Fallen star

Let’s not beat about the bush — investors in fast fashion firm ASOS (LSE: ASC) have endured an appalling time of late. Partly due to the rotation away from growth-focused, lockdown winners into value stocks, the share price has tanked 25% in 2022 so far. In the last year, the former market darling’s value has dropped nearly 70%!

Personally, I see this as an opportunity. ASOS still has many attractive qualities, including a growing portfolio of brands and great international growth prospects.  

This is not to say that the share price capitulation isn’t completely unwarranted. ASOS has faced multiple headwinds in recent times, including higher costs and supply chain constraints. The former isn’t exactly great considering margins at this sort of business will never be sky-high. UK-based online clothing retailers have also seen increased competition from overseas rivals such as China-based Shein. Oh, and the big rise in the cost of living isn’t helping any retailer. 

Still, I think these concerns are now starting to be reflected in the valuation. At 21 times forecast earnings, ASOS still isn’t ‘cheap’ in the conventional sense but it’s far more attractively priced than it used to be. The move to the main market from the less-regulated AIM might also help to entice new investors.

Assuming inflation will eventually loosen its grip, I consider the £1.75bn cap a firm ‘buy’ for me at these levels. Half-year numbers are due not long after the ISA deadline passes.

Power up

A second growth stock I’ve got on my watchlist is XP Power (LSE: XPP). This is a company I’ve actually held within my Stocks and Shares ISA before (and made a very nice profit on). Since then, however, the shares have tumbled.

XPP’s valuation is now almost 30% below where it stood this time last year. Is the actual business really 30% less valuable though? I don’t think it is. XP is a leading developer of critical power control solutions for a number of sectors. Once on board, clients rarely leave. It therefore has a bit more earnings visibility than some in the market. 

Speaking of which, it’s worth mentioning this month’s full-year results. Despite multiple headwinds including pandemic lockdowns and component shortages, the company managed to grow revenue by 3% in 2021 (to £240.3m). I think that’s actually quite impressive considering that trade from healthcare customers has inevitably moderated following huge demand in 2020. XP Power also started 2022 with a record order book of £217m. 

Having been caught up in the general market sell-off, the shares now trade on 17 times forecast earnings. The 2.8% dividend, nicely covered by expected profit, is the cherry on top.

Like ASOS, I believe XP will recover in time. Of course, there’s no such thing as absolute certainty and the fact that Covid-19 infections in Asia are on the rise again is not great news for this Singapore-based business. Hence, I would never allow my Stocks and Shares ISA to be overly invested in a particular sector, including this one.

The post 2 growth stocks I’d buy before the Stocks and Shares ISA deadline 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?

Paul Summers has now position in any of the shares mentioned. The Motley Fool UK has recommended ASOS 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.

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.

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?

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.

Picked well, penny stocks have the potential to dramatically improve my wealth in a short period of time. This is especially true if I hold them in a Stocks and Shares ISA. Doing so means I won’t need to pay tax on any profits I make. 

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Today, I’m returning to look at a company that’s been on my watchlist ever since it was listed in June 2021. Should I finally dip my toe in the water?

Penny stock disaster

Based on recent performance, it’s just as well I’ve held back from pulling the trigger on bathroom specialist Victorian Plumbing (LSE: VIC). From jumping to a 52-week high of almost 342p early on, the share price has since collapsed 75% to 85p. What on earth’s happened here?

I don’t think there’s one single factor to blame. As I remarked at the time, it’s clear that Victorian Plumbing’s IPO was opportunistic and designed to coincide with the boom in DIY seen since the beginning of the pandemic. This allowed original investors to make an absolute killing. And I can’t really blame them for wanting to achieve the best price possible for their stakes. 

The issue with being the largest IPO ever on the junior AIM market is that new investor expectations jumped ahead of reality. Since those heady days, Victorian Plumbing has experienced issues with its supply chain (like many other businesses). Revenue growth has also slowed as the rush to buy new bathroom suites replaced with spending on other things.

Buy the (big) dip?

On the one hand, I’m now able to buy stock in a cash-generative company for 17 times earnings, based on analyst forecasts. That’s not screamingly cheap but nor is it is eye-poppingly expensive. Interestingly, VIC also has a PEG (price/earnings-to-growth) ratio of just 0.5. Anything less than one suggests new buyers are getting a lot of bang for their bucks. 

I’m also attracted to Victorian’s online-only/capital-light business model. It’s already profitable (in contrast to a lot of highly-valued fluff out there) and there’s a decent amount of cash on the books.

Furthermore, the company has a sizeable share of the market and customer reviews are generally very positive. To round things off, CEO/founder Mark Radcliffe retains a huge 47% stake. If anyone wants the company to bounce back, it’s him. 

But let not get ahead of ourselves. An obvious risk with this penny stock is that things could get worse before they get better. A military conflict in Eastern Europe has the potential to hit growth stocks like this, even if it’s irrelevant to selling bathrooms. Margins look like being squeezed for the foreseeable future too.

Victorian Plumbing also has a small free float. Just 35% of the company’s stock is available to trade in the market. That could exacerbate an already bad situation. It only takes a small amount of selling to really move the needle. On a more optimistic note, the reverse is also true. 

My verdict

I do feel like the (prolonged) sell-off of this penny stock has been overdone. Nevertheless, I’m inclined to wait until after this month’s AGM (and a potential update on trading) before deciding whether now is the time to strike.

For now, this penny stock stays on my ISA watchlist.

The post 1 penny stock I’m considering for my Stocks and Shares ISA 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?

Paul Summers 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.

Great in theory

Now, don’t get me wrong; the arguments for buy-to-let look pretty compelling on paper. The idea of someone paying my mortgage combined with the gradual (or perhaps not so gradual) rise in the property’s value is undeniably attractive.

The reality, of course, would be a lot different for me. The average cost of a house in the UK hit £255,000 at the end of December, according to Nationwide. That’s all well and good were I already invested. But becoming a landlord from scratch means I’d need a big deposit. The prospect of rising interest rates isn’t exactly appealing either. 

I also don’t feel I have time to find tenants who will consistently pay their rent (and not prove a nuisance), nor to keep the flat or house in good working order throughout the time I own it and abide by all the regulations imposed on landlords. So, I’m leaving buy-to-let to others.

A better source of passive income

To be frank, investing via the stock market appeals to me as it involves a lot less fuss. Assuming I’m comfortable with the sort of price volatility we’re experiencing right now, I simply need to buy and hold investments that deposit money in my account on a regular basis. In other words, I’m looking for shares and funds that pay dividends. And there’s no shortage of options that do just this. Given that I did once consider buy-to-let, however, it’s worth highlighting that some will allow me my property fix.

Real Estate Investment Trusts (or REITS) are companies that invest in and manage property portfolios. These could include residential homes, warehouses, self-storage facilities, healthcare buildings, office space and retail stores. The choice is staggering. And all allow me to become a landlord just through buying some shares. 

Another great thing about holding REITS (actually, any dividend stock) is that I don’t need to pay any tax on the passive income if I keep them in a Stocks and Shares ISA. This gives me more cash to reinvest and grow, assuming that’s what I choose to do. And over the long term, equities have consistently been the best-performing asset I can own.

Safety in numbers

Of course, it’s worth making it very clear that no passive income stream is ever guaranteed. A company may decide to suspend paying dividends if earnings hit a sticky patch. It may also refrain from increasing the payouts if it needs to pay for things that will allow the business to grow. 

One way of protecting myself from this eventuality is to hold a diversified bunch of shares and funds. This way, the pain caused by one company cutting its dividend can be mitigated by others perhaps increasing theirs. 

The post Buy-to-let? I’d buy stocks and shares for passive income instead! 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?

Paul Summers 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.

With this in mind, here are three such shares from the FTSE 250 I’d add to my ISA portfolio today.

TI Fluid Systems

TI Fluid Systems (LSE: TIFS) is the go-to option for car manufacturers looking for components to move fluids around inside their vehicles. Its operations stretch over 28 countries, giving the company great geographical diversification. However, the chief reason it’s caught my eye is that it looks very attractively-priced for the growth on offer.  

Right now, I can pick up the stock for under 16 times earnings. That already looks pretty decent value, relative to the levels of some stocks in the FTSE 250. And the price-to-earnings growth (PEG) ratio for FY21 is just 0.3. As a general rule of thumb, anything at or below 1.0 on this metric suggests the market is undervaluing the company. 

Of course, numbers never tell the full story. A key risk with TIFS is that it could be impacted by the ongoing issues with supply chains currently dogging the automotive sector.

Another thing worth mentioning is the ‘free float’. A relatively low number of shares (as a percentage of total equity) currently trade on the market. Theoretically, this could make TIFS’ price more volatile than other mid-tier stocks.

As long as I can remain focused on the long term, however, this looks like a good investment for me.

Redrow

As a (mostly) growth-focused investor, I’ve long regarded housebuilders as more suitable for a wholly income-focused portfolio. Perhaps I’ve been overly cautious. After all, some companies in this sector look temptingly priced for the growth they offer.

One example from the FTSE 250 is Redrow (LSE: RDW). We’ve seen a post-lockdown housing boom, but its shares now trade on less than 10 times earnings. More importantly, a forward PEG ratio of 0.5 is also very low. 

Of course, a key question now is whether recent activity will now decline as more people return to the office, others get laid off, and government incentives end. In fact, there are signs this is already happening. 

Still, I’m encouraged by RDW’s most recent update. Back in July, it reflected on having a “very strong” order book. Its sales market also “remains robust“. This leads me to suspect that buying for my ISA now could still work out well. 

Coats

A final ISA buy is industrial threads and fasteners manufacturer Coats (LSE: COA). A world leader at what it does, the business also has great earnings diversification, supplying products to industries such as apparel, transportation and telecoms.

Once again however, it’s the valuation that appeals. Coats’ forward PEG is bang on 1 at the moment. So, while not being as undervalued as the other two stocks mentioned, it feels like I’d be getting a good price based on this penny stock’s prospects.

Naturally, there are still risks here. A growing awareness of just how unfriendly fast fashion is for the environment could impact clothing sales and, by association, profits at Coats. Debt has also been creeping up over the years and could be worth watching.

On balance though, I’d still buy today. 

The post FTSE 250: 3 dirt-cheap growth shares I’d buy for my ISA 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?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Coats Group and Redrow. 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.

Doubling my ISA: what will it take?

To double the value of my portfolio, I need to achieve an annualised return of around 15%. In other words, I need my capital to grow 15% in 2021, another 15% in 2022, and so on. This is how things would look if I used the nominal sum of £1,000.

Compound interest really is a wonderful thing. And this doesn’t include the impact of any reinvested dividends!

So, how do I hit this target?

Clearly, being invested in the best stocks helps. But what makes a company better than others? Everyone will have an idea about this.

A ‘meme stock’ investor would say that AMC Entertainment and GameStop would qualify. I respectfully disagree. Their share prices have certainly ‘popped’ in 2021 but have since flagged. They’re best left to traders, in my opinion. 

Personally, I don’t think I need to take on such risk to get a 15% annualised return. For me, the best ISA stocks are those that are leaders in niche markets, boast fantastic brands, have strong growth potential, and/or generate great returns on the money they invest. I think I have several in my portfolio already. These include kettle appliance maker Strix, equipment manufacturer Somero Enterprises, and online behemoth Boohoo. 

But let’s take a step back here. The fact that something is achievable does not mean it will happen, of course. Let’s briefly look at what things could stop me from achieving my goal.

What could go wrong

Unfortunately, there’s no guarantee my ISA stocks will perform. Last week alone showed just how unforgiving other investors can be with the share prices of Best of the Best and Avon Protection being pummelled. Both have previously scored highly on the things I usually look for.

Even if the companies I own do very well, they could still be held back by general market jitters. These days, investors are getting increasingly worried about rising inflation, for example. And even if this does prove ‘transitory’, there will always be another potential setback waiting in the wings to knock confidence. 

How I can improve my chances

Aside from hoping my stock-picking is on form, there are four other things I think I can do. 

1) Keep investing. This includes periods in which markets head south. It sounds simple but it’s harder to do in practice.

2) Go small. Smaller companies have the ability to grow at rates larger companies simply can’t. This can often lead to a huge uplift in share prices. 

2) Use up my ISA allowance. As well as continuing to invest, it would also be a good idea to use my £20,000 ISA allowance in full. The more money I put to work, the greater the potential impact of compounding.

3) Avoid frothy markets. A final, debatable point is that it might make sense to avoid markets (and companies) where valuations are looking stretched. Having more than doubled over the last year, the US market looks a little too hot to me right now. 

The post How I plan to double my Stocks and Shares ISA in 5 years 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?

Paul Summers owns shares in Strix, Somero Enterprises and boohoo group. The Motley Fool UK has recommended Avon Protection, Somero Enterprises, Inc., and boohoo 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.

Despite not being exposed to the tech titans, his investment vehicle — Pershing Square Holdings — has outperformed the S&P 500 over the last five years. And when you consider the US index has more than doubled itself over this time, I think this makes Ackman worth listening to. 

Thinking like Bill Ackman

As a value investor, Ackman looks for stocks he believes are being unfairly rated by the market. This isn’t to say he automatically buys anything with a cheap-looking price tag. He actually makes a point of only investing in companies with sound balance sheets and strong brands in sectors with significant barriers to entry.

The drawback of adopting this approach is that it takes time for value plays to work out (if they work out at all!). This can test even the most patient of investors. It’s hard to stay committed to a stock when others are making great money in glitzy tech shares or promising penny stocks. 

Not that this bothers Ackman. As he said: “Investing is a business where you can look very silly for a long period of time before you are proven right.” In other words, he’s more than happy to play the contrarian. 

I believe there are at least a couple of stocks in the FTSE 100 that matches this mentality.

2 UK stocks Ackman might like

1) Tesco (LSE: TSCO) is a stock Ackman actually once contemplated buying. It’s not hard to see why. A great brand is just one of the FTSE 100 member’s attractions. And right now, the UK supermarket giant also looks good value at 13 times forecast earnings.

The shares have been stuck in the 200-250p range for a couple of years. However, I reckon Tesco’s share price will rise again as additional costs relating to Covid-19 aren’t repeated and profits rise accordingly. Yes, the supermarket sector remains a highly competitive space. The growth of German discounters, for example, shows no sign of slowing. However, if any company can beat back rivals, it’s one with a huge market share.

In the meantime, Tesco yields 4.1%, according to analyst projections. I’d have no problem buying the stock for my ISA today.

2) Whitbread (LSE: WTB) is another FTSE 100 stock I think Ackman might like. He does, after all, hold a considerable position in Hilton within the Pershing Square portfolio.

Whitbread has an excellent brand in Premier Inn. It also has a commanding market share of the budget hotel sector in the UK. Having taken advantage of the weakness of opportunities over the pandemic, it now stands to fully benefit from a rebound in travel and tourism in the UK. On top of this, the firm is continuing to expand in Germany. This should give it more geographical spread, earnings-wise.

Quite when we see a full recovery in the Whitbread share price is open to debate. Variants of Covid-19 could still impact the hospitality sector for some time to come, which comes back to the point of being patient. 

The post I’d listen to billionaire Bill Ackman and buy these FTSE 100 shares for my ISA appeared first on The Twelfth Magpie.

More reading

• Here’s what a surging Tesco share price has done to £10,000 invested 5 years ago
• Are Tesco shares losing their momentum?
• Tesco’s share price drops 2% on Q1 trading miss. What’s gone wrong?
• As Tesco shares dip on Q1 results, is this a brilliant time to buy?
• How much might £19,999 in a Cash ISA be worth in 2036?

Paul Summers has no position in any of the shares mentioned. 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.

Earlier this week, I picked out three FTSE 100 stocks I’d consider buying with my £20,000 ISA allowance. Today, I’m focusing on two smaller UK shares — one of which I already own — which would also make the cut. As luck would have it, both have just released positive news to the market.

Hot UK share

Today’s full-year results from kettle safety control supplier Strix (LSE: KETL) go some way to reminding me why I’m already invested in this wonderfully ‘boring’ company.

While revenue fell 1.6% to £95.3m over 2020, this was “significantly ahead” of what Strix believed might happen because of Covid-19. This was due to a “marked recovery” in the second half of the year.

Moving to the bottom line, pre-tax profit climbed 2.4% to £30.9m. Although a 41.2% rise in net debt (to £37.2m) would usually cause me concern, the reasons for this increase look sound. Over 2020, Strix acquired water filter firm LAICA and spent money on its manufacturing operations in China.

Comments on Strix’s outlook were also encouraging. Today, CEO Mark Bartlett reflected that the “much-improved performance” in the second half of last year had carried on into this year. A strong order book for kettle safety controls and the launch of new products suggests the Isle of Man-based business will enjoy a better 2021.

Ironically, my one concern with this UK share is that its share price has more than doubled over the past year. This leaves it trading on a valuation of 17 times forecast earnings. That’s not excessive. But it’s vastly different from the single-digit P/E valuation the AIM-listed company had when I first began investing in it.

I do wonder if we might see a wave of profit-taking over the next few weeks and months. This could be compounded by the trend for investors to move away from defensive stocks (which Strix arguably is) and into battered travel and leisure shares.

As such, I’m inclined to add to my holding gradually over the next few months. 

Lockdown winner

Another stock I’d feel comfortable spending some of my ISA allowance on is Harry Potter publisher Bloomsbury (LSE: BMY).

In another positive trading update, the UK small-cap announced profit for the year to the end of February will now be “significantly ahead” of the £14.8m expected by the market. This follows an “exceptional sales performance” last month as millions of us sought to pass the time by reading. In addition, Bloomsbury also saw an increase in demand for remote access to learning materials by academic institutions. 

As great as this is, the shares aren’t devoid of risk. Even the company has no idea whether recent performance will continue once restrictions are lifted. Like Strix, Bloomsbury also traded on 17 times forecast earnings before markets opened. It will be even higher after today’s 7%+ share price rise. Again, this isn’t an absurd valuation. However, it does imply that some (much?) of the good news is now priced in. 

Still, I remain a fan of this company. It might not grab the headlines like other UK shares, but I think that’s part of the appeal. Another is the £54m in net cash Bloomsbury had on its balance sheet at end of February.

Should shares fall back, I’ll be ready with at least some of my ISA allowance.

The post I’d buy these top UK shares with my ISA allowance 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?

Paul Summers owns shares of Strix Group. The Motley Fool UK has recommended Bloomsbury Publishing. 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 good as this performance is for those who had the courage to invest, I’m more likely to buy a related stock from the US market. Before revealing its identity, I’ll briefly recap on why I’m not tempted by Cineworld. 

Cineworld share price: too much too soon?

First and foremost, the company remains heavily indebted and dependent on fresh liquidity to keep going. It’s somewhat inevitable that many traders are betting the Cineworld share price will fall in the months ahead. 

Second, the movie schedule continues to be impacted by the pandemic. Since studios need to be confident that they can make a decent return on their money, I wouldn’t be shocked if more delays were announced.

Third, there’s no guarantee moviegoers will rush back when cinemas reopen. This may be due to an ongoing psychological wound left by coronavirus or the simple desire to be outdoors when good weather arrives.

To be fair, Cineworld has some plus points too. Consumers are craving a return to much-loved activities and it could benefit even more from people being unable to go on holiday for much of 2021.  

As an investor, however, I need to be sure that my money goes into high-quality, multiple-product companies more likely to survive the coronavirus storm. This brings me to a far less risky alternative in the entertainment space.  

This US stock looks like a better bet

At £333bn, US behemoth Disney (NYSE: DIS) towers above Cineworld in size. But it’s not just its sheer market clout that makes this a more defensive pick. Disney owns some of the biggest brands/franchises going, including Star Wars and Marvel as well as companies such as Pixar. It has theme parks, cruise liners and exposure to sports via ESPN. It earns stacks of cash from merchandising every year. 

I’d say Cineworld needs Disney a whole lot more than Disney needs Cineworld. The US giant can easily distribute its own films and TV shows via its streaming service. Boosted by people being forced to stay indoors due to lockdowns, it now has 95 million subscribers to Disney+. It expects up to 260 million by 2024.

No sure thing

Naturally, there are still challenges ahead. Disneyland and co remain closed due to the coronavirus. Even once they are permitted to open, restrictions on the number of visitors are possible. If not, social distancing measures look inevitable, which doesn’t exactly sit well with the ‘magical’ atmosphere it wants to create. In addition to this, departures of its cruise ships remain suspended. Naturally, Disney will also continue to face stiff competition for eyeballs from the likes of Netflix and Amazon.

Having recently hit a record high, one might reasonably argue that a lot of optimism is already in Disney’s share price too. A twist in the coronavirus tale could put paid to that. Due to the size difference, the Cineworld share price is theoretically more likely to double in value in the near future than Disney.

In spite of all this, I know which I’d feel more comfortable owning within my Stocks and Shares ISA. While Cineworld is on life support, the Mouse is in rude health. 

The post I’d ignore the Cineworld share price and buy this US stock for my ISA instead 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?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon, Netflix, and Walt Disney and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 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.

So, what is this hot stock and why is it the flavour of the month? And should I lock in gains or buy more for my ISA? Here’s my take.

The soaring SEE share price

The name of the company in question is Seeing Machines (LSE: SEE). The Canberra-based business develops and supplies tech that monitors levels of fatigue and distraction in drivers. But we’re not just talking about cars here. The adaptability of its products means that Seeing can have its fingers in many sector pies, including off-road, fleet and aviation. 

As one might expect when it comes to the adoption of new technology, however, progress has felt painfully slow at times. Multiple fundraisings have tried investors’ patience, as has the ‘pop and drop’ behaviour of the share price. That said, many owners of the stock are, like me, perhaps in a more forgiving mood these days, I feel.

The gains seen in the SEE share price over the last few weeks appear to have been in anticipation of news released yesterday. This relates to confirmation that the company will partner with US computing giant Qualcomm Inc in designing a driver monitoring system. Perhaps most importantly for those already invested, CEO Paul McGlone stated that Seeing expects this relationship “to deliver significant incremental volume” on top of its existing business plan.

Having seen my stake in Seeing Machines rise so spectacularly since the beginning of 2021, I’m now left with a quandary.

Should I sell now or buy more?

One argument for selling is that some traders will seek to lock in some profit soon. This will likely make the SEE share price volatile or certainly more volatile than your typical FTSE 100 stock. 

As mentioned earlier, this is nothing new to those already invested. Back in June 2018, Seeing hit a share price high of almost 13p. In less than 12 months, it was back down at 3p. In the March 2020 market crash, it fell to as low as 1.7p. This is most definitely not a share for the faint-hearted. If I was a prospective investor now, I’d definitely go in with my eyes open. 

On the other hand, I find it hard to overlook the importance of SEE’s tech. Based on over 20 years of research, its AI driver safety systems already save lives and should continue to do so as safety features are mandated around the world. The link with Qualcomm could also lead the AIM-listed company to hit the radars of tech-obsessed investors across the pond. This could usher in more buying and more share price momentum. On a long enough timeline, I can even imagine the company being of interest to a deep-pocketed suitor. Not that such an outcome can be guaranteed, of course.

Staying diversified

I suspect I will retain my full position for now. But I need to ensure my position doesn’t become too large relative to my other holdings. A concentrated portfolio where only a few stocks dominate can be very risky if some fail. Some diversification is essential. 

For now, however, I’ll simply toast this development and salute the recent uplift in the SEE share price. 

The post The SEE share price is up 75% in January. Should I sell this hot growth stock 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?

Paul Summers owns shares of Seeing Machines Ltd. 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.