Ashtead boasts an impressive track record of adapting its business model to the macroeconomic backdrop. This performance is underpinned by strong returns on invested capital that have resulted in a steadily climbing share price over the last decade.

There every reason to believe Ashtead will continue its ascent. It has many business advantages at its disposal and will be able to use its scale, differentiation, and cash levers to manage the downturn. In the US, rising equipment costs and changing health and safety regulations will likely provide further rental opportunities. Additionally, the downturn itself may uncover further acquisition prospects, consolidating its position.

Ashtead’s £500m buyback policy offers alluring returns for shareholders, although a yield at under 2% may not be the most attractive. However, the dividend per share has increased every year over at least the last five years. The company’s cash reserves imply it’s affordable.

Ashtead is currently on sale for around 2,130p, with some analysts giving the firm a fair value of 2,800p.

Moneysupermarket.com

Moneysupermarket.com (LSE: MONY) is the UK’s largest provider of online price comparison services. It owns four major trading brands in MoneySuperMarket, MoneySavingExpert, TravleSuperMarket, and Decision Tech. About half the group’s revenues come from insurance, 22% from money, and 17% from home services, such as electricity providers.

Moneysupermarket’s strong competitive position comes from its big size and ability to differentiate itself from its competitors. It aims to sustain this lead by offering a new energy switching service that tailors its offerings between low-cost products and those with other specific features.

However, since Moneysupermarket’s revenues are directly related to the services it promotes, the coming recession could adversely affect its travel and money streams. That said, this will likely be offset by growing revenues from its insurance products, as premiums rise due to increasing payouts from Ogden rate changes. 

Moneysupermarket has a solid set of financials. Excellent sustained revenue growth, profitability, and cash generation ability gives the group a well-earned reputation for dependable dividends. Its current yield is a decent 3.6%.     

Both Moneysupermarket and Ashtead are dependable and cheap FTSE stocks I want in my diversified portfolio. To maximise returns, I would buy them both right now.

The post Got £2k to invest? I’d buy these cheap FTSE stocks right now appeared first on The Twelfth Magpie.

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Rachael FitzGerald-Finch has no position in any of the shares mentioned. The Motley Fool UK has recommended Moneysupermarket.com. 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.

According to its analysts, the FTSE 250 — the second tier of companies listed on the London Stock Exchange — was one of the leading global indexes over the last decade. Not only was its 12% annualised return comparable with that of US equities (the S&P 500 returned the most with 13.6%), it also significantly outperformed the more internationally-focused FTSE 100 (7.4%).

As good as these numbers are, however, they pale in comparison to what investors could have achieved had they had the skill or good fortune to buy and hold the best performing UK-listed companies.

Let’s take a closer look at the three biggest winners since 2010.

On the podium

In third place is online property portal Rightmove (LSE: RMV). Thanks to its virtual monopoly in the UK, the company achieved a compound annual growth rate of 30.52% over the period. When it’s considered that the housing market hasn’t exactly boomed since 2010 (quite the opposite in some parts of the country), that’s some result.

Right now, shares trade on a forecast 30 times earnings. That might look expensive but it does begin to make sense when the company’s long history of generating huge returns on the capital it invests is considered. Operating margins are consistently above 70%, there’s stacks of cash on the balance sheet and very little debt.

A valuation approaching £6bn suggests management might struggle to replicate this incredible growth going forward, but I suspect the firm’s dominance of its industry means it will continue rewarding investors. Indeed, the recent uplift in sentiment in the housing market following the election can only be good news for Rightmove.

Boasting a compound annual growth rate of 32.34%, the company providing the second-highest returns was Melrose Industries (LSE: MRO). For those unfamiliar with the name, the £12bn FTSE 100 business specialises in buying manufacturing firms with strong fundamentals and then setting out to improve their performance.

Based on its price movement over the last decade, you could say Melrose is pretty good at what it does. Back in January 2010, the stock could be yours for around 18p. Today, it’s available for 233p.

With shares currently trading on 16 times forecast earnings (and coming with a seemingly-secure 2.1% yield, covered well over twice by profits), I think there’s still money to be made. Indeed, management reported in November that recent trading had been in line with expectations.

And the winner is…

Occupying top spot on the list of best performing shares is equipment rental company Ashtead (LSE: AHT).

According to Refinitiv, £1,000 invested in the firm at the beginning of 2010 — when the shares were trading around 85p a pop — would be worth around £35,611 at the end of 2019, assuming all dividends had been reinvested (something we heartily recommend at the Fool UK). All told, the company achieved a staggering compound annual growth rate of almost 43% over the period. 

Can Ashtead’s outperformance continue? Its latest results were certainly encouraging, with the company posting a 14% rise in revenue (to £2.68bn) and 6% rise in pre-tax profit (to £690m) over H1. What’s more, the stock trades on just 12 times earnings. Considering the high profit margins the company is able to achieve, that still looks great value to me.

The post ALERT! Here are the best performing UK stocks over the last decade appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of Melrose. The Motley Fool UK has recommended Rightmove. 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.

Today I want to look at two FTSE 100 companies I think are potential value traps.

Taste the difference?

Orange-topped supermarket J Sainsbury (LSE: SBRY) reckons that its customers can Taste the Difference. The firm says that customers “rate Sainsbury’s first for food quality”.

Unfortunately, shoppers don’t seem to want to pay extra for better food. Sainsbury’s profits margins have crumbled in recent years, and are now significantly lower than both Tesco and Morrisons.

This hasn’t happened by chance. As well as improving their store offerings, Morrisons and Tesco have both boosted profits by expanding into the wholesale market.

Morrisons has used its food production business to become wholesale supplier to Amazon‘s UK grocery business and to around 1,500 convenience stores. Tesco chose to acquire FTSE 250 wholesaler Booker, which has increased its presence in the convenience store and foodservice (restaurant) markets.

By contrast, Sainsbury’s acquired Argos. While this may have increased the level of sales per square foot in the group’s large stores, it hasn’t helped the group’s profit margins. Argos is a very low-margin retailer. My belief is that this deal has actually reduced the group’s overall profit margin.

To solve this problem, Sainsbury’s boss Mike Coupe tried to merge with Asda. This would have created a business of a similar size to Tesco, providing useful economies of scale. Unfortunately for Mr Coupe, the UK’s competition authorities blocked this deal.

What next for Sainsbury?

The failure of the Asda deal has left Mr Coupe with no choice but to go back to basics and focus on making Sainsbury’s a leaner, faster-growing and more profitable business.

This won’t be an easy task, in my view. Although debt is falling and cash generation remains quite good, analysts expect underlying earnings to fall by about 5% this year.

SBRY shares now trade on 9.3 times forecast earnings and offer a 5.6% dividend yield. In my view, that’s not cheap enough. I see this as a potential value trap and won’t be buying at current levels.

Is this US play a better buy?

Construction equipment hire firm Ashtead Group (LSE: AHT) has expanded steadily in the US market by buying up lots of smaller rivals and integrating them into its main Sunbelt brand.

Pre-tax profit rose by 20% to £208.6m last year while the group’s operating margin remained impressively high, at 29%. Chief executive Brendan Duggan says the group continues to see “strong end markets in North America”.

Ashtead’s share price has doubled over the last three years, but the stock has fallen by 15% since last summer. AHT shares now trade on just 10 times 2019/20 forecast earnings.

For such a profitable, fast-growing business, that seems cheap. However, my view is that markets are (correctly) pricing in the likelihood of an economic slowdown in the next couple of years. I think this could hit Ashtead’s profits hard, especially if the firm hasn’t reduced its debt levels by that time.

I reckon Ashtead shares are priced about right at the moment. I don’t think this firm is a value trap, but I’ve no plans to invest.

The post Is the Sainsbury’s share price the biggest value trap in the FTSE 100? appeared first on The Twelfth Magpie.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Roland Head owns shares of Tesco. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Tesco. 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.

Alongside another stock which released upbeat results on Tuesday, the FTSE 100-listed insurance business may be worth buying for the long run.

Improving prospects

The company in question is rental equipment specialist Ashtead (LSE: AHT). Its third quarter results showed a rise in underlying rental revenue of 19% to £1049.1m, with operating profit rising 21% to £297.2m. Strong demand in North America boosted the company’s performance, with bolt-on acquisitions helping to complement organic growth. During the quarter, it invested £491m in acquisitions, with the investment reflecting the structural growth opportunity it continues to see.

Looking ahead, Ashtead plans to broaden its product offering and geographic reach, aiming to increase market share. It expects capital expenditure for the year to be towards the upper end of previous guidance, which could lead to improved financial performance in the long run.

With the stock forecast to post a rise in earnings of 28% in the current year, followed by growth of 13% next year, it seems to have a bright future. Its price-to-earnings growth (PEG) ratio of 1.1 suggests investors may not yet have fully factored in its profit growth prospects.

Margin of safety

Aviva could also offer impressive long-term prospects. The company has been in the news this week following the announcement of a new CEO. This could lead to improved investor sentiment, with the company having experienced a mixed period since its previous CEO announced his resignation last year.

Looking ahead, the business appears to be in good shape to generate improving financial performance. It’s set to continue with a programme of targeted acquisitions, while also seeking to improve its balance sheet strength. This could lead to a more appealing risk/reward ratio at a time when the outlook for many of its established and growing markets remains uncertain.

In terms of Aviva’s valuation, its price-to-earnings (P/E) ratio of around 7 suggests that it could offer good value for money. A margin of safety may be worthwhile given the management changes that have taken place, as well as the uncertain prospects for the world economy. However, such a low rating suggests investors may have adequately priced in the risks which the company faces.

As such, buying the stock now could be a worthwhile move, since it offers long-term capital growth potential at a relatively low share price. Since the State Pension age is expected to rise, Aviva could help investors to generate a second income in older age.

The post Worried about the State Pension? I think the Aviva share price could help you retire early appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Aviva. 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.

Clearly, there are short-term risks facing the bank, as well as a wide range of other companies with exposure to the UK. But if the domestic economy is able to deliver growth over the long run, as per current forecasts, the stock could prove to be a sound recovery play. Alongside a company which released positive news on Tuesday, it could be worth buying, in my opinion.

Positive performance

The company in question is FTSE 100 support services specialist Ashtead (LSE: AHT). Its first-half results showed a rise in rental revenue of 18% on an underlying basis, with pre-tax profit increasing by 19% to £633.4m. During the period, it invested £1,063m in capital and a further £362m in bolt-on acquisitions. This has added 80 locations to its business and contributed to a rental fleet growth of 15%.

It continues to see a structural growth opportunity as it seeks to broaden its product offering and geographic reach. It now expects full-year results ahead of previous forecasts, with earnings due to rise by 28% in the current year, followed by growth of 13% next year.

Having fallen by 34% since the start of October, Ashtead’s shares appear to offer a margin of safety. They have a price-to-earnings growth (PEG) ratio of 0.6, which suggests they may offer recovery potential.

Turnaround prospects

As mentioned, the near-term prospects for the UK economy appear to be highly uncertain. There seems to be no clear path towards Brexit at the time of writing, and this may lead to investors applying ever-larger margins of safety to UK stocks such as Lloyds.

However, the performance of the UK economy may prove to be stronger than many investors are pricing in. The IMF is forecasting a GDP growth rate of 1.6% in 2019, followed by 1.7% growth in 2020, 2021 and 2022. Although this is behind a number of developed economies, those forecasts don’t suggest the UK is about to experience a hugely challenging period that includes a recession.

If the UK economy does grow as per IMF forecasts, it could mean that the Lloyds share price is cheap at the present time. It trades on a price-to-earnings (P/E) ratio of 6.8, using 2018 forecast earnings. As such, rising to 100p over the long run may be possible, since it would mean the stock having a P/E ratio of 13.2. This doesn’t appear to be excessive.

While forecasts are subject to change and the future is uncertain ahead of Brexit, for long-term investors the bank could now offer a buying opportunity following its stock price decline.

The post If this happens, I think the Lloyds share price could soar to 100p appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.