It’s no secret that 2022 has been a torrid time for many investors. With macroeconomic issues such as inflation — which rose to 9% in the UK in April — squeezing investor confidence, many stocks have taken a hit. Down 6% this year, I’m on the lookout for some FTSE 100 stocks to add to my portfolio. Here’s two I’d buy today.

BT

The first FTSE 100 stock I’d opt for is BT (LSE: BT.A). The telecommunications firm has provided a beacon of hope against the tough market conditions and is up nearly 6% year to date. BT has failed to deliver to its shareholders in recent times, as the last five years have seen it fall nearly 40%. However, I think in current times BT could be a strong addition to my portfolio.

One reason for this is due to its strong dividend yield. Currently sat at 4.21%, this is above the FTSE 100 average. With inflation seemingly set to continue to rise, this yield offers me some form of protection against spiking rates. With stagnant cash losing value, I think this makes BT a smart move.

Another reason I’d buy BT shares today is due to its strong full-year results. The main highlight within these was the growth of Openreach. It’s now reached 7.2 million premises. On top of this, BT’S 5G network now covers over 50% of the UK. These solid figures make BT a tempting proposition for me.

However, one concern I have with BT is its large pile of debt. And this has only been worsened by a recent £5bn investment in capital expenditure. With interest rates also on the rise, this may provide further issues for the firm in paying off this debt. However, the short-term problems this investment may provide should pay dividends in the long run. As a result, I’d be willing to buy BT stock today.

ITV

My second buy would be television group ITV (LSE: ITV). The stock is down over 48% in the past 12 months. Yet, I see long-term potential in this dip.

One of the main reasons for the fall is its new streaming service venture ITVX. A free, ad-funded service, the reveal of this new service back in March saw the ITV share price plummet 30%. Clearly, investors think this new, potentially expensive, project may struggle to provide ITV with extra profits.

However, I think this fall represents value. The stock trades on a price-to-earnings (P/E) ratio of 7.1, comfortably below the FTSE 100 average of 14. And coupled with a strong 4.97% dividend yield, I think ITV is a solid buy for my portfolio.

The firm also posted some impressive results in 2021. For example, its announced record revenues of £3.5bn. And this strong performance continued into 2022, with Q1 revenues up 18% year-on-year. The firm also has a target of £750 million in digital revenues by 2026. Should it be able to meet this target, I think the FTSE 100 stock would be a great buy today.

The post Here’s 2 FTSE 100 stocks I’d buy today! appeared first on The Twelfth Magpie.

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• Here’s how to invest £3,600 in UK shares to target a 7% dividend yield
• Why has the BT share price almost doubled – yet gone nowhere?
• Down 16% in 5 weeks, are BT shares just too good to miss?
• Down 16% to around £2.03! Here’s where BT’s bargain-basement shares ‘should’ be trading right now

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

If I was investing £2,000 in a tax-free ISA today, I’d be scouring the FTSE 100 for dirt-cheap bargain stocks offering attractive dividends. There are plenty to choose from right now, and I’d split my money between broadcaster ITV (LSE: ITV) and builder Taylor Wimpey (LSE: TW).

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.

ITV currently yields 4%. That isn’t the highest dividend yield on the FTSE 100, but it is covered 4.6 times by earnings, giving scope for progression. It looks doubly attractive when combined with its dirt-cheap valuation of just 5.4 times earnings. 

That makes Taylor Wimpey look relatively pricey, with its valuation of 7.3 times earnings. Obviously, that’s cheap too, roughly half the average FTSE 100 price/earnings ratio of 15.63. It currently yields an eye-catching income of 6.54% a year.

So why are these two dividend heroes so cheap? The ITV share price has had a rotten time lately, falling 25% in the last six months. Having only re-entered the FTSE 100 in June last year, it risks falling out again, as its market cap has now slumped to just £3.34bn. 

Two FTSE choices for my ISA

That seems harsh given that last month it posted a 46% jump in operating profit to £519m for 2021. It was boosted by the success of Love Island, The Masked Singer and Gareth Southgate’s England team in the 2020 Euros.

Investors ignored all that and cast a nervous eye over management’s ambitious spending plans instead. It’s pouring £1.23bn into original content, in a bid to double its digital revenues.

ITV does risk over-reaching itself in an increasingly competitive market. However, I reckon the backlash has been overdone. I’m pleased to see management taking the fight to Netflix, Amazon and other streaming giants. I think today’s cheap valuation more than justifies the added dangers. As does the dividend. ITV is forecast to yield 6.7% in the year ahead, with cover remaining strong at 2.5. I’d buy it for my ISA.

Taylor Wimpey’s stock has also disappointed, falling 25% over the last year. That’s par for the course in the housebuilding sector. Barratt Holdings, Persimmon and Vistry Group have all suffered similar declines. Rising interest rates, higher building costs and the cost of living crisis have hit home. The upside is that their share prices look cheap.

Taylor Wimpey has bounced 4% today, following reports the government is dropping demands for housebuilders to contribute towards a £4bn cladding fund.

I’d buy these dirt-cheap stocks today

Last month, Taylor Wimpey also reported a strong 2021, with revenues soaring by 53.6% to £4.28bn. Home completions jumped 47% to 14,087 (helped by Covid restrictions easing). The UK housing market has to slow at some point, but property shortages should underpin prices, in my view.

Mortgages are still very, very cheap, by historical standards. As is Taylor Wimpey, which is why I would add it to my ISA portfolio today.

The post £2k to invest in an ISA? I’d buy these 2 dirt-cheap FTSE dividend stocks today appeared first on The Twelfth Magpie.

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Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Cheap FTSE 100 penny stock

Broadcaster ITV (LSE: ITV) has seen its market-cap tumble almost 30% year-to-date. Based purely on this, investors might suspect that trading has been awful. However, this simply isn’t the case. The £3.4bn-cap recently revealed a 48% jump in pre-tax profit and 24% rise in total external revenue growth of 24% in 2021. On top of this, the company kept its word and reinstated the dividend.

So what’s got investors flustered? It all seems down to the company’s plan to “supercharge” its streaming services and launch ITVX. As interesting a development as this is, it will require an awful lot of cash to get going. In addition to the cost, some investors are clearly sceptical of ITV’s ability to challenge established giants such as Netflix or Amazon. 

Valid concerns as these are, I believe the market is probably being too pessimistic. ITV still boasts an impressive list of popular productions. Debt is also coming down and a total dividend of 5.71p per share has been estimated for FY22. That’s a chunky yield of 6.81%, easily covered by profit. All this for a penny stock now trading at just six times earnings.

So as bad as the last few weeks have been, I’d be comfortable buying a slice of ITV today, just as I was before this month’s update. 

50% down! 

Another penny stock I’d consider is dotDigital (LSE: DOTD). It provides solutions to other businesses for automating their marketing campaigns across social media and email.

Despite the clear demand for what it does, holders have endured a torrid time of late. The shares have halved in value since the beginning of 2022. What’s brought on this capitulation?

Well, investors’ growing aversion to growth stocks in recent months can’t have helped. Nor can more recent news that full-year revenue growth will now be lower than expected “during the current and future financial years“.

Nonetheless, dotDigital looks like a fundamentally good business to me and possesses many of the qualities I look for. Margins are pretty high. Returns on capital — essentially, what a company gets back for the money it puts in — have been consistently decent too.

Recurring revenue also now stands at 94%, giving the company good visibility on trading. If CEO Milan Patel is right and the “dramatic acceleration” in the adoption of digital marketing is “set to endure,” DOTD might prove a great buy at these levels.

Risks to consider

Cautiously bullish though I am, there’s nothing to say things won’t get worse before they get better for either penny stock. The awful conflict in Eastern Europe may continue impacting general market sentiment, dragging the share prices of both companies lower.

dotDigital might be particularly at risk here. A forecast P/E of 23 still looks punchy considering the amount of competition it faces. ITV shares could also sink lower if, for example, advertising revenue dips again. 

However, the time to buy shares is when the expectations are (temporarily) low. I think that might be the case here. With a bit of patience, I reckon these penny stocks can still deliver. 

The post This cheap FTSE 100 share isn’t the only penny stock I’d consider buying appeared first on The Twelfth Magpie.

More reading

• £500 gets 617 shares in one of the top FTSE income stocks to buy!
• Here’s how to invest £3,600 in UK shares to target a 7% dividend yield
• Should I buy ITV shares for my ISA ahead of the World Cup?
• With dividend yields averaging above 7%, are these 2 UK shares worth considering?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV and dotDigital 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.

ITV

Broadcaster ITV (LSE: ITV) is down to publish final results on 3 March. 

Unlike other loosely-labelled ‘value’ stocks, shares in the £4bn cap haven’t really benefited from the rotation away from growth plays in recent weeks. That’s despite Covid-19 restrictions coming to an end and the company making lots of positive noises about a recovery in advertising revenue when it last reported to the market in November. Perhaps traders are concerned that viewing figures will drop as people prioritise getting out more in the months ahead.

The invasion of Ukraine by Russia has shown just how few ‘safe havens’ there are in the stock market. I certainly wouldn’t include ITV in this category given the competition it faces from companies such as Netflix and Amazon. At seven times forecast FY22 earnings, however, I continue to believe that the shares are too lowly rated, especially if dividends are reinstated in the near future. 

The road ahead could still prove bumpy. Even so, I’d be willing to buy at the current level. 

Deliveroo

Also reporting next month is takeaway delivery firm Deliveroo (LSE: ROO). It’s down to release full-year results on 17 March. 

As an investment, I’ll admit to not being the company’s greatest fan. In fact, I stated last December that I’d only consider getting interested in the stock if it fell by another 50%. Since then, it’s tumbled by 45%. 

Now, a lot of this isn’t necessarily down to anything Deliveroo’s done or not done. The aforementioned exodus from highly-valued growth stocks since the beginning of 2022 has been pretty indiscriminate. That said, the company’s lack of profits can’t have helped. With rampant inflation now squeezing discretionary income, I’m wondering if there could be a few nasty surprises to come next month. 

Investors will be looking to see whether the company has managed to hit the 7.5%-7.75% gross profit margin guidance it gave in its last update. If not, I can see the share price being hammered again. Unsurprisingly, I don’t intend to snap up this stock before then.

Ocado

A final FTSE 100 stock I’ll be watching next month is Ocado (LSE: OCDO). An update on Q1 trading is expected on the same day as Deliveroo’s results: 17 March.

As impressive as the company’s automated warehouses are, I’ve long been perplexed by how an unprofitable business like this can occupy a space in the top tier. In fact, recent share price activity suggests more investors are tiring of the company’s ‘jam tomorrow’ strategy. Ocado’s valuation has tumbled 40% in the last year.

Sure, the recent full-year numbers weren’t bad. Revenue for the 12 months to 28 November was 7.2% higher (at £2.5bn) than the previous year. Five high-tech Customer Fulfilment Centres (CFCs) were also opened over the period. However, the big question now is whether trading has been impacted by galloping prices. If it has, Ocado’s downward trajectory could continue in March. 

I’m not going anywhere near the stock until I get some clarity on this. 

The post 3 FTSE 100 stocks I’ll be watching in March appeared first on The Twelfth Magpie.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon, Deliveroo Holdings Plc, ITV, and 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.

Rising debt

BT’s Q1 results showed a £409m rise in debt for the period, to over £18bn, and for me, this is the largest concern. While this was in part due to the impact of the pandemic, the firm also pinned it to a 63% rise in capital expenditure. BT said the rise was mainly due to investment in spectrum (BT’s ability to access suitable radio frequencies) along with spending on 5G infrastructure. As an investor who highlights the importance of a long-term outlook, it would be contradictory of me to not state the benefits this could provide for both the firm over a longer timeframe and for the BT share price.

However, BT has already taken the decision to suspend dividends, and this rise in debt further decreases the chance of investors seeing dividends soon. This squashes any hope of BT shares making me a passive income in the short term, and this is a factor that deters me from buying. While I think dividends will return, this issue puts me off.

Other issues persist with BT. As my fellow Fool Jabran Khan highlighted, it could be argued that the share price is expensive with a high price-to-book ratio of 140. This makes me hesitant to add BT to my portfolio. 

Bullish outlook

But there are positives that I see with BT too. As I stated above, the short-term hit that may be taken due to large amounts of investment has the potential to benefit the share price in the long term. This could mean that this dip in price presents an opportunity for me to add the telecoms giant to my portfolio.

The firm recently announced that Adam Crozier would be joining as an independent non-executive director and chairman. Crozier is known for turning around various business’s fortunes, and he most recently displayed this through his seven-year tenure at ITV. His appointment, along with the dip in price, is a potentially persuasive factor for me to buy.

Why I’m not buying

Yet overall, I retain my bearish outlook on BT. The appointment of Crozier could put the firm back on the right path. And its large amount of investment may also prove to be beneficial in the long run. But if I look at performance over the past five years, a 60% drop in price shows that BT’s long-term track record is unimpressive. The large debt the firm finds itself with is a major factor in my bearish view. Regardless of a dip in the share price, I will not be buying BT.

The post Here’s why I’m not buying the BT share price dip appeared first on The Twelfth Magpie.

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• Down 16% in 5 weeks, are BT shares just too good to miss?
• Down 16% to around £2.03! Here’s where BT’s bargain-basement shares ‘should’ be trading right now
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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Q1 figures

The BT Q1 report seemed to be a mixed bag. Revenues were down 3% to just over £5bn, along with pre-tax profit down 4%. However, EBITDA was up 3% for the same period and negative free cash flow was reduced. While these results seem pretty stagnant, I wouldn’t have expected them to have led to such a large movement in the BT share price.

I think the problem for investors lies in the expansive outlook for the firm, and how this will affect them moving forward. Capex increased 63% to $1.5bn and will mainly be used for 5G infrastructure to achieve BT’s network plan of reaching 90% of the UK landmass by 2025. While this is good long-term news for the firm, it means in the short term that money won’t be given back to investors. BT has had a historically handsome dividend, outperforming the FTSE 100 average. If investors have turned sour because of this, I think the BT share price could slide further in the coming months.

BT share price valuation

The BT share price is currently trading with of a monstrous 137x price-to-book (P/B) ratio. For a company that is struggling to make revenues, this seems steep to me. For context, competitor Vodafone trades with a P/B ratio of 60x. However, BT boasts a slightly more realistic trailing price-to-earnings (P/E) ratio of 15x. With £18bn debt on the balance sheet, both P/E and P/B ratios may appear distorted. In fact, my fellow Fool Alan Oscroft estimates a P/E ratio of 23x is more realistic.

Moving forward

Regardless of the hefty valuation, I like the outlook for BT. The firm recently announced that Adam Crozier would be joining the firm as an independent non-executive director and chairman. Crozier has previous experience steering corporations out of trouble. For example, in his seven years at ITV the share price quadrupled. Crozier has announced his interest in restructuring BT to fit into the new digital age. I think that this level of experience could really help the firm effectively roll out its expansive 5G network. If done right, this should pay off for the BT share price in the future.

Overall, I like the future outlook of the BT share price. I think the company has a good plan and the right people behind it to pull it off. However, at current levels, I don’t think the company fundamentals justify its share price. Therefore I will be keeping this stock on my watchlist.

The post Should I buy the BT share price dip? appeared first on The Twelfth Magpie.

More reading

• Why has the BT share price almost doubled – yet gone nowhere?
• Down 16% in 5 weeks, are BT shares just too good to miss?
• Down 16% to around £2.03! Here’s where BT’s bargain-basement shares ‘should’ be trading right now
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Dylan Hood has no position in any shares mentioned above. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The J Sainsbury (LSE: SBRY) share price has performed brilliantly over the last year, rising 57% by last Friday’s close. It’s up another 11% this morning. Could it be about to explode?

Sainsbury’s share price: ready to rocket?

According to headlines over the weekend, private equity group Apollo is taking a closer look at Sainsbury. While this has been referred to as merely “exploratory” (according to the Sunday Times), it does suggest that we could be about to see an offer submitted for the FTSE 100 member. 

This shouldn’t really come as a surprise given the bidding war that has erupted for fellow listed supermarket Morrisons. Last week, it was revealed that management would be recommending holders accept a 285p per share bid for the company from Clayton, Dubilier & Rice (CD&R). This valued MRW at £7bn, up from the £6.7bn offer received from rival Fortress. 

Sainsbury’s attractions aren’t hard to fathom either. For one, the shares still look reasonably valued and, before this morning, changed hands for a little less than 14 times earnings. It’s also got a big property portfolio and currently has the second-largest share of the UK grocery market.

However, this is not to say that I would be guaranteed a great return on my investment if I bought today.

No guarantees

One rather obvious risk to buying SBRY now is that it won’t actually receive a bid. One can name many firms in the FTSE 100 that have looked like prime takeover candidates for years but that are still to be snapped up. Broadcaster ITV springs to mind. Luxury fashion firm Burberry is another. Both already occupy places in my portfolio. However, I own them because they are, in my view, great businesses. If I were to buy the supermarket’s stock now, I’d need to be confident that Sainsbury is capable of delivering a solid gain without any bid interest.

A further, potential issue here is that Apollo could join forces with Fortress and launch another counter bid for Morrisons. Were this to happen, any talk about acquiring its rival would likely end and the Sainsburys share price rally may run out of steam.

It’s also worth highlighting that SBRY is among the most shorted stocks on the London Stock Exchange, according to shorttracker.co.uk. In other words, a good proportion of traders are betting that the Sainsbury’s share price will fall. 

Of course, this could actually work in investors’ favour if bid rumours grow. In such a scenario, the aforementioned traders would rush to close their positions. The resultant ‘short squeeze’ would likely put a rocket under the Sainsbury’s share price. We may already be seeing some of this today. 

Undeniably positive

Based on recent news, I think there’s certainly a chance the share price could continue rising — and potentially explode — over the next few weeks. The fact that it’s already up 6% in early trading today is certainly evidence that the market is getting excited over the company’s near-term outlook.

Even so, I’m less inclined than others to buy today. Based on my own risk tolerance, (long) investing horizon and the business itself, my preferred choice remains market leader Tesco. And if I were solely looking for income from the supermarket space, this real estate investment trust looks by far the least risky option to me. 

The post Is the Sainsbury’s share price (SBRY) about to explode? appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Burberry and ITV. The Motley Fool UK has recommended Burberry, ITV, Morrisons, and 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.

Holders of UK gaming company Sumo Group (LSE: SUMO) will be enjoying a huge jump in the company’s share price this morning, thanks to a takeover bid. I don’t think this growth stock will be the last to fall at the hands of an overseas suitor either.

Another UK growth stock is snapped up

Today, it was revealed that an agreement had been reached for an all-cash sale of Sumo to Chinese internet giant Tencent. Under the terms of the deal, each existing owner will receive 513p for every share that they own. All told, this values Sumo at £919m.

I think this represents a great return for holders and gives a premium of roughly 43.3% on Sumo’s share price of 358p at last Friday’s close. Before today’s announcement, those who had snapped up a stake in this company just a year ago would have near-doubled their money. Today, that gain became just over 180%! 

Sumo isn’t going cheap either. Before this morning, shares were already trading at 40 times forecast earnings. At today’s bid price, the valuation is now an eye-watering 58 times earnings. That’s a meaty price for Tencent to pay. So, as much as I hate to see a promising UK growth stock fall into the hands of the Chinese giant, I wouldn’t blame holders for giving the deal two thumbs up. 

Then again, we could still see a bidding war erupt. This exact scenario played out with fellow UK gaming stock Codemasters not long ago.

Who will receive a takeover bid next?

While Sumo has been a great UK growth stock, the name of the company was unlikely to be on the radars of many in the market. However, today’s news shouts out two things to me.

First, the gaming sector continues to be white-hot. In fact, I think this space could be one of the investment themes of the next decade when the growing popularity of eSports is taken into account. For this reason, I wouldn’t blame holders of Team 17 and Frontier Developments for licking their lips over potential deals.

Second, news of today’s bid is yet another indication that the UK market remains attractive to overseas/private equity firms. Morrisons is one big name that’s set to be sold. I think FTSE 100 broadcaster ITV, luxury goods firm Burberry and price comparison site Moneysupermarket.com might be next. Then again, I would say that — I own all three! 

The only problem with all this is that no one knows for sure who will receive a bid (other than those making it!). For this reason, I’d never buy a stock solely on the possibility that it might be taken over. I need to be confident that each of the companies I own is robust enough to survive on its own. To do otherwise would be risky. This is especially true if the company was already going through a period of wobbly trading. Takeover offers can be great when they happen. However, they must never be presumed.

What I’d buy now

So, congratulations to holders of Sumo. While there could be another chapter of this tale to go, I’d already be turning my attention to finding other UK growth stocks to fill the eventual void in my portfolio.

Having tumbled in price recently, one in particular really catches my eye.

The post Here’s why the Sumo share price jumped 43% today! appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Burberry, ITV and Moneysupermarket.com. The Motley Fool UK has recommended Burberry, Frontier Developments, ITV, Moneysupermarket.com, and Morrisons. 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.

Losing on penalties isn’t the conclusion to Euro 2020 that any England fan would have wanted. However, this isn’t to say there won’t be any stock market winners from the team’s nail-biting push for glory. One example is broadcaster ITV (LSE: ITV). Today, I’ll explain why.

FTSE 100 winner

Let’s start with the viewing figures. England’s progress through to the very last stage of the competition was good news for the company.

A few days ago, it was announced that almost 24 million long-suffering fans tuned in for the semi-final game against Denmark. Importantly, this was broadcast solely by ITV. That fact will surely have done no harm at all to the FTSE 100 stock’s advertising revenue. The latter has long been a problem for the company, due to online giants like Facebook and Alphabet (Google) stealing its thunder. 

Sure, coverage of last night’s gripping final was shared with the BBC. However, I’m still willing to bet that a sufficient number of the estimated 31 million fans tuned in to ITV. We should get at least some indication of how beneficial the competition has been when it announces its latest set of interim results on 28 July.

Regardless, I’m not about to sell my holding just yet. I think there are other reasons to be optimistic.

Too cheap

Staying with football, let’s not forget that the World Cup is scheduled to take place in November/December 2022. This is a lot sooner than the 24-month wait that would ordinarily be the case.

Given Gareth Southgate and co’s recent progress, this should prove another huge draw for ITV. This is assuming, of course, that the England team stays in the tournament long enough for the FTSE 100 member to show a few games! 

In the meantime, I reckon it’s likely that ITV will manage to keep viewers glued. The ongoing travel complications will have deterred many from even considering a trip abroad this summer. Yes, staycations should prove popular. However, the higher prices charged (coupled with the limited supply) will mean many will be restricted to day trips in the car, evenings at home and Love Island on the box.

By the time normal travel resumes, ITV should have seen a big recovery in advertising revenue from holiday firms and airlines. This should allow it to kick-start dividend payments again. Such a move will send a confident message to the market. Income investors will be attracted back to the fray, pushing the share price up.

And while investors should never buy stock purely on the suggestion that it might be a takeover target, I believe ITV will eventually be gobbled up by a deep-pocketed suitor. While I need to be wary of bias, a valuation of 11 times earnings just looks too tempting to me. 

Solid hold

The ITV share price is up over 80% in the last 12 months. Once again, this highlights the potential gains available to patient investors like me if I’m able to buy when others are selling and hold for the recovery.

There’s no guarantee that there won’t be bumps in the road ahead. A resurgence of Covid-19 could threaten production schedules. A bout of great weather could also keep viewers away from the telly.

Even so, I’m keeping a firm grip on my shares for now and may potentially increase my stake. 

The post Euro 2020: this FTSE 100 stock could still prove a winner appeared first on The Twelfth Magpie.

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• £500 gets 617 shares in one of the top FTSE income stocks to buy!
• Here’s how to invest £3,600 in UK shares to target a 7% dividend yield
• Should I buy ITV shares for my ISA ahead of the World Cup?
• With dividend yields averaging above 7%, are these 2 UK shares worth considering?

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

The Morrisons (LSE: MRW) share price has jumped on news of an unsolicited (and since rejected) £5.5bn takeover bid from US private equity firm Clayton, Dubilier & Rice. Time will tell whether we see a second bid for the UK supermarket chain. Perhaps a third party may enter the fray.

Regardless, I think we can safely say the UK stock market still looks an attractive hunting ground for opportunistic suitors. Here are two FTSE 100 companies that I think could receive interest in the near future.

FTSE 100 takeover target?

I’m naturally biased when it comes to ITV (LSE: ITV) because I own its stock. It’s also not the most creative of suggestions when it comes to potential takeover scenarios. The newly-promoted FTSE 100 firm has long been touted as a candidate following the miserable performance of its share price since 2015. If there’s a suitor running the rule over ITV however, I think time might be running out to get a great deal. 

Based on its most recent update, I expect advertising revenues at ITV to continue rising as the coronavirus is sent packing. This should then allow the company to kick-start its dividend policy. Such a move would surely attract income investors back, further supporting the share price.

Of course, this could take longer than expected and there’s an opportunity cost of not being invested elsewhere. However, the firm will benefit from showing the delayed Euro 2020 football tournament as well as the return of popular programmes such as Love Island in the meantime. 

For now, ITV trades on just 11 times forecast earnings. As normality returns, I’m starting to think it’s a question of ‘when’ not ‘if’ the company will be acquired.

In suitors’ sights?

Like ITV, luxury goods company and FTSE 100 peer Burberry (LSE: BRBY) is no stranger to takeover talk. Back in 2016, news leaked that the company had rejected numerous bids from US accessories brand Coach. However, I wonder if the £9bn-cap could become a target again after being thrown off course by the pandemic.

There’s certainly been no shortage of consolidation in the sector. For example, LVMH finally completed its acquisition of high-end jeweller Tiffany & Co at the beginning of 2021. It wouldn’t surprise me if the French luxury goods group began sniffing around Burberry. I’m not alone in thinking that more takeover activity in this space looks likely post-Covid-19.

Trading at 26 times forecast earnings, Burberry isn’t as cheap as ITV. This could imply that the shares carry more risk because recovery is priced in. Then again, this valuation certainly hasn’t stopped top UK fund manager Nick Train from recently upping his stake in the former. 

Buy to hold

This is all speculation on my part. While it would be lovely to experience similar leaps to that seen in the Morrisons share price, I’d never buy into a company purely in hope of a takeover. No, I’m only interested in making investments that I’d be content to sit on for years. With their high returns on capital, strong brands, and sound finances, ITV and Burberry fit this bill nicely. 

It remains to be seen whether a deal for the aforementioned supermarket is struck. However, some holders may bank some profit anyway. The Morrisons share price performance wasn’t exactly stellar before yesterday. Momentum could always dissipate if that second bid doesn’t materialise soon.

The post After Morrisons, will these FTSE 100 stocks be next to receive bids? appeared first on The Twelfth Magpie.

More reading

• £500 gets 617 shares in one of the top FTSE income stocks to buy!
• Here’s how to invest £3,600 in UK shares to target a 7% dividend yield
• This FTSE 100 share pays no dividends. Could that change?
• Should I buy ITV shares for my ISA ahead of the World Cup?
• With dividend yields averaging above 7%, are these 2 UK shares worth considering?

Paul Summers owns shares in Burberry and ITV. The Motley Fool UK has recommended Burberry, ITV, and Morrisons. 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.