Gold prices may have come off the boil recently but there’s enough macroeconomic and geopolitical intrigue to keep investors interested in the safe-haven asset. It’s why latest World Gold Council data showed holdings in global gold-backed exchange traded funds (ETFs) rising by three tonnes in March to 2,489 tonnes as inflows continued in North America and Europe.

It’s well known how tension surrounding Brexit keeps driving retail demand for the yellow metal, and with many in the European Union running out of patience with the UK and increasingly tipping a ‘no deal’ EU withdrawal, there’s plenty of scope to expect gold prices to spike again soon.

Other troubles for the global economy have emerged over the past month that could escalate and drive gold demand still further, like the currency crisis in Turkey, German factory orders hitting multi-year lows and slashed economic forecasts in Italy.

A bright future

Highland Gold was smacked by lower ore grades and recoveries last year, problems which caused total annual production to slip fractionally to 269,500 ounces.

But the company is confident that it can roar back from 2019 onwards. In recent weeks it upgraded its production forecasts for the current year to between 290,000 and 300,000 ounces because of the acquisition of the Valunisty complex in late 2018. And things look good further out too — on top of recent studies that extended the life of its other prestige mine, Mnogovershinnoye, to 2029, it’s set to embark on exploration work at around a dozen of its brightest assets across Russia in 2019 alone.

Drive on!

Given the quality of Highland Gold’s assets in Russia, its busy drive to bring these online, and therefore the company’s exceptional long-term outlook, I consider the firm to be a steal at its current valuation, a forward P/E ratio of 12.7 times.

This is in spite of the unpredictability that comes with the mining industry as we witnessed at the firm last year. In  fact, an additional sweetener in the form of its prospective dividend yield of 3.8% goes some way to boosting its appeal too.

There are plenty of bigger yielders I’d happily ignore to buy Highland Gold instead, one of which is Marshall Motor Holdings (LSE: MMH), a stock that boasts a chubbier corresponding yield of 5.1% (and a cheaper earnings multiple of 7.3 times). In fact, I’d be happy to sell out of the car retailer in order to buy the precious metals digger given that news flow surrounding the auto market continues to go from bad to worse.

Latest figures from the Society of Motor Manufacturers and Traders, in fact, showed new car registrations in March at their lowest since 2013, and things are unlikely to get any better soon as Brexit-related fears crush car demand, as does ongoing uncertainty surrounding diesel.

Marshall Motors saw new car sales tip 8.2% lower last year on the back of those diesel troubles and stock shortages. I find it hard to envisage when things will start to pick up either, and for this reason I’m steering well clear of the retail giant.

The post Why I’d sell this 5%-yielding dividend stock to buy this 3%+ yielder appeared first on The Twelfth Magpie.

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Royston Wild 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.

Looking ahead, the strategy that has been put in place by the business could lead to a rising share price that allows it to outperform the FTSE 100. However, it’s not the only UK-focused stock which could be worth buying at the present time. Reporting on Tuesday was a company that may offer a wide margin of safety and upside potential.

Robust performance

The company in question is automotive retail group Marshall Motor Holdings (LSE: MMH). It released a robust rest of interim results on Tuesday which showed that it is performing well despite industry headwinds. Revenue in the first half of the year was down by 0.4% to £1,162.9m, while reported profit before tax increased by 6.5% to £17.2m. Like-for-like (LFL) new unit sales to retail customers fell by 5.9%, although LFL used revenues were up by 5.2%.

In response to a tough retail environment, the company was able to reduce net operating expenses versus the comparable period. This was driven by strong management actions on discretionary costs and site closures. Further cost reductions could help the company to offset what may prove to be a challenging period in the second half of the year.

With Marshall Motor Holdings trading on a price-to-earnings (P/E) ratio of around 7.5, it appears as though investors are expecting further difficulties over the medium term. But with its bottom line due to return to growth of 2% next year, it could be a stronger performer than the market is anticipating. As such, now could be the right time to buy it.

Changing strategy

The prospects for Morrisons may also be better than investors are expecting. Certainly, the supermarket sector continues to be crowded and highly competitive. No-frills operators such as Lidl and Aldi have caused mid-tier operators’ sales to come under pressure. This trend, though, may now have eased somewhat, with Morrisons delivering improving financial performance in recent quarters.

The strategy change employed by current management could lead to further growth over the medium term. Accessing convenience store growth through the resurrection of its Safeway brand and a deal to supply a range of stores could lead to high growth with minimal outlay. And with an increasing online presence, the company’s prospects appear to be improving at the same time as its net debt is falling.

With Morrisons due to post a rise in earnings of 9% this year and 8% next year, its prospects could be stronger than many of its FTSE 100 peers. And with Brexit causing confidence towards UK-focused shares to decline, now could be the right time to buy the retail stock.

The post Here’s why the Morrisons share price could surge higher than the FTSE 100 appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Morrisons. 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.

Now though, the company could offer investment appeal. Improving trading conditions and a refreshed strategy could make it worth buying alongside another cheap stock that reported encouraging results on Tuesday.

Recovery potential

While M&S has sought to make various changes to its strategy in recent years, its current plan appears to be sound. It involves a refocus on the fundamental aspects of the business, with the company seeking to put in place an improved website and a more efficient supply chain. Alongside this, it is rationalising its asset base, while also seeking to become more competitive in what remains a fast-moving retail space.

The company could be aided by falling inflation, which is now lower than wage growth, while consumer disposable incomes are due to remain positive in real terms over the next few years. As such, the pressure on the UK retail sector that has been felt in the last few years could ease to some degree in future.

Investment potential

With M&S having a price-to-earnings (P/E) ratio of around 12 and a dividend yield in excess of 6%, it seems to offer a wide margin of safety. Since dividends are covered 1.4 times by profit, they appear to be sustainable. Certainly, profit growth may be modest in the near term, with trading conditions still being tough. But with the prospect of a revised strategy and an improving outlook for consumers, the stock appears to have the capacity to deliver improved performance.

Encouraging outlook

Also offering scope for strong capital growth over the medium term is automotive retail group Marshall Motor Holdings (LSE: MMH). The company reported a solid performance in the first half of the year on Tuesday, with its underlying profit before tax expected to be marginally ahead of the record performance delivered in the same period of the prior year. This performance has been driven by tight cost control, the positive impact of the closure of six lossmaking sites and robust trading disciplines.

Looking ahead, there is considerable uncertainty surrounding the automotive industry. Economic challenges may lie ahead, while there remains confusion surrounding diesel products and possible new vehicle supply constraints. However, with a P/E ratio of 8 and a dividend yield of 4% that is covered 3.6 times by profit, the stock seems to have investment potential.

Certainly, Marshall Motor Holdings may endure a volatile period, with the resignation of its CFO adding to its uncertain outlook. But for long-term investors, it may deliver high returns in both a capital growth and income capacity.

The post Why the Marks and Spencer share price could be about to soar appeared first on The Twelfth Magpie.

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

Today, I’m looking at two dividend stocks I think could make good choices for long-term dividend growth.

Out of favour

Shares of car dealership group Cambria Automobiles (LSE: CAMB) have lost 25% of their value over the last two years as new car sales have slowed, placing profits under pressure.

Today’s half-year figures from Cambria show the impact of this decline. Revenue fell by 4.5% to £295.1m during the six months to 28 February, while underlying pre-tax profit was 14.3% lower, at £4.8m.

Protecting profits

The group is still very profitable and delivered a return on equity of 17.4% during the first half. The board is taking steps to protect the business from a downturn by focusing more heavily on premium brands, such as Lamborghini and McLaren.

This is helping to improve the profitability of each car sold, as more expensive cars generally carry higher profit margins. A stronger focus on used car sales and aftersales is also helping to protect profits.

Although used car sales fell by 0.8% on a like-for-like basis during the half year, profit per car rose by 7.3%. In aftersales, like-for-like revenue rose by 6.1%, generating a gross profit of £13.7m. That’s more than new car sales (£9.7m) or used sales (£11.8m).

A contrarian choice for income?

It’s difficult to know when it’s the right time to invest in a falling market. It may be too soon to buy car dealers, but I think that Cambria could be an attractive choice for long-term investors.

Although the forecast dividend yield of 1.6% is low, it should be covered seven times by earnings. This reduces the chance of a cut and leaves plenty of room for future growth when conditions are more favourable.

Profits are expected to fall by 18% this year, before starting to recover in 2018/19. With the stock on a forecast P/E of 8, now could be a good time to start building a position.

A high yield alternative

If you’re attracted to car dealers’ low valuations but need a higher dividend yield, one alternative is Marshall Motor Holdings (LSE: MMH).

This £130m company has so far managed to buck the trend of falling profits. Underlying pre-tax profit at the group rose by 14.4% to £29.1m in 2017. The group also used £42.5m from the sale of its leasing business to help reduce net debt, from £119m to just £2.2m.

This confident performance supported a 16.4% increase in the dividend, which rose to 6.4p per share last year. At the last-seen share price of 169p, that’s equivalent to a dividend yield of 3.9%. That’s quite high for a small cap.

A second attraction is the group’s large property portfolio. According to Marshall’s 2017 results, it has £116.3m of freehold and long leasehold property. That’s equivalent to around 150p per share, which covers 89% of the current share price.

Like Cambria, Marshall makes more profit from aftersales than new car sales. One appeal of this is that even if new car sales slow, aftersales profits from cars under warranty should remain strong for several years.

Although the automotive sector isn’t without risk at the moment, these shares do seem cheap to me on just 7.1 times forecast earnings. I believe this could be a buying opportunity.

The post Income investors: 2 dividend growth stocks I’d buy and hold today appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK owns shares of Cambria Automobiles. 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.

Motoring ahead

Car dealership group Marshall Motor Holdings (LSE: MMH) rose by 7% on Tuesday morning, after the company’s half-year results came in ahead of analysts’ forecasts.

Although the board emphasised its “cautious” outlook for the car market, the group’s underlying pre-tax profit rose by 32.9% to £18.6m during the period. Shareholders were rewarded with a 19.4% increase in the interim dividend, which rose to 2.15p.

These figures were flattered by last year’s acquisition of rival Ridgeway. But even excluding this, like-for-like revenue rose by 6.7%.

Strong asset backing

Car dealership groups often rely on debt financing to purchase vehicles. Marshall is no exception, but the group’s adjusted net debt of £35.1m seems comfortable when set against trailing 12-month net profit of £23.2m.

The company also owns a portfolio of freehold and long leasehold property worth £112.5m, providing solid asset backing for this debt.

What could go wrong?

New cars carry very thin profit margins. Dealers make most of their profit from used cars and after-sales. One risk for investors is that the value of used cars will collapse. This could crush profits from leasing and used car sales.

In Tuesday’s results, management reported “margin pressure” on used car sales and “lower levels of disposal unit profitability” in its leasing business. To me, this suggests that used car values are falling, albeit slowly.

Too cheap to ignore?

This sector of the market is modestly valued. But even so, Marshall shares stand out for being unusually cheap. At the last-seen share price of 152p, the company’s stock trades on a 2017 forecast P/E of about 5.5, with a prospective yield of 4.1%.

In my view, this low valuation discounts quite a lot of risk. I believe the shares could be worth a closer look.

A mountain of cash

Global mining group Anglo American (LSE: AAL) has made a stunning comeback over the last year. But the firm’s shares still look very affordable to me.

Cash generation has rocketed and net debt has fallen by almost half to $6.2bn over the last year. As a result, Anglo has said it will resume dividend payments. A full-year payout of $0.76 per share is expected for 2017, giving a prospective yield of 4.7%.

Looking back over the last 12 months, Anglo stock now trades on a trailing P/E of 7 and a trailing price/free cash flow ratio of 5.2. Both figures seem very cheap to me.

However, analysts expect profits at all of the big miners to be lower in 2018 than in 2017. For Anglo, the forecast is for a 24% fall in earnings to $1.60 per share. That sounds quite drastic, but it still leaves the stock on a 2018 forecast P/E of 10, with a potential yield of 3.9%. These forecasts are also likely to change. Broker profit forecasts for 2018 rose by 7% last month. They could easily rise (or fall) again.

My view is that Anglo American’s modest valuation and strong cash generation could make the group a bid target. Even without this, the shares look good value to me.

The post How Anglo American plc could help you retire with a million appeared first on The Twelfth Magpie.

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Roland Head owns shares of Anglo American. 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.

While it may mean disappointing performance in the short run, it could also present an opportunity for long-term investors to buy stocks when they are trading on low valuations. In many cases their outlooks are relatively positive, and earnings growth may be ahead. Here are two companies which could fall into that category.

Strong performance

Reporting on Tuesday was automotive retail and leasing company Marshall Motor Holdings (LSE: MMH). The company announced strong performance, with profit materially higher than in the prior year. This has been driven by continued like-for-like (LFL) sales growth, as well as the contribution of Ridgeway Garages, which was acquired in May 2016.

In the company’s Retail segment, many customers pulled forward new car purchases in order to avoid changes to Vehicle Excise Duty that came into force in April. This helped to boost the segment’s performance, although the UK new car market declined. This was expected, although new registrations to fleet customers helped to offset a fall in registrations to retail customers. Meanwhile, in the company’s Leasing segment, profitability remained robust and this provides further growth opportunities for the business.

Looking ahead, Marshalls Motor Group is expected to record a fall in earnings of 1% this year, followed by growth of 2% next year. Clearly, this is a rather lacklustre outlook. However, with the company’s shares trading on a price-to-earnings (P/E) ratio of just 5.5, it offers an exceptionally wide margin of safety. This suggests that even with the risks it faces from a declining UK car market, now could be the right time to buy the company for the long term.

Low valuation

Also offering a wide margin of safety at the present time is fellow automotive retailer Pendragon (LSE: PDG). The company faces a difficult outlook due in part to the challenging environment within the UK economy. This is set to cause the company’s bottom line to flat line in the current year after four consecutive years of growth. As such, in the near term at least, there seems to be a lack of a catalyst to push its share price higher.

Of course, the automotive retail market is highly cyclical. Therefore, the downtrend being experienced right now is unlikely to last indefinitely. In fact it could present an opportunity to buy while companies such as Pendragon trade on low valuations. This could lead to an upward re-rating in future as sales and profitability start to pick up once again.

Looking ahead to next year, Pendragon is forecast to report a rise in earnings of 7%. This puts it on a price-to-earnings growth (PEG) ratio of just one. This suggests that it offers a sufficiently wide margin of safety to merit investment.

The post 2 hot value shares that could help you retire early appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Pendragon. 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 deal will be funded entirely from Marshall’s existing resources and the company expects it to be significantly earnings enhancing from the 2016 financial year onwards. And with Marshall now set to become the seventh largest motor dealing company in the UK, it seems to be well-positioned to deliver further growth in the long run. This should be aided by a UK economy likely to benefit from a low interest rate in the coming years, with consumer confidence likely to be relatively high. As such, Marshall could be a sound buy at the present time.

More rises to come?

Also rising today are shares in Bonmarche (LSE: BON), with the  value-focused clothing and accessories retailer recording a rise of almost 10% despite there being no significant news flow released by the company. Clearly, 2016 has been a challenging year thus far for its investors and Bonmarche’s shares have fallen by around 27% since the turn of the year even after today’s rise.

However, with Bonmarche forecast to increase its earnings by 19% in the current financial year and then by a further 12% next year, investor sentiment could continue to improve as the market begins to price-in the improved financial performance that’s anticipated. And with Bonmarche trading on a price-to-earnings growth (PEG) ratio of only 0.5, it seems to offer a wide margin of safety that indicates capital gains are very much on the cards.

Certainly, the UK retail sector is changing at the present as consumers benefit from having wages rise at a faster pace than inflation. However, despite this uncertainty, Bonmarche seems to be well-placed to continue today’s rise over the medium term.

Meanwhile, shares in Lonmin (LSE: LMI) have jumped higher by over 5% today and this takes the mining company’s rise to 130% since the turn of the year. A key reason for this is improved sentiment towards the wider mining sector, but with Lonmin having raised funds last year it also seems to be well-placed to deliver on its sound strategy of reducing costs and making the business more efficient.

Evidence of the progress being made by Lonmin can be seen in its forecasts. It’s expected to return to profitability next year and this has the potential to significantly improve investor sentiment towards the stock. Clearly, Lonmin’s future share price performance is highly dependent on the price of commodities, but for less risk-averse investors it could prove to be a sound buy.

The post Should you buy Marshall Motor Holdings plc, Bonmarche Holdings plc and Lonmin plc after today’s major share price moves? appeared first on The Twelfth Magpie.

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• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Marshalls. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.