The airlines have been hit particularly hard, with British Airways owner IAG down more than 16%, at time of writing. Ryanair is down 10% and easyJet down by 13%. Aircraft engine maker Rolls-Royce has fallen 5.5%, as fears grow over international travel.

FTSE 100 energy giants BP and Shell are also down around 5% or 6%, as any Covid resurgence could hit demand for oil.

Who’s afraid of a stock market crash?

Judging by the sectors hit today, it’s beginning to feel a lot like March 2020. As well as FTSE 100 travel and energy stocks, entertainment enterprises are in the mire. Cineworld, Mitchells & Butlers and Restaurant Group are firmly out of favour. Online grocery delivery specialist Ocado Group is bucking the trend by climbing.

As Hargreaves Lansdown markets analyst Susannah Streeter has noted, scientists are calling the mutations “horrific” and of “great concern”. Their dire warnings have triggered a sell off in Asia, where Japan’s Nikkei and Hong Kong’s Hang Seng both fell by 2.6%, while in Europe, the DAX, CAC 40, and Euro STOXX 100 are all tumbling.

I have cautiously backed both BP and Shell in recent days, but lacked the courage to buy airline stocks which look too exposed to pandemic uncertainties. That is one reason why I am relatively sanguine about today’s events (at least from an investment perspective). It’s not the most important one, though. As ever in the middle of a stock market crash, the idea of selling any of my shares or funds simply doesn’t occur to me.

I’ll buy FTSE shares once they get cheaper

I’m still more than a dozen years away from retirement, and that gives my portfolio plenty of time to recover from the current setback. With luck, today’s Covid fears will have been overdone. Even if they’re not, it’s impossible to assess the impact on stock markets. There are just too many variables, including how central bankers will respond.

If the stock market crash does lead to a more protracted slump, further stimulus could be forthcoming, bolstering shares. Investors have been quietly making that bet for years. The US Federal Reserve has effectively been backstopping share prices since the financial crisis.

My wider point is that nobody knows where stock markets will go next. They could crash further. If they do, I still won’t sell. Instead, I would take the opportunity to pick up my favourite FTSE stocks or funds at a reduced price.

History shows that stock markets always recover after a crash, if you give them long enough. In my opinion, they remain the best way to generate long-term dividend income and capital growth for my retirement. Today’s grim news won’t change that.

The post Stock market crash: I’m still buying FTSE shares despite ‘horrific’ new Covid warnings appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Ocado 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.

Since peaking in mid-March at 122p, Cineworld (LSE: CINE) shares have lost 50% of their value. It was expected that the Cineworld share price would boom as lockdowns eased, however, this doesn’t seem to have been been the case. There are a few reasons why this dip could be a good buying opportunity for my portfolio, but there are still long-term risks ahead of the UK multiplex cinema chain.

Pandemic problems

Cineworld shares were hammered by the pandemic. With multiple UK lockdowns, the cinema industry ground to a halt. The 2021 half-year results highlight the continued strain on the firm. Revenue came in at just $293m with a loss before tax of $659m. In addition to this, monthly cash burn was around $45m. Net debt also increased by $81m, reaching $4.6bn.

Another problem the pandemic brought to the fore is the dominance of streaming services such as Netflix and Amazon Prime. As my fellow Fool Gemma Blackwell pointed out, film viewing is now twice as likely on one of these platforms as it is in a traditional cinema. Moving forward, Cineworld will need to find ways to overcome this competition if it wants to stay afloat in the market.

Cineworld shares: bull case

That being said, there are a number of reasons I think Cineworld shares could rise in the shorter term. As we continue to move out of the pandemic, it’s likely that customer demand will pick up again. In fact, Cineworld has already reported attendance figures reaching 50% of pre-pandemic levels. I expect this demand to continue picking up throughout the remainder of 2021.

Another factor driving demand is the line-up of new releases Cineworld has coming up. This is due to a Covid-related backlog of new films from franchises such as The Matrix and James Bond. With many of these films being released exclusively to Cineworld, this sets it aside from online streaming services.

The firm has also been able to effectively rebuild its balance sheet having secured an additional $213m in liquidity. This liquidity will be issued in addition to over $800m secured during the pandemic. While this increases long-term liabilities, it allows the firm to more quickly recover from the virus’s impacts. I expect this to help Cineworld shares in the short term.

The verdict

Cineworld has a long way to go before I would consider adding its shares to my portfolio. The excessive financial strain on the firm won’t be permanently lifted by a temporary increase in demand. In addition to this, I don’t think Cineworld will be able to compete with online giants Netflix and Amazon much longer. Although liquidity help is good in the short term, it only places more strain on Cineworld in the long run. 

The post Should I add Cineworld shares to my portfolio today? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Dylan Hood has no position in any of the shares mentioned in this article. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon and Netflix. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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.

Or, to put it another way, is the stock market rally the ideal time to buy beleaguered cinema chain Cineworld Group (LSE: CINE) and sell food delivery specialist Ocado Group (LSE: OCDO)? Or the other way around?

Measured over 12 months, the performance of these two stocks couldn’t be more different. The Cineworld share price has lost three quarters of its value, while the Ocado share price has doubled. However, since Pfizer announced its vaccine breakthrough on 9 November, they’ve streaked off in completely opposite directions.

Ocado and Cineworld are so different right now

Cineworld has outpaced the wider stock market rally, its share price rising 62% since the Pfizer announcement. By contrast, Ocado has fallen 10%.

Today’s valuations are extremely different, despite the stock market rally. Cineworld is still dirt cheap, with a price-to-revenue ratio of 0.2 and price-to-book value of 0.3. By contrast, Ocado’s numbers stand at 9.9 and 16.5 respectively. While these figures aren’t entirely comparative, I think they give us a fair idea of how cheap Cineworld is, and how expensive Ocado has become.

I’m certainly wary of buying Ocado, even though home food deliveries are rising again in lockdown 2.0, and Christmas is coming fast. I’m more concerned about 2021. If that vaccine works, people will rush out to enjoy the luxury of dining in actual restaurants. The demand’s there, just look at the success of Eat Out to Help Out.

Ocado has offered a double blow lately, as new figures show rival Waitrose eating away at sales, while it’s being sued by Norwegian rival AutoStore for a warehouse technology patent breach. Its shares are up 850% in the last three years, and that level of success is hard to replicate.

If the stock market rally continues, Ocado could miss out. It still has plenty to offer, especially with its M&S joint venture showing strong trading. But I’d rather bank profits than buy today.

Cineworld is soaring on hopes that a vaccine will make people feel comfortable watching a big screen in a darkened room with hundreds of their fellow citizens. My worry is that the damage has already been done, as the cinema chain has run up an $8bn debt pile due to Covid-19.

Stock market rally may not be enough

Management is now doing all it can to stay solvent until the spring, when it hopes for a double shot in the arm from the vaccine and a fresh stream of blockbusters. It’ll be touch and go. I can foresee a time when cinema goers are queueing round the block to see the long-delayed James Bond film, but there’ll be some anxious times before then.

My worry is that Cineworld will be a greatly weakened operation, with fewer screens and audiences used to streaming at home. Right now, both stocks are too risky for me, although in very different ways. I’m now looking for better ways to play the stock market rally.

The post Stock market rally: should I sell overpriced Ocado shares to buy dirt-cheap Cineworld? appeared first on The Twelfth Magpie.

More reading

• Here are 2 FTSE shares I’m excited about this July — and 1 I’m avoiding
• Can anything save the Ocado share price?

Harvey Jones 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.

FTSE 100-listed Cineworld is the world’s second-largest cinema chain. It has more than 9,500 screens in 11 countries including the UK, US, and Canada, all of them closed since the pandemic.

The Cineworld share price is trading at dirt-cheap levels today. It peaked in January at around 220p. Right now, you can buy it for just under 60p. That means it has lost is almost three-quarters of its value. Tread carefully, if tempted. While many shocks rebounded sharply after the stock market crash in March, progress here has been slow.

Two weeks ago, Cineworld had plans to open its cinemas in the UK and US on 10 July, with social distancing measures in place. Today, it pushed that date back to 31 July, despite the government allowing cinemas to reopen from 4 July. Earlier planned openings in other countries will go ahead, though.

The Cineworld share price hangs in the balance

CEO Mooky Greidinger continued to talk up prospects of a summer recovery with a strong slate of films lined up, including Mulan and Tenet. The big question is whether audiences will queue up to be “immersed in the timeless theatrical experience they know and love”, as Greidinger puts it, if the pandemic is not quelled by then. This is mostly out of the company’s hands, making this a difficult stock to invest in right now.

The Cineworld share price is trading at bargain levels. The price-to-earnings ratio has slumped to just 3.3 times, although I’m not really sure that tells us much these days, other than that the group is in an extreme position.

Last week, Cineworld announced it had secured a new $250m debt facility with private investors, which has a maturity of 2023. In May, it agreed covenant amendments and a $110m revolving credit facility increase. This will bolster its balance sheet, although that has failed to tempt investors back.

Stocks like this one, and travel companies such as budget carrier easyJet and cruise operator Carnival, are huge gambles right now. If you dive in and buy the Cineworld share price today, you could be handsomely rewarded if it makes a successful recovery. If not…

This stock could make you rich but…

Many are sceptical that people will want to take a chance by returning to the cinema. I’m not so sure. The public is hungry to get out again and have some fun, especially younger people. The streaming bug cannot quite replace the popcorn experience.

However, Cineworld still faces the extra cost of enforcing sanitary measures, while box office will be down due to smaller, socially distant audiences. It also faces the threat of a second wave of the pandemic.

This is reflected in the Cineworld’s rock-bottom share price. If you want to take a chance on a dirt cheap FTSE stock, this could be your opportunity.

It is very risky, though.

The post The Cineworld share price looks like a dirt-cheap FTSE bargain to me. Are you feeling brave? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones 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.

Today, the Cineworld Group (LSE: CINE) share price is up an incredible 46%, as investor sentiment surges on signs the European outbreak may be slowing, encouraging people to take a punt on riskier stocks. The Cineworld share price isn’t the only dramatic climber, FTSE 100-listed cruise operator Carnival (LSE: CCL) is up 26%.

As the stock market crash turns into a potential recovery, would Warren Buffett open his wallet for these two?

Cineworld share price is so cheap

It’s been a good week for the FTSE 100, which has risen sharply for two consecutive days to over 5,700 at time of writing, up 15% since dipping below 5,000 on 23 March.

In the short run, the index could go anywhere from here. It could fall 1,000 points, or rise 1,000 points, nobody knows. I don’t, you don’t, and neither does Warren Buffett, who believes timing the market is both futile and dangerous. “I never have an opinion about the market because it wouldn’t be any good and it might interfere with the opinions we have that are good,” the Sage of Omaha has said.

Bargain FTSE stock fails the Warren Buffett test

Investors seem to be rushing to get a piece of the Cineworld share price and Carnival share price today because they think Covid-19 is on the run, and shares hit hardest in the stock market crash are likely to rebound fastest.

FTSE 250-listed Cineworld has crashed as social distancing regulations killed off the cinema visit. It is trading 86% lower than this time last year, with a crazy low valuation of just 1.78 times earnings. That’s a bargain FTSE stock by conventional metrics, but a different matter in today’s unprecedented situation.

Cineworld’s problems pre-date the crisis, as it is loaded with $4bn of net debt, following last year’s highly leveraged acquisition of Regal Entertainment, and faces stiff competition from streaming services such as an Netflix, Amazon Prime, HBO and next up, Disney. Warren Buffett likes a company with a competitive moat, but Cineworld has serious challengers.

Carnival share price scares me

Carnival also worries me, because frankly who would want to book a cruise right now? I don’t even want to go to the supermarket. Especially since further coronavirus outbreaks are likely. Carnival stock stock is down 81% measured over a year, and trades at just 2.02 times earnings.

The group has raised nearly $6bn in net debt to see it through the stock market crash. But we don’t know how long the current troubles will last. Warren Buffett loves it when a “great company gets into temporary trouble”, but Cineworld’s and Carnival’s troubles seem far from temporary to me.

The post This bargain FTSE stock is up nearly 50% today! Would Warren Buffett buy it? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Carnival. 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.

Unfortunately, it doesn’t look as if the company’s performance is going to improve any time soon. According to its half-year report, Funding Circle’s business performance actually deteriorated during the first six months of 2019, even though revenue expanded 29%. 

Rising losses

According to the report, group revenue increased by 29% to £81.4m during the first half of 2019, but increased costs pushed adjusted earnings before interest tax depreciation and amortisation down to -£19.7m, from -£13.9m in the same period a year ago.

The adjusted EBITDA margin declined from -22% to -24%. The loss before tax for the period hit £30.8m, up from £27.1m last year. 

Still, despite this performance, the company continues to believe that its adjusted EBITDA loss margin for 2019 will be better than in 2018. I’m doubtful Funding Circle can achieve this performance, especially with Brexit looming at the end of October. City analysts are also sceptical. They’re expecting a full-year loss of £51m, up from last year’s loss of £49m. 

And even though the City is expecting revenue to grow around 45% by 2020, losses will hit £54m by 2020, analysts believe.

With losses set to grow over the next two years, I would sell Funding Circle today, as it doesn’t look as if the company’s share price performance is going to improve anytime soon.

On the other hand, I am much more positive on the outlook for Cineworld (LSE: CINE).

Debt paydown

Cineworld’s acquisition of its larger US peer Regal in 2018 lumped the group with a tremendous amount of debt, which seemed unsustainable at the time. 

However, the company has surpassed all expectations since the deal. It is on track to achieve merger synergies of $150m and, according to Cineworld’s results for the first half of 2019, the business’s debt reduction is ahead of schedule.

Cineworld took on $4bn of debt to buy Regal, but by the end of June, borrowings had fallen to $3.3bn (excluding lease liabilities), primarily thanks to a massive sale and leaseback transaction.

Dividend champion  

Declining debt is just one of the reasons why I think Cineworld could be a great addition to your portfolio. It is also a dividend champion. At the time of writing, the stock supports a dividend yield of 5%, but with earnings per share set to increase by 17% this year, analysts believe the company has scope to increase the payout by 30% to $0.19. If this comes to fruition, it will leave the stock yielding 6.5%.

At the time of writing, the price for this level of income is just 9.4 times forward earnings, which looks to me to be a steal considering Cineworld’s projected earnings growth.

So, if you’re looking for a cheap income play with tremendous growth potential, then I highly recommend taking a closer look at Cineworld today. 

The post One FTSE 250 turnaround stock I’d sell and one I’d buy right now appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Rupert Hargreaves owns no share 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.

So, if you want to earn a better return on your money, you’re going to have to look elsewhere. One of the first places I think you should go looking for a higher return is the FTSE 250. 

Global income 

The first FTSE 250 income champion I think could be a great alternative to a Cash ISA is Hays (LSE: HAS). This global recruitment company has reported a surge in income over the past six years, with profits rising an average of 18% per annum since 2013. 

Hays has been able to profit from the booming global economy, which has lead to a spike in demand for skilled workers, the company’s specialism. Recruitment for the accountancy, finance, construction and information technology professions accounts for 51% of group net fees.

One of the great things about recruitment businesses like Hays is that they require very little in the way of capital spending, so they tend to highly cash generative. Hays is no exception. For the past five years, the company has reported an average return on capital employed — a measure of profitability for every £1 invested in the business — of 35%.

City analysts expect Hays to report a slight increase in earnings per share for fiscal 2019, and it looks as if the company is on track to meeting this target. In a trading update published today, management confirmed Hays’ full-year operating profit is expected to be in line with current consensus market expectations, even though overall group net fee income remained flat during the second quarter of 2019.

Cash generation also remains strong. The company ended the period with £130m of cash on the balance sheet, which should be more than enough to cover its dividend for the year. City analysts have the stock distributing 7.2p per share this year and 7.5p for 2020, giving a dividend yield of 5%. As well as this income, the stock trades at an attractive forward P/E of just 13.

Income growth

Another FTSE 250 income champion I’ve got my eyes on is Cineworld (LSE: CINE). I will admit, in the past, I’ve been sceptical about this company’s prospects. Its highly leveraged acquisition of US peer Regal left the group with a huge amount of debt, although it has nearly doubled net profit.

So far, the company seems to be progressing well with the deal, and my view of the business is starting to change. Earnings per share are expected to jump 18% for fiscal 2019, leaving the stock trading at a forward P/E 10.2. On top of this, analysts expect a 20% increase in the dividend yield, giving a yield of 5.4%.

These figures are attractive and, in my opinion, offset some of the risk associated with the high level of debt. The dividend is also covered 1.8 times by earnings per share, giving plenty of headroom to maintain the distribution while paying down debt at the same time.

Overall, if you are looking for a cheap FTSE 250 income play, I highly recommend taking a closer look at Cineworld, although due to its high level of borrowing, it might not be suitable for every investor.

The post Forget the Cash ISA! I’d buy these 2 FTSE 250 dividend champions yielding 5% today appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Rupert Hargreaves owns no share 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.

However, because of the paltry interest rates on offer means I’ve chosen to invest the lion’s share of my hard-earned cash elsewhere and, more specifically, in the London stock market.

A quick scan of price comparison website Moneysupermarket.com shows the best-paying instant access Cash ISA on the market from AA boasts a 1.42% (AER) interest rate. With inflation in the UK currently running above 2%, this means that, essentially, your money is losing more and more of its value the longer it’s locked up.

Compare these pathetic interest rates with the average forward yield of 4.5% that investors can enjoy with FTSE 100 stocks and things get even more puzzling. Quite why any of us are so wedded to stashing all or most of our capital in wealth-eroding Cash ISAs, given some of the returns you can expect from stock investing, is quite beyond me.

Up, up and away!

Of course, parking your cash is a conventionally safer than stock investing. Just ask those individuals who chose to stash the cash in FTSE 250 divers Kier Group, Metro Bank or Saga — shares which have lost two-thirds or more of their value over the past 12 months — how they’re feeling right now.

That said, there’s no shortage of great dividend companies quoted on London’s second-tier index which I consider to be safe as houses. Cineworld Group (LSE: CINE) is one such stock, and a share I’ve felt confident enough to plough my own money into.

Why am I so bullish? The intense pulling power of so-called popcorn movies — in other words superhero flicks, sequels and reboots — which Hollywood remains committed to producing, that’s why.

Franchises from Star Wars to The Avengers, Toy Story to The Fast And The Furious, have been pulling people into the picture houses in their droves for donkey’s years now. If anything, these films are more effective in putting bums on those plush seats than ever before.

Dividend hero

I first bought into Cineworld in the hope of some big dividends and the company hasn’t disappointed on this front. In fact, I can honestly say it’s exceeded my expectations.

Last year, it hiked the full-year dividend 18% to 15 US cents per share, the board feeling encouraged enough by the performance of its recently-acquired US businesses to supercharge the payout. And then last week, it announced it was paying a special dividend of 20.27 cents, a reward generated from the proceeds from the sale and leaseback of 18 of its North American cinemas.

As I write, City analysts expect Cineworld to pay an ordinary dividend of 17.6 cents per share in 2019, an estimate that creates a bulging 5% yield. So, once again, I say forget about those paltry returns Cash ISAs currently offer. I think  this movie star is a much better way to make money.

The post Forget the Cash ISA! I’d rather buy this FTSE 250 dividend hero appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild owns shares of Cineworld Group. 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.

The US business and general aviation market may be crawling rather than rocketing higher, but sales at the flight support services play continue to grow ahead of the broader market. That’s because of the steps it’s taken to improve customer service and build its fixed base operator (FBO) network across the world.

Speaking of which, BBA has shelled out plenty via acquisitions to boost its geographical and operational wingspan, the latest of which in 2018 saw it snap up fuel and fuel-related services provider EPIC to bolster its core Signature FBO division significantly. What’s more, because of its explosive cash generation, the firm’s in great shape to keep investing both organically and through M&A to boost earnings.

Investors assemble

Dividend-seeking bargain hunters should also pay Cineworld Group (LSE: CINE) very close attention today.

As a shareholder of the cinema chain myself, I’ve long celebrated the electrifying impact Hollywood and its packed roster of superhero movies are having on box office takings all over the globe. The appeal of these audiovisual masterpieces was underlined by Imax chief executive Richard Gelfond last week who declared: “With a robust lineup of tentpole films ahead, like the highly-anticipated Avengers: Endgame… we anticipate delivering our strongest box office year ever in 2019.”

Indeed, news that the latest outing for Captain America et al generated $1bn in ticket sales in its opening weekend, the first time such a milestone has ever been achieved, illustrates the immense profits-generating capabilities of such films.

It’s no shock to find City analysts forecasting a 19% earnings rise at Cineworld in 2019 then, a figure that creates a dirt-cheap prospective P/E multiple of 12.5 times. Throw big dividend yields of 4.2% and 4.6% into the bargain and I reckon the FTSE 250 firm is a cracking buy today.

Yields close to 6%

The broader advertising market may be under pressure but this isn’t likely to dent STV Group (LSE: STVG) and its ability to deliver splendid earnings growth, or so say the experts. An 11% bottom-line rise is forecast for 2019.

The broadcaster’s latest trading statement last week certainly gave fresh reason to be optimistic. In it, STV said that total advertising revenues are expected to have risen 1-2% in the first quarter, with a marginal drop in national sales anticipated to have been offset by ripping regional ad sales growth of 20-25% and digital ad growth of 15-20%.

What’s more, a decade’s best viewing performance in 2018 has carried over to the first quarter, the firm said, helped by soaring watching figures on the STV Player platform. It’s why City brokers are predicting a 13% profits rise in 2019, a projection that creates a forward P/E rating of just 8 times. Dividends will also keep climbing through to the end of next year too, resulting in monster yields of 5.6% for 2019 and 5.9% for 2020. I reckon STV is a stock that could help you to make a fortune in the years ahead.

The post 3 value stocks paying BIG dividends that I’d buy today appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
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Royston Wild owns shares of Cineworld Group. The Motley Fool UK owns shares of and has recommended BBA Aviation. 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 FTSE 100 bank has already seen business hit as a result of the uncertainty created by the UK’s protracted exit from the European Union. And the outlook for Lloyds remains as clear as mud, with everything from a lengthy Article 50 extension to a catastrophic ‘no-deal’ Brexit still on the table, issues that threaten to harm profits growth at the firm in the near term and beyond.

Economic data for the UK continues to make for grim reading for the banking giant, the latest Office for National Statistics report showing GDP expanded just 0.3% in the first quarter, with the positive-but-artificial impact of Brexit-related stockpiling thought to have played a large part in this limp rise.

Such growth could well be considered a thing to behold in the near future, though. Indeed, in the event of a no-deal Brexit being signed off, the International Monetary Fund predicts a British recession that could last as long as two years.

Crazy forecasts?

For these reasons I’d be content to forget about Lloyds, about its compelling forward P/E ratio of 8.8 times which (on paper at least) suggests stunning value, and its bulging dividend yields of 5.1% and 5.4% for 2019 and 2020 respectively.

The Footsie bank is dirt-cheap for a reason. The possibility of City forecasts being blown wildly off course, estimates that suggest a 38% earnings rise in 2019 alone, is extremely high in the current economic and political landscape, and so are the chances of profits creation disappointing well into the next decade.

A better dividend buy

I do not see the point of gambling on Lloyds, when there are plenty of other blue-chips with stronger earnings outlooks not clouded by the spectre of Brexit. Take Cineworld Group (LSE: CINE), for example.

Britons may not have as much to spend in the current economic climate, but a trip to the cinema is a relatively inexpensive pursuit and so I’m not expecting box office takings at the multiplex operator to fall off a cliff, however our European Union exit goes. In fact, supported by the steady stream of blockbusters from Tinseltown — irresistible catnip for modern movie fans — as well as Cineworld’s ongoing cinema building programme I’m fully expecting profits to keep on swelling.

But if you’re still concerned over how Brexit will impact takings, I would urge you to consider Cineworld’s expansion into foreign territories, and more recently its takeover of US chain Regal Entertainment, as reasons to be optimistic. Its move into the North American market helped adjusted EBITDA on a pro-forma basis swell 9.4% to $1.07bn in 2018, illustrating the enormous profits potential of this one territory.

It’s not a shock that City analysts are predicting that earnings will swell 21% in 2019 alone, or that dividend yields sit at a chubby 4.3% for this year and 4.6% for 2020 thanks to expectations that payouts will keep climbing through this period. It doesn’t trouble me that these figures are less appealing than those over at Lloyds, just like the FTSE 250 firm’s forward P/E ratio of 12.6 times. In my opinion it’s a far superior stock to buy today.

The post Have £2k to invest? Why I’d ignore Lloyds and buy this cheap FTSE 250 dividend stock instead appeared first on The Twelfth Magpie.

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Royston Wild owns shares of Cineworld 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.