So, amid the global economic environment, should I be looking to buy Cineworld shares now? Let’s take a look.

Cineworld bull case

In uncertain times, consumers tend to reduce their spending. However, the current economic condition may actually benefit Cineworld. This is because, in times like these, consumers may avoid pricey nights out, with a cheaper alternative being a trip to the cinema. And as my colleague Rupert Hargreaves highlighted, this is a trend that has proven to play out in the past.

On top of this, the firm has just begun a large marketing push in an attempt to increase footfall. As part of this, Cineworld has reduced the price of its tickets to as little as £3 in some cases. Combine this with the large success seen from box office releases such as Spider-Man: No Way Home, and it’s clear to see the potential Cineworld has to thrive this year.

Cineworld share price risks

With that said, there are a few risks to consider with Cineworld.

The most pressing is the variety of options consumers now have today. Subscription services such as Netflix provide an even cheaper option than going to the cinema, and for a relatively low-price consumers can use it repeatedly. The increasing popularity of streaming services has largely attributed to the decline of cinemas in recent times. For Cineworld, they pose a serious threat.

Another issue with Cineworld is the large debt the firm has. As of September, the business had over an $8bn debt pile. And with its full-year results due this week (17 March), it is expected this debt will still be lingering on the firm’s balance sheet. This is an issue for Cineworld for a few reasons. Firstly, it will potentially stunt growth in the future. And, with rising interest rates, this debt will become more difficult to pay off.

To make issues worse, Cineworld lost a court dispute late last year regarding its abandoned takeover of Canadian rival Cineplex. After launching a failed counterclaim, the firm has been ordered to pay over $900m. This will only further its debt issues.

What I’m doing

So, while I think the Cineworld share price has potential, I won’t be buying any shares just yet. The headwinds the firm face are too difficult to ignore. And with talks of a new subvariant of Omicron surfacing, any future Covid restrictions would have a major impact on Cineworld. Its large debt also makes the business fragile. Instead, I intend to wait until Thursday to get a better measure of the firm’s current position.

The post The Cineworld share price is rising! Here’s what I’m doing now appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shared 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.

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.

What’s gone wrong?

Before going on, it’s worth recapping why investor sentiment has reversed so dramatically. Much of this year’s sell-off is the result of concerns over Netflix’s slowing subscriber growth. A few days ago, the company revealed it was targeting just 2.5 million new accounts in the current quarter. That’s 4.4 million less than analysts were expecting.

But is this just a blip? I can think of a few reasons why now might be a great time to load up.

Reasons to buy Netflix stock

First, this is a business that has shown it can produce quality content. Series like Squid Game, The Crown and Bridgerton have been warmly received by critics and viewers. The company’s rapidly growing film catalogue is also doing well. Last week’s share price capitulation was as if investors believed the US giant was suddenly incapable of maintaining this form. 

I also think a Netflix subscription has become so ingrained in many people’s lives (and that TV consumption has changed so much in recent years) that a lot of us wouldn’t even consider cancelling, even in inflationary times. The value for money compared to even a single cinema trip is truly astounding.

It’s also worth noting that Netflix is not alone in seeing a drop in subscriber growth. Back in November 2021, shares in Disney tumbled as it also reported that fewer people than before were signing up to its own streaming service. Isn’t all this inevitable as the pandemic enters its end-game and lockdowns become distant memories?

Worse to come?

For balance, let’s look at some arguments against buying now. It’s important to not get anchored to a price. Netflix stock doesn’t have a right to get back to its $700 record high, as much as holders might want it to. It could easily fall further as investors rotate into value stocks held back by Covid-19. And they might be right to do so. These may offer potentially better returns, at least in the short term. 

Another argument is one that can apply to any company in the entertainment business, namely the popularity of whatever it produces is never guaranteed. Simply put, Netflix can throw money at a project and have no idea whether it will make a decent return on its investment. I’d need to be comfortable with this if I invested here.

Last, there’s the competition. While Netflix is the clear market leader, Amazon, Apple and the aforementioned Disney aren’t about to throw in the towel. As such, I certainly don’t think there’s anything wrong with taking a risk-off approach and buying a tech-focused fund that holds some or all four stocks.

Expectations lowered

On balance however, I’m very tempted to snap up some Netflix stock for my own portfolio. Now that previously-lofty expectations have been thoroughly reset, the company may even now surprise on the upside in its next update.

Even if this doesn’t happen, the long-term outlook — which now includes an expansion into video gaming — still looks stellar to me. And for someone with a totally different time horizon to your average fund manager, that counts for a lot.

The post Is it finally time to buy Netflix stock? appeared first on The Twelfth Magpie.

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

Today, I’ll highlight three reasons why next month might be a good one for the stock and its long-suffering owners.

The Cineworld share price: ready to rally?

First, you have the release of the long-awaited James Bond film ‘No Time to Die’. Postponed several times due to the Covid-19 crisis, the new movie will be hitting the silver screen on 30 September.

Importantly, the latest Bond installment isn’t arriving on streaming services at the same time. This is in contrast to the tactic recently used by Disney for films such as Cruella and Black Widow. Such is the popularity of the franchise, I suspect the restriction could see previously nervous fans flock to screenings.

Assuming these experiences are positive, this could mark an inflection point in Cineworld’s fortunes and trading can get back to normal. 

There are other, perhaps more speculative reasons for thinking the Cineworld share price might climb. Any upward momentum could be boosted by a ‘short squeeze’, for example. As things stand, the company remains the most shorted stock on the market.

Third, I also wonder if the end of school holidays (and the advent of colder weather) is another potential catalyst for improved business, since families will be looking for fuss-free things to do at the weekend again. Sensing this, the market could send the Cineworld shares higher in advance.

So, am I a buyer?

In short, no. It’s possible the above may not be enough to truly arrest the downward trajectory of the Cineworld share price. Moreover, I think the company faces a number of challenges beyond September.

#1) No control. Cineworld’s ability to revive itself ultimately depends on something it can’t control, namely the popularity of the movies it shows. I believe the Bond movie will be a huge money-maker, whatever the reviews. But how many other films look like nailed-on blockbusters? A few, but not many, I submit.

#2) Foggy outlook. I’m just not optimistic about the future of cinemas in general. Yes, they’re a relatively inexpensive treat and I don’t think they’ll disappear anytime soon, despite the popularity of Disney+, Netflix and Amazon Prime. However, nor do I expect the sort of growth over the next few years that other listed companies may be able to achieve. With limited capital at my disposal, I’m looking for stocks that will shoot the lights out, not amble along.

#3) Disturbing debt burden. Even if next month does mark a turning point in the Cineworld share price, all that debt is hard to ignore. The potential for the company to list in the US might help, but it does seem a rather desperate move (and might not actually happen). Why would I take on this risk when there are many financially sound UK stocks for me to buy instead?

#4) Traders selling up. Having commanded a much higher price earlier in 2021, I think it’s fair to say that at least some traders are still underwater. As such, any sufficiently strong rise in the Cineworld share price might be sold into. This, in turn, could impede the recovery. Investors will probably need to be patient.

The post 3 reasons I think the Cineworld share price could rally in September 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 owns shares of and has recommended Amazon, Netflix, and Walt Disney. The Motley Fool UK has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Why is the Netflix share price falling?

It all seems to be down to the growth in subscribers so far in 2021. Although revenue of $7.16bn beat expectations, the market was expecting around 6.25 million new accounts to have been opened between January and March. The figure released last night fell far short of that at 3.98 million. 

To make matters worse, Netflix expects only 1 million new account openings for the next quarter of its financial year. Again, this does not compare well to the near-5 million predicted by analysts. 

In its defence, Netflix said that the recent slowdown was likely due to the lack of new shows on the service. This seems fair. The pandemic succeeded in halting production for many companies and movie studios in 2020 (including FTSE 250 broadcaster ITV).

Will the rout continue?

It’s hard to say if this will continue. There are certainly reasons for thinking this fall in the Netflix share price could prove temporary. The company remains the clear market leader. Almost 208 million people already hold accounts. Moreover, the release of new seasons of popular shows later this year could lead to a better set of numbers. 

One must also put things in context. Multiple coronavirus-related lockdowns have been a boon to the company. Almost 16 million new subscribers signed up for the service in Q1 2020, a large proportion of them in Asia. As a consequence, the Netflix share price is up 65% since the crash. Seen in this light, some slowing of momentum (and profit-taking) was inevitable.

Then again, there are reasons to be bearish. The successful rollout of vaccines and gradual return to normality means people will be less inclined to stay in over the rest of 2021. Even if they do, Netflix continues to face strong competition from the likes of Disney+ and Amazon Prime. There’s also something to be said for being wary of stock market valuations right now, particularly in the US. 

Foolish options

Whether the fall in the Netflix share price represents an opportunity or not depends on an individual’s time horizon and risk tolerance, in my view. In the near term, there’s no way of knowing whether things will get worse. Over a longer time frame, the odds of making money should improve.

That said, I won’t be buying the shares today. Instead, I’d be more likely to buy a fund that owns a slice of Netflix in addition to other stocks. The Polar Capital Technology Trust or Baillie Gifford American are examples. There’s no guarantee that the value of these funds won’t fall as well. However, the fact that my cash is invested in multiple companies rather than just one means I should be able to sleep more soundly.

Netflix has been one of the best investments in recent times. I don’t doubt it still has the potential to make money for those buying now. With a market cap close to $250bn, however, expectations of future returns must be tempered. The time for me to throw everything at the stock was 10 years ago.  

The post The Netflix share price is falling. Should I buy? 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 owns shares of ITV. The Motley Fool UK owns shares of and has recommended Amazon, Netflix, and Walt Disney. The Motley Fool UK has recommended ITV 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.

Unfortunately, this momentum has slowed in 2021 so far. Before speculating whether this a golden opportunity for me to climb on board, let’s look at the fund in a bit more detail. 

What is Baillie Gifford American?

Baillie Gifford American’s objective is pretty simple. Outperform the S&P 500 index by at least 1.5% per annum over rolling five-year periods. In their effort to achieve this, its fund managers make a point of paying more attention to company fundamentals than trying to predict where the US economy may go next. As such, they describe themselves as “bottom-up, growth investors with a long-term horizon.“

This strategy helps explains why the fund has an ‘active share’ of 89%. This is the extent to which its holdings differ from the benchmark index, expressed as a percentage. For me, this is a vital thing for any prospective investor to check before buying. After all, why pay a professional to beat the index if they’re not even attempting to do so! 

Another big attraction to the fund is the relatively low management fee of 0.51%. This compares favourably to other extremely popular funds, including Terry Smith’s Fundsmith Equity (0.95%). The lower the cost of holding a fund, the more of its gains I get to keep.  

Why has it fallen?

A quick look at which stocks Baillie Gifford American holds goes some way to explaining its outperformance last year and why this hasn’t continued into 2021. E-commerce giant Amazon and electric car maker Tesla feature, as does streaming major Netflix and conferencing app Zoom. Thanks, in part, to their frothy valuations, many of these stocks have now fallen out of favour.

This has been compounded by the fact that the Baille Gifford American team (Dave Bujnowski, Tom Slater, Gary Robinson and Kirsty Gibson) believe in running a concentrated portfolio. In other words, they focus on only their best ideas. This is why the fund will only ever own between 30 and 50 stocks at any one time. While this can turbocharge returns in the good times, it can also work the other way when their popularity dims.

So, time to buy?

As a way of getting exposure to some of the best companies the US has to offer, I’d be comfortable buying the Baillie Gifford American fund today. However, there’s are a few caveats.

First, there’s no guarantee we’ve seen an end to the tech sell-off. So long as the coronavirus vaccine rollout proceeds as planned and restrictions are lifted, the switch to ‘value stocks’ (those hammered by the pandemic) may continue. In such a scenario, the biggest beneficiaries won’t be those held by Baillie Gifford American. So, perhaps buying in installments would be prudent.

I’d also ensure I was sufficiently diversified elsewhere. This can be achieved in a variety of ways. One option would be to simply buy a selection of passive exchange-traded funds that track other stock markets around the world.

An alternative is to invest in a group of quality single company stocks with greater dependence on cheaper markets, such as the UK and Europe. A compromise would be to combine both approaches. 

The post Baillie Gifford American: time to buy? 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 owns shares in Fundsmith Equity. The Motley Fool UK owns shares of and has recommended Amazon, Netflix, Tesla, and Zoom Video Communications 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.

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.

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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 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.

Well, let’s start by looking at a couple of reasons to be optimistic that people will flood back to the silver screen. 

Cineworld shares: reasons to be cheerful

First, there’s the novelty effect. Convenient as streaming services such as Netflix and Amazon Prime are, holders of Cineworld shares will surely argue that there’s nothing quite like watching the latest blockbuster in all its visual and auditory glory. Having endured two lockdowns, a trip to the cinema will almost feel like a new experience, in the same way as taking a holiday abroad might.

Second, we know there’s a truckload of blockbusters on the way. New Bond and Batman films, the Top Gun sequel, Wonder Woman — the list goes on and on. And, make no mistake, film studios will be chomping at the bit to ‘green light’ productions once it’s safe to do so. 

Based on the above, demand for cinema tickets looks set to increase. However, we need to put things in perspective.

Awful investment

For one, we’re not out of the woods yet. Distributing the vaccine will take time and patience is not something many in the market are blessed with. It is, therefore, quite possible that Cineworld shares will resume their downward descent as people get bored, bank profits and seek out their next target. 

The number of traders still betting against Cineworld also needs highlighting. Even after this week’s stonking price action, the company remains the most shorted stock on the London Stock Exchange. One reason for this enduring pessimism is the shocking state of its finances. 

To be clear, Cineworld’s problems extend far beyond simply selling popcorn and getting ‘bums back on seats’. With a huge debt burden, it seems likely it will seek more cash from its owners at some point. To paraphrase top fund manager Terry Smith, I prefer companies that pay me rather than the other way around.

And that jump in the share price? Go back to the beginning of 2020 and Cineworld shares were trading at 220p a pop. Regardless of this week’s move, it’s still been a staggeringly bad investment for loyal holders. 

Steering clear

Now, I don’t doubt it’s still possible to make money from Cineworld shares over the next few months. In the absence of a crystal ball however, this will surely depend far more on luck than anything else. Right now, Cineworld’s a gamble, a ‘punt’. This isn’t the Foolish way.

Nope, we see investing as a long-term pursuit. We’re focused on buying great companies at decent prices and holding them ‘forever’. Even when they get in a sticky spot — and all businesses will — we’re confident they’ve the products or services, growth opportunities and financial firepower to recover.

As someone still struggling to put Cineworld in this camp, I’d encourage prospective buyers to look beyond the share price. Instead, look at the underlying business. Is this something that’ll thrive for years to come? I still need convincing.

The post Cineworld shares have soared. Have I missed the investing opportunity of a lifetime? appeared first on The Twelfth Magpie.

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• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

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 and Netflix and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 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.

Contrarian UK stock

Pre-pandemic, shares in Premier Inn owner Whitbread (LSE: WTB) struck me as being rather too expensive. While it remains the most popular hotel brand in the UK, I still think last year’s sale of Costa Coffee to Coca-Cola was a mistake. It did, after all, offer the company some earnings diversification in better times. 

Now that the share price has been hammered back to levels not seen for roughly seven years, however, the probability of making money from this top-tier UK stock has surely increased markedly.

My chief reason for thinking this is that Whitbread has acted fast to tap investors for new funds. A £1bn, deeply-discounted rights issue back in May provided the company with cash to cover outflows while its hotels remained shut.

More importantly, this money should also allow Whitbread the financial firepower to increase its market share by taking advantage of “enhanced structural opportunities” in both the UK and Germany. In other words, Whitbread is ‘buying the dip’. It’s intending to purchase assets on the cheap to reap the rewards later down the line.

Of course, the recovery for hoteliers is unlikely to be swift in the absence of a vaccine. Then again, I don’t think this should trouble Fools too much. The philosophy we endorse is the same as that of many brilliant investors such as Warren Buffett and the UK’s own Terry Smith: buy great shares at a reasonable price and sit back for value to be recognised. 

Whitbread certainly isn’t the best business I’ve ever come across. Then again, the value on offer suggests those investors looking for FTSE 100 bargains could do worse than run their slide rules over it.

Priced-in?

I fortuitously sold my holding in broadcaster ITV (LSE: ITV) just before March’s market crash. I’ve now begun rebuilding my position.

Like Whitbread, the £2.5bn cap has its problems — the ongoing reduction in advertising revenue being one example. Although some of this is temporary and coronavirus-related, many businesses are now opting to use sites such as Facebook to promote their products and services.

Another issue has been ITV’s ongoing struggle for viewers with US streaming services such as Netflix, Amazon Prime and Disney+. There’s no sign that this will get any easier going forward.

On a more optimistic note, ITV has form among UK stocks when it comes to bouncing back from cyclical setbacks. At the height of the last financial crisis, for example, shares fell as low as 25p each. Once the storm had passed, they climbed as high as 250p.

So long as the company’s Studios arm can get back to work, online revenue continues to grow and demand for its Britbox subscription service continues, I suspect (hope) history may repeat itself once the pandemic is truly over.

This is, of course, unless a deep-pocketed suitor decides to bid for the company beforehand. At only 64p per share, such an outcome wouldn’t surprise me. 

The post Looking for cheap UK stocks to buy after the market crash? I’d start here appeared first on The Twelfth Magpie.

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Paul Summers owns shares of 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.

Today, I’m focusing on the types of business that might actually see a rise in demand for their goods and services should this happen. But importantly, they could also benefit from longer-term changing habits.

Wash those hands

Debate rages as to whether Boris Johnson’s approach to dealing with the coronavirus outbreak is the correct one. But the advice to wash our hands more frequently is far less contentious.

It’s for this reason that companies like PZ Cussons — owner of soap brands such as Imperial Leather and Carex — could see increased demand for its products over this difficult period and beyond. That’s especially so if more of us become conscious of the need for hygiene after the pandemic has passed. 

Consumer goods giant Reckitt Benckiser is another firm that should benefit. The FTSE 100 member owns brands such as Dettol and Lysol that are likely to be in demand by consumers wishing to cut their chances of getting ill.

Order in

Crisis or no crisis, we still need to eat. For this reason, supermarket stocks are likely to be in demand for the foreseeable future. Or at least they shouldn’t be subject to the same selling pressure as less defensive businesses.

My pick of the UK-listed bunch remains Tesco that has huge market share. More risk-tolerant investors might be drawn to tech-focused Ocado. But I remain wary as it’s still to generate consistent profits. It has already said it’s struggling to cope with orders since the crisis, leading it to take its app offline. 

Further afield, it may be worth taking a bite of Domino’s Pizza if you think being stuck at home and long-term trends mean more food being delivered to the door. Interestingly, its share price is still far above where it was six months ago.

Entertain us

Last but not least, we’ll need to do something to take our minds off things. That’s especially so if we’re trying to entertain a young family. 

Those willing to invest overseas might want to take a closer look at US giants like Netflix and Amazon. In addition to growing its Prime subscription members, the latter could also see a jump in sales of books and music over the period and changing habits could mean rising sales longer term too.  

Despite needing to close some of its theme parks, Disney could also gain from more people stuck at home thanks to the forthcoming launch in the UK of its new streaming service, plus there’s the pent-up demand when the crisis has passed.

Closer to home, FTSE 100 broadcaster ITV is bargain-basement cheap, even though it’s already warned that advertising revenue will be dented over the next few months. Assuming no dividend cut, the company is forecast to yield a stonking 9.6% this year.

An alternative to TV-related stocks would be those in gaming. Although new releases may need to be put back, options here include developers such as Codemasters to Frontier Developments. And if buying a publisher of games feels too risky, there’s always services group Keywords Studios to consider. 

The post The coronavirus has changed the way we live. I think these stocks should benefit 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 owns shares of PZ Cussons. The Motley Fool UK has recommended Domino's Pizza, ITV, Keywords Studios, 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.