Burberry

Burberry (LSE: BRBY) is a British luxury fashion house. The brand designs and distributes ready-to-wear items. These include leather goods, footwear, and fashion accessories. This week, a director sold thousands of Burberry shares, but they were also awarded from a huge chunk of free shares as part of their compensation.

• Name: Jonathan Akeroyd
• Position of director: Chief Executive Officer
• Nature of transaction: Free shares
• Date of transaction: 15 June 2022
• Amount purchased: 71,106 @ nil
• Total value: £N/A

• Name: Jonathan Akeroyd
• Position of director: Chief Executive Officer
• Nature of transaction: Sale to cover tax liabilities
• Date of transaction: 15 June 2022
• Amount sold: 34,395 @ £16.18
• Total value: £556,399.73

Greggs

Greggs (LSE: GRG) is a British bakery chain. It specialises in savoury products. Among these are bakes, sandwiches, sweet items, and its famous sausage rolls. This week, a non-executive director purchased a thousand Greggs shares.

• Name: Lynne Weedall
• Position of director: Non Executive Director
• Nature of transaction: Purchase of Shares
• Date of transaction: 16 June 2022
• Amount purchased: 1,000 @ £19.01
• Total value: £19,007.20

Deliveroo

Deliveroo (LSE: ROO) is a British online food delivery company. It operates in over 200 locations across the UK and internationally. In the UK, it is the second biggest food delivery platform behind Just Eat. A huge director dealing occurred over at Deliveroo this week. Tens of thousands of Deliveroo shares were traded.

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Free shares
• Date of transaction: 15 June 2022
• Amount purchased: 83,200 @ £0.81
• Total value: £67,392.00

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Sale to cover tax liabilities
• Date of transaction: 15 June 2022
• Amount sold: 40,314 @ £0.81
• Total value: £32,654.34

Types of shares in a SIP

To provide context, there are a few types of shares within a company’s share incentive plan (SIP). A SIP is an employee plan for companies within the UK to flexibly award equity to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

In this instance, the director dealings at Burberry and Deliveroo were free shares. These are a form of restrictive stock units (RSU). RSUs are a form of stock compensation. It is a promise from the company to award a company’s shares in the future.

For Burberry’s CEO, these shares are yet to be cashed in. As such, they hold nil value. But for Deliveroo’s CFO, shares were awarded at the stock’s market price at that time. This means that he decided to cash in his awarded shares.

The post Director dealings: Burberry, Greggs, Deliveroo appeared first on The Twelfth Magpie.

More reading

• Here’s how much passive income 1,000 Greggs shares could pay…
• Here’s how a 40-year-old with no SIPP today could have one worth over £1,153,000 by age 67       
• Here’s how high these brokers think Greggs shares could soon climb!
• Here’s why I’m hanging onto my Greggs shares, even though they’ve fallen
• The Greggs share price has crashed 50%! Now see what it could be worth this time next year

John Choong has no position in any of the shares mentioned at the time of writing. The Motley Fool UK has recommended Burberry, Deliveroo Holdings Plc, and Just Eat Takeaway.com N.V. 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.

Thanks to my Foolish mentality — and the fact that my problems are tiny compared to those of people in Ukraine — I’ve generally succeeded in taking this not-insignificant wobble in my stride. 

Here’s what I’ve been doing

First, I haven’t sold a single thing. Yes, there’s certainly no guarantee that markets won’t dip lower in the months ahead. Then again, I have no way of knowing whether this will be the case in advance. Getting out now may help stop the bleeding but it will also leave a (costly) financial bloodstain. In other words, it merely turns what is only a potential loss into a real loss.

Second, I’ve taken a quick look at whether anything has truly changed with regard to stocks I own. Without exception, this is thankfully not the case.

Sure, there are some significant headwinds. For example, one of my favourite businesses — Greggs — has fallen heavily on news it might need to raise prices for the second time this year due to rising costs. That’s unfortunate, but I highly doubt the sausage roll seller now faces an exodus of customers compared to businesses devoted to selling big-ticket items. And will Greggs still face this challenge in a few years? I suspect not. 

This brings me to a third thing I’ve been doing, namely adding to my watchlist of stocks I’d be tempted to buy at current levels. Right now, Games Workshop, SDI and XP Power are all in my sights. Whether I end up pulling the trigger is dependent on having available funds to do so, of course. Regardless, I always keep this list running in good times and bad. This should mean that my rationale for investing is solid and I’m not making any impulsive purchases.

Walking away

My last action is both simple and highly effective. Not checking my portfolio at all. 

To be clear, this is not the same as sticking my head in the sand. I know full well that a good chunk of my paper profit has gone up in smoke in recent weeks. But if I know I can’t change the situation, the next best option is to learn to accept it and do something far more productive. This could include finding ways of raising extra cash which can then be deposited in my Stocks and Shares ISA.

That last point is particularly important at this time of the year. After all, the ISA window closes early next month. Whatever of my £20,000 allowance I don’t throw at this tax-efficient savings account will be lost forever. That really matters over the long term, given the wonder that is compound interest. 

Long-term focus

It goes without saying that there are far more important things going on in the world right now than volatile share prices. Even so, I remain convinced that ‘this too shall pass’ just as all stock market crises have.

For someone not planning on touching his Stocks and Shares ISA for a couple of decades, that simple mantra is good enough for me.

The post My Stocks and Shares ISA has tanked. So I’m doing this appeared first on The Twelfth Magpie.

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• 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?

Paul Summers owns shares in Greggs. The Motley Fool UK has recommended Games Workshop and XP Power. 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.

Earlier today, I looked at three companies from the FTSE 100 that are involved in the flood of results expected in March. I’m now turning my attention to three growth stocks from the FTSE 250.

Darktrace

Recently demoted from the FTSE 100, cybersecurity specialist Darktrace (LSE: DARK) is first on my list of second-tier stocks to watch next month. It releases interim numbers on 3 March. 

The former market darling has now given up most of the gains it made since becoming a listed company. That’s a quite shocking reversal considering just how important cybersecurity already is and the potential growth that lies ahead. Darktrace’s undoubtedly impressive self-learning AI can be applied to multiple industries too.

Then again, I do understand why sentiment has changed. As good as Darktrace’s tech appears to be, there can be no doubt that it’s operating in a highly competitive space. Brokers also remain concerned by the company’s low level of R&D spending.

Unfortunately, the valuation of almost 11 times sales still looks rich to me as well. In fact, I wonder if the stock will fall further in March if traders continue to shun unprofitable growth stocks in favour of more traditional value plays. 

I still can’t bring myself to get involved just yet.

Greggs

The advent of higher prices at food-on-the-go retailer Greggs (LSE: GRG) makes its next update an essential read in my opinion. The sausage roll seller reports final results on 8 March.

Shares in Greggs have tumbled almost 25% in 2022 so far. Is the actual business 25% less valuable though? As a holder, I won’t be surprising anyone when I say that I don’t think it is. Yes, the departure of long-standing CEO Roger Whiteside isn’t ideal. And, no, the spread of the Omicron variant late last year can’t have helped trading.

But these are temporary setbacks. Helped by its strong brand and marketing savvy, I have no doubt Greggs can deal with pretty much anything that comes its way. I also doubt its loyal fanbase will resent a 5p price hike for long.

At less than 21 times forecast earnings, Greggs still isn’t cheap as chips to acquire. However, the price is far more palatable than it once was. Since I plan to keep the stock in my portfolio for years rather than weeks, I’d have no issue increasing my holding next month.

Computacenter

A final FTSE 250 member I’ll be watching is IT solutions provider Computacenter (LSE: CCC). While a 7% drop in the share price year-to-date is unfortunate, investors here have fared a lot better than other UK growth shares.

I can’t see full-year results on 16 March being anything less than solid. Back in January, Computacenter reported that recent trading had been ahead of expectations despite supply chain headwinds.

The question I’m asking now, however, is how much of this is already factored into the valuation. The fact that Computacenter’s share price didn’t move higher after its last update suggests quite a bit. Perhaps investors are getting concerned about just how thin margins are at the Hatfield-based business?

On the flip side, its shares currently change hands for 17 times earnings. That’s cheap compared to peers in the industry. There’s also a 2.2% dividend yield, easily covered by forecast profits.

For now, the company stays on my watchlist.

The post 3 FTSE 250 growth stocks I’ll be watching in March appeared first on The Twelfth Magpie.

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• Here’s how much passive income 1,000 Greggs shares could pay…
• Here’s how a 40-year-old with no SIPP today could have one worth over £1,153,000 by age 67       
• Here’s how high these brokers think Greggs shares could soon climb!
• Here’s why I’m hanging onto my Greggs shares, even though they’ve fallen
• The Greggs share price has crashed 50%! Now see what it could be worth this time next year

Paul Summers owns shares in Greggs. 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.

Ahead of expectations

Notwithstanding “tough trading conditions“, total sales rose almost 52% in the last financial year to £1.23bn. While this growth isn’t completely unexpected considering that many of the firm’s shops were closed for a time in 2020, it also eclipses sales seen in 2019 (£1.168bn).

This is not to say that Greggs isn’t still being impacted by Covid-19. In company-managed sites, like-for-like sales were up just 0.8% in the final three months of 2021, compared to the same period two years ago. They were also down 3.3% for the full year. The emergence of the Omicron variant, supply chain issues, and staffing disruptions were all blamed. 

Nevertheless, it’s clear Greggs still managed to shift an awful lot of mince pies and festive bakes. And having kept costs in check, it announced today that full-year results in March would now be slightly ahead of its previous expectations. 

New boss

In a separate announcement, the food-on-the-go retailer confirmed that CEO Roger Whiteside would be retiring. Current retail and property director, Roisin Currie, will take up the reins in May.

As sad as it is to see Whiteside depart (he helped increase the Greggs share price from below 500p in 2013 to 3,300p yesterday), I see this appointment as a good thing for two reasons. First, it shows some decent succession planning on the part of the board. The last thing a company needs is for investors to get skittish because it hasn’t got someone in mind for the top job.

The fact that the new CEO is an internal candidate is also encouraging. While fresh blood/ideas from an external applicant can sometimes be exactly what a business needs, I really don’t think that’s the case here. 

Not cheap

As good as today’s update is, Greggs did warn that inflationary pressures are likely to “remain elevated” in 2022. This needs to be borne in mind, considering that the stock was trading at almost 29 times forecast earnings before the market opened.

That doesn’t strike me as an absurd valuation, considering the quality of the business. However, it is arguably getting a little frothy for a sausage roll seller. Moreover, Greggs did say the next few months would probably be “challenging“. 

Still, it can be suggested that the FTSE 250 stock’s growth strategy makes up for this. Roughly 150 net new stores are expected to open in 2021. The business also plans to extend its trading hours and push its digital offer.

With a war chest of almost £200m at its disposal, Greggs certainly has the cash to implement this strategy. Actually, it now has more money than it knows what to do with! Today, the £3.4bn-cap announced that £30m-£40m would be returned to shareholders at some point over the next six months. 

Solid hold

Having done so well last year (+86%), it’s inevitable that the Greggs share price will let off steam. The threat of an earlier-than-expected interest rate rise in the US isn’t helping market sentiment either.

Nevertheless, I have no hesitation in sticking with the stock for now. I may even buy more if the sell-off continues.

The post The Greggs share price falls despite solid trading. Time to buy? appeared first on The Twelfth Magpie.

More reading

• Here’s how much passive income 1,000 Greggs shares could pay…
• Here’s how a 40-year-old with no SIPP today could have one worth over £1,153,000 by age 67       
• Here’s how high these brokers think Greggs shares could soon climb!
• Here’s why I’m hanging onto my Greggs shares, even though they’ve fallen
• The Greggs share price has crashed 50%! Now see what it could be worth this time next year

Paul Summers owns shares in Greggs. 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.

Staycation winner

The latest trading update from food-on-the-go baker/retailer Greggs (LSE: GRG) will be essential reading for me on 5 October. It’s one of the biggest single company positions in my Stocks and Shares ISA. 

Having likely benefited from UK staycations and high streets getting back to some semblance of normality, I’m confident whatever numbers are released will be encouraging. Recent signs that the company is keen to crack on with store openings over the rest of the year are surely bullish?

Of course, the risk with Greggs is that all of this is already priced in. A valuation of 29 times forecast earnings arguably doesn’t give new investors a massive margin of safety. Perhaps trading has moderated. Perhaps everyone has had their post-lockdown fill of sausage rolls for now.

No matter — I’m focused on the long term. If I do end up getting my call wrong, I’ll still use any dip as an opportunity to increase my holding further. 

Quality FTSE 250 retailer

Shares in homewares retailer Dunelm (LSE: DNLM) are up 74% over the last five years. That may not be as great a performance as that seen elsewhere in the index but it’s still a very decent return. For perspective, it’s well over double that achieved by the FTSE 250 as a whole (32%). 

Next month’s trading update, due on 14 October, could see further positive momentum. Despite its apparent lack of economic moat, a valuation of a little under 21 times earnings seems reasonable for a company that generates consistently great returns on the money it invests in itself. Any move upwards may also be exacerbated by the fact that Dunelm has a low free float. Only 55% or so of the company’s shares are actually traded.

Of course, a significant lurch downwards is also possible. Investors might also argue that Dunelm has already benefitted from the home improvement bug that set in over 2020 and could be about to slow.

Still, the 2.8% dividend yield is higher than the FTSE 250’s 1.8%. It also looks very secure, based on projected profits. 

Recovering strongly

Recruitment company Hays (LSE: HAS) is a third stock whose share price could rise in October. Like Dunelm, it’s down to release a trading update on 14 October.

Only last month, the FTSE 250 member said it now saw “a clear route back to, and then exceeding, pre-pandemic levels of profit” at a faster clip than previously expected. No wonder the share price has been on a roll.

I can’t imagine the outlook has changed for the worse over the last few weeks. Moreover, a PEG (price/earnings-to-growth) ratio of just one suggests investors could still get a lot of bang for their buck from the shares. A net cash position and the recent resumption of dividends further enhance the investment case.

Obviously, a jump in Covid infections could put a stop to this progress. With the colder weather approaching and more people being a little less vigilant than usual, this certainly can’t be dismissed. As always then, I need to ensure I was diversified in other sectors before pulling the trigger here.

The post 3 FTSE 250 stocks to buy before October appeared first on The Twelfth Magpie.

More reading

• Here’s how much passive income 1,000 Greggs shares could pay…
• Here’s how a 40-year-old with no SIPP today could have one worth over £1,153,000 by age 67       
• Here’s how high these brokers think Greggs shares could soon climb!
• Here’s why I’m hanging onto my Greggs shares, even though they’ve fallen
• The Greggs share price has crashed 50%! Now see what it could be worth this time next year

Paul Summers owns shares in Greggs. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

As the manager of what’s become the UK’s most popular fund (Fundsmith Equity), Terry Smith has helped to increase the wealth of many thousands of investors, including himself. As someone who picks my own stocks, I regularly draw on simple but powerful tips from the celebrated money manager. Here’s a small selection. 

Don’t just buy what’s cheap

Terry Smith’s experience tells him that investors obsess over price. Indeed, he frequently mentions wishing he’d kept a diary since he started his career in 1974. This would have two columns — one for whenever someone asked him whether a stock was cheap and one for if it was a good company. Smith believes that he would have “overwhelmingly” more ticks in the first column than the second. 

This is not to say that Smith thinks the price of a stock is irrelevant. No one wants to overpay if they can avoid it. For him, however, “it’s not the most important question“. Instead, he favours looking at the quality of a business first. One way of doing this is to look at its return on capital employed (ROCE).

Taking this on board, I’ve become a little less interested in valuation over the years and more interested in ROCE. I’ve already done well out of stocks like trading platform IG Group, laser-guided equipment manufacturer Somero Enterprises, kettle safety component supplier Strix and food-on-the-go retailer Greggs. All of these consistently generate high returns on capital (outside of a pandemic). 

This is not to say that Terry Smith would buy these stocks. Nor is blindly buying businesses with high ROCE a guaranteed route to riches. Some I’ve owned have performed woefully. Nevertheless, I’m confident that my winners now outnumber my duds. And over an investment career, that’s what matters.

Don’t time the market

Given his stellar investment returns, one would assume that Terry Smith is rather skilled at timing the market: buying at the bottom and selling at the top. However, he’s very much against trying to do so. As he frequently reflects during speeches, there are “only two types of people I’ve ever met in investment: those who can’t do [time the market] and those that don’t know they can’t do it“.

However, this doesn’t stop Smith from buying on short-term weakness. He snapped up US coffee chain Starbucks and sportswear and trainer maker Nike during last year’s market crash. But these are quality stocks that were already on his radar.

This is why I’m continuing to push money into Smithson Investment Trust — a fund run by his colleagues. This adopts an identical strategy to Fundsmith but focuses on companies lower down the market spectrum. Smithson’s performance has been superb and I might be tempted to take profit. However, I’m continuing to buy nearly every month. Why? I simply don’t know when markets will sink.

I also try to keep my costs as low as possible. After all, there’s only one certainty with frequent buying and selling: it costs money. So, like Fundsmith Equity, I try to have a very low turnover of stocks. Unless I spot something I really don’t like (or spot a great opportunity), I don’t deal very often.

As Terry Smith has reflected, “over the long term, it’s what the company does that makes money, not what you do“.

The post These tips from millionaire Terry Smith are boosting my stock market returns appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Paul Summers owns shares in Fundsmith Equity, Greggs, Somero Enterprises, Inc, Strix, IG Group and Smithson Investment Trust. The Motley Fool UK owns shares of and has recommended Nike and Starbucks. The Motley Fool UK has recommended Somero Enterprises, Inc. and has recommended the following options: short October 2021 $120 calls on Starbucks. 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 just some of what I consider to be the Sage of Omaha’s most important lessons.

Know your business

“Never invest in a business you cannot understand“.

Warren Buffett is a fan of sticking to what you know. He only buys stakes in a business if he understands what it does and how it will continue to make money for him in the future. 

The portfolio of stocks owned by his holding company Berkshire Hathaway bears this out. Buffett part-owns giants such as Coca-Cola, American Express and Apple. 

Early in my investment journey, I found it remarkably easy to get involved in things I didn’t understand (or at least didn’t understand as well as other people). Even if I didn’t end up buying shares in these companies, I still wasted lots of time trying to figure out exactly how they would grow my capital.

These days, I do what Buffett does. Throw such stocks in the ‘too hard’ pile. Instead, I hold shares in businesses I can easily summarise, like food-on-the-go retailer Greggs, luxury fashion brand Burberry and drinks firm AG Barr.

Buy quality stocks

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

If understanding what a business does is vital, so too is knowing how much to pay for its shares. Warren Buffett’s original investment strategy was to buy seriously cheap stocks. Their quality didn’t matter so much if they were so lowly priced. As such, he was confident he could still make money. This focus later changed to buying stocks with strong competitive advantages (or economic moats).

By their very nature, such companies aren’t all that common and are usually more highly valued. So, having found a good thing, Buffett believes an active investor should bet big. If not, s/he may as well track the index.

Learning how to separate the wheat from the chaff takes time. What’s taken me longer however, is recognising that paying up can still work if a company can reinvest and compound earnings for years to come.

Stay the course

“If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.”

With news coming thick and fast every day, there’s a tendency to think that investors need to react to everything. Buffett disagrees. He thinks that inaction is key to growing wealth. This is why he says his favourite holding period is ‘forever’. 

While we shouldn’t take that literally (he still sells), Buffett’s record bears out this ‘buy and hold’ approach. He first began investing in Coca-Cola back in the late 1980s and still holds the stock today. 

Whether I can own stocks for as long as Buffett remains to be seen. However, adopting a ‘don’t touch!’ policy means I’ll definitely save on commission fees. Over time, costs like these actually have a huge impact on returns.

The post How I’d invest using 3 lessons from billionaire Warren Buffett appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

American Express is an advertising partner of The Ascent, a Motley Fool company. Paul Summers owns shares in Greggs, Burberry and AG Barr. The Motley Fool UK owns shares of and has recommended Apple and Berkshire Hathaway (B shares). The Motley Fool UK has recommended AG Barr and Burberry and has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. 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.

Powering on

Having once owned the stock, XP Power‘s (LSE: XPP) progress has served to remind me that it’s often a good idea to really run your winners. As I type, the stock’s up 35% in 12months. While some of this will be due to the wider market recovery, investors have clearly been cheered by the company boasting of a “strong order book.”

XP Power’s shares traded on 27 times forecast earnings on Friday. That’s hardly cheap considering rising Covid infection rates. Foreign exchange movements could also prove a drag for the mid-cap.

To quote Warren Buffett however, I’d rather buy “a wonderful company at a fair price than a fair company at a wonderful price.” XP is a leading manufacturer of critical power control components for the electronics industry. Once onboard, its customers rarely look elsewhere. 

So long as I wasn’t attempting to move in and out of the stock quickly (which isn’t the Foolish way), I’d have no issue buying some XPP shares before half-year numbers on 2 August.

A quality FTSE 250 stock

As a holder of the stock already, I’ll also be paying close attention to FTSE 250 member Greggs (LSE: GRG) next month. It reveals interim results to the market on 3 August.

The question isn’t whether Greggs is a great company. It’s got a strong brand, good leadership and has shown an ability to tap into emerging trends (vegan food) before others. Pandemic aside, returns on capital have long been great. 

No, the question is whether 27 times earnings is a reasonable price to pay now. Assuming Greggs has benefitted from more people hitting the road for staycations this year, I think it might be. Growth in retail sales over May and June also bodes well. 

Sure, the time to really pile into Greggs was last September. And yes, buying now is risky if the Delta variant really gets out of control. Notwithstanding this, I’d still buy into any weakness. The long-term outlook remains solid. 

Strong growth ahead

My final pick is real estate investment trust Tritax Big Box (LSE: BBOX). I’d be seriously amazed if next month’s interim results (5 August) weren’t decent. After all, multiple lockdowns and the subsequent explosion in online retail have pushed demand for warehousing through the roof. 

None of this has escaped the market’s attention. BBOX shares are up 38% since this time last year. As a result, shares in this FTSE 250 member now trade at a steep premium to their net asset value (the value of Tritax’s property minus its liabilities). Some might think now’s a risky time to buy.

But let’s be frank. Demand for BBOX’s buildings won’t disappear. In fact, I think we’re still in the early stages as far as online shopping is concerned.

On balance, I’d be happy to buy Tritax today to secure the dividend stream, However, I’d also be comfortable adding to my position if the share price subsequently lets off steam. 

The post 3 FTSE 250 stocks to buy before August appeared first on The Twelfth Magpie.

More reading

• Here’s how much passive income 1,000 Greggs shares could pay…
• Here’s how a 40-year-old with no SIPP today could have one worth over £1,153,000 by age 67       
• Here’s how high these brokers think Greggs shares could soon climb!
• Here’s why I’m hanging onto my Greggs shares, even though they’ve fallen
• The Greggs share price has crashed 50%! Now see what it could be worth this time next year

Paul Summers owns shares in Greggs. The Motley Fool UK has recommended Tritax Big Box REIT and XP Power. 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.

Greggs shares: too dear? 

It would seem the UK can’t get enough of its sausage roll fix. Having already said it had seen a big recovery in sales as shops reopened, Greggs announced in June that sales were even better than expected. This could have a “materially positive impact” on full-year numbers. This is significant news considering the company was expecting demand to moderate as more cafes and restaurants opened and shoppers’ enthusiasm (and savings) dropped. 

We’ll get a further update on current trading when Greggs reports its half-year numbers at the beginning of August. Unless the share price gets silly, I doubt I’ll be selling before then. 

Yes, the valuation — at 29 times forecast earnings — is high. In normal times, this is something we might see attached to a promising tech stock. It’s certainly prompted me to question whether a lot of good news is now priced in to Greggs shares. Should it fail to live up to investors’ revised expectations, there could be volatility ahead.

Nonetheless, I remain optimistic. Frequent changes to the rules surrounding foreign travel lead me to think that many of us will throw up our hands and just stay within the UK for another summer. With its presence at motorway service stations and in big cities, this should be good news for Greggs. But even when I factor in the possibility of improving sales from those finally returning to offices, the frothy valuation puts me off buying more now but I don’t think I’ll be taking profits just yet.

“Small improvement”

Of course, Greggs isn’t the only well-known high street name seeming to have turned a corner. Today saw an update from newsagent WH Smith (LSE: SMWH) on trading for the 18 weeks to 3 July. 

It wasn’t too bad. Revenue from its UK high street stores was back to 86% of what it had been over the same period in 2019. Footfall is still below pre-pandemic levels and it’s going to take a while for full confidence to return.

Having said this, revenue at travel sites continues to suffer. Sales at airports, for example, were only at 10% of what they once were. All told, sales in this part of the business were at 62% of 2019 levels.  

Based on trading at Smith’s North America business, however, the worst appears to be over. Revenue here was 74% of 2019 levels over the same 18-week period. However, this jumped to 88% in June as passenger numbers increased. As a result, there’s been “a small improvement to management’s expectations for the current financial year“, although no numbers were given.     

I suspect WH Smith will fully recover, albeit probably not at the same pace as Greggs shares. More Travel stores are planned and it will shortly bring its US tech brand InMotion to UK airports, including London Heathrow.

Nevertheless, I probably wouldn’t rush to buy the stock today, given its greater dependence on international travel getting back to normal. 

The post Are Greggs shares now too expensive? appeared first on The Twelfth Magpie.

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• Here’s how a 40-year-old with no SIPP today could have one worth over £1,153,000 by age 67       
• Here’s how high these brokers think Greggs shares could soon climb!
• Here’s why I’m hanging onto my Greggs shares, even though they’ve fallen
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Paul Summers owns shares in Greggs plc. 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.

Towards the end of the last month, I suggested the Greggs (LSE: GRG) share price was ready to push higher. Today, it’s done just that. Here’s why the FTSE 250 baker is back in demand.

“Strong recovery”

Perhaps unsurprisingly, Greggs revealed it had seen a “strong recovery” in sales since Boris Johnson began lifting coronavirus-related restrictions. Indeed, total sales over the 18 weeks to 8 May were comparable to those seen over the same period in 2019 (£352m vs £373m respectively). They were also far better than the £280m in 2020.

In the eight weeks to the 8 May, like-for-like sales were down 3.9% compared to the same period in 2019. However, this is clearly far better than the -23.3% seen in the 10 weeks to 13 March. While these numbers are only related to company-owned shops, Greggs is clearly rising to the occasion. In fact, like-for-like growth has been positive since high streets re-opened on 12 April.  

The company is also expanding. In line with its plan to continue growing its estate in places where demand was solid, Greggs opened 34 new shops over the first 18 weeks of 2021. When the closure of 11 sites is factored in, the £2.4bn-cap boasts 2101 shops — the vast majority of which are company-managed.

In addition to this, Greggs has now implemented its delivery services in 800 of these units. Collectively, these have contributed just over 8% of sales over the last eight weeks.

Positive outlook

As good as this news is, why is the Greggs share price up 8%? It’s mostly down to the positive comments from management regarding the company’s outlook.

Greggs now expects sales for its current financial year to be better than expected. This is assuming, of course, that Johnson’s roadmap continues to be implemented as planned. As a result, profits are now predicted to be “materially higher” than previously thought, and back to 2019 levels.

This is clearly a better scenario than the market expected and goes some way to demonstrating how big a role psychology can play in making money from shares. Buying a stock when expectations are low rather than high is always something I try to do.

Reasons to be wary

As a holder of the stock, I’m clearly biased when it comes to Greggs. As such, I think it’s important to consider the flip-side to its investment case.

Naturally, there will come a time when all the positive news is baked in. As the company stated today, it’s tricky to guide on profits given just how uncertain trading conditions are. News that many top employers will be changing their working practices going forward could impact on sentiment surrounding the stock. Even though the sausage roll-seller is concentrating on building shops in retail parks and petrol stations.

Even if workers return en masse, their desire to sit and eat on-site when restrictions are lifted could play into competitors’ hands. On top of this, the possibility (however faint) that new variants of the coronavirus could still disrupt operations shouldn’t be ignored. As an investor, it pays not to be too confident.

Happy holder

Despite these concerns, I’m encouraged by the reaction to today’s figures. Along with a number of other stocks, I continue to regard Greggs as a great play on the ongoing recovery from the pandemic. I won’t be selling just yet.

The post The Greggs (GRG) share price is rocketing. Here’s why appeared first on The Twelfth Magpie.

More reading

• Here’s how much passive income 1,000 Greggs shares could pay…
• Here’s how a 40-year-old with no SIPP today could have one worth over £1,153,000 by age 67       
• Here’s how high these brokers think Greggs shares could soon climb!
• Here’s why I’m hanging onto my Greggs shares, even though they’ve fallen
• The Greggs share price has crashed 50%! Now see what it could be worth this time next year

Paul Summers owns shares of Greggs. 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.