The Covid-19 vaccine rollout is under way, and 2021 could be the year when this pandemic comes to an end. Therefore, educational institutions such as schools and universities may soon be reopening, which is excellent news for one FTSE 100 stock that I’m watching. Let’s take a look.

A FTSE 100 giant in education

Pearson (LSE:PSON) has a pretty interesting history. What started out as a construction company during the industrial revolution has transformed itself into an educational publishing powerhouse.

Today the business provides educational content, assessments, and digital learning services to schools and universities. Anyone who’s ever ordered or used a school textbook has probably had a Pearson product pass through their hands.

The stock has recently shifted its strategy to focus more on digital content. In the most recent annual report, 66% of revenue was generated from digital materials, compared to 59% in 2017. But why does this matter?

Digital content is much cheaper to distribute and update, thus leading to improved profit margins. A closer look at the financials provides evidence to support this. If exceptional expenses are ignored, the business’s underlying profit margin has been steadily increasing from 8.9% in 2017 to 12.4%.

The impact of the pandemic

Covid-19 has certainly had a notable impact on the firm. As mentioned, many educational facilities remain closed. Combining this with exams cancellations and general economic pressure on spending, Pearson saw a 10% decline in overall revenue in 2020.

However, what’s encouraging is its online learning platform saw an 18% increase in customer spending due to new subscriptions. Whether these subscriptions will be retained once schools and universities open again is yet to be seen. But it has exposed Pearson’s digital products to more institutions, which I believe has accelerated their adoption and could attract additional subscriptions in the future.

The FTSE 100 stock is far from risk-free

Because Pearson operates at the heart of the global education system, institutions often rely heavily on it to deliver learning materials, tests, and assessments. Any delays or disruptions will have a significant impact on the firm’s brand and reputation that could be exploited by competitors.

But that’s not the only threat to its reputation. There will always be individuals who try to cheat at school. And in 2019 Pearson’s security was breached. Its Mathematics A-Level exam was leaked shortly before it was to take place nationwide. The firm did fix the flaw in its cybersecurity. But any future breaches will likely give Pearson a reputation for poor security, subsequently leading to a steady decline in market share.

The Bottom Line

To me, Pearson looks like it could be in for a long-overdue boost to its business. As educational institutions begin to reopen, the demand for the stock’s products and services could surge. At least that’s what I think.

Therefore, Pearson is definitely a stock to watch in my eyes. And if digital content adoption continues to grow, even after the pandemic has ended, then it may become a fantastic addition to my growth portfolio.

The post 1 FTSE 100 stock to watch in 2021 appeared first on The Twelfth Magpie.

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Zaven Boyrazian does not own shares in Pearson. The Motley Fool UK has recommended Pearson. 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.

It’s not hard to see why this real estate investment trust is so despised. With retail sales still sluggish as a recession bites, the owner of sites such as Highcross in Leicester and Victoria in Leeds is feeling the pain.

A few weeks ago, the firm revealed that just 41% of rent had been collected over its fourth quarter. This was lower than the 59% collected for Q3. It’s also a world away from the 97% achieved in Q1.

The longer the pandemic persists, the more pressure this puts on Hammerson’s balance sheet. Can another cash call be far away?

More hated than Hammerson

Trading at 20p a pop, shares in Hammerson look like a classic value trap. Even if ‘bricks and mortar’ retail is able to recover after the coronavirus subsides, the huge growth in online shopping shows no signs of abating. Factor-in recent management issues and the mid-cap looks to me to be more trouble than it’s worth.

Having said this, two FTSE 100 stocks — educational products and services provider Pearson (LSE: PSON) and supermarket Sainsbury (LSE: SRBY) have even bigger short positions.

Have the valuations of these top-table titans dropped far enough to now make them bargains for patient Foolish investors? 

Uncertain outlook

Pearson was a favourite with the shorting community long before the coronavirus arrived. Even now, it’s still the sixth most hated stock on the market according to shorttracker.co.uk. That seems fair based on recent trading.

Earlier in October, the self-styled ‘world’s learning company’ said that sales had declined by 14% over the first nine months of 2020 due to the closure of test centres and schools. Revenue in the UK was particularly hard hit by the cancellation of exams.

With “larger than usual uncertainties” likely to be felt in Q4, Pearson could only say that trading for the rest of 2020 would be “broadly in line with market expectations“. That’s hardly bullish. However, one could argue this is already priced-in.

Shares in Pearson currently trade on a little less than 13 times forecast FY21 earnings. That could make it a decent contrarian buy, especially as the FTSE 100 company said that online learning sales had helped to soften the blow from the pandemic. I’d certainly be more bullish on Pearson than I would on Hammerson.

Cheap for a reason

You might expect the UK’s second-biggest supermarket to be in something of a purple patch. After all, the coronavirus confined us to our homes earlier in the year. There’s a possibility of it doing the same again before 2020 ends. 

It would seem traders don’t agree. At the time of writing, Sainsbury is the eighth-most shorted stock on the market.

A forecast price-to-earnings (P/E) ratio of just under 11 suggests the shares are a bargain but I’m not so sure. As well as having to cope with competition from the German discounters and the Ocado/M&S tie-up, there’s a truckload of debt on the balance sheet. Margins are wafer-thin too.

Even if/when a vaccine to Covid-19 is found, I can’t see Sainsbury bouncing back to the same extent as other stocks. With dividends on hold, I’d steer clear.

The post These FTSE 100 shares are more hated than Hammerson. Are they too cheap for me to ignore? appeared first on The Twelfth Magpie.

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

A stock market crash is supposed to be bad for fund managers, as panicky investors pull their money and assets under management plunge. If that’s the case, nobody told Ashmore Group (LSE: ASHM).

The FTSE 250 emerging market asset manager’s stock is up a whopping 8.32% this morning, after its statement showed assets under management up an impressive $1.9bn in the three months to 30 September. Ashmore has obviously benefited from the strong recovery from the stock market crash. Investment performance boosted assets by $2.7bn, more than offsetting $800m of net customer outflows.

Emerging market dividend hero

Ashmore said its active investment processes delivered a “strong outperformance” for the quarter as markets continued to recover from oversold levels. CEO Mark Coombs warned of near-term macro risks, primarily Covid-19 and the US election. However, he said these could provide “good investment opportunities for Ashmore’s active processes to exploit.”

Ashmore specialises in investing in emerging markets, which seem to be recovering faster from the pandemic. The stock could be a good way to play Asia and beyond, but with the security of a London listing.

You have a stock market crash buying opportunity here, because the Ashmore share price still trades around 25% lower than a year ago. Currently, you can pick up its stock at a valuation of 13.3 times earnings.

Ashmore is also a highly attractive income stock, currently yielding 4.6% with cover of 2.2. While emerging markets may be bumpy in future, they may have more exciting prospects than ageing, debt-burdened developed economies.

Another stock market crash opportunity

FTSE 100 educational publisher Pearson (LSE: PSON) talked up its “improving trend in Q3” in today’s trading statement, but the market isn’t impressed. The Pearson share price fell almost 2% after digesting a 14% drop in group sales. Test centre and school closures hit its Global Assessment and International division, while its North American Courseware operation also saw declines.

On the plus side, sales at its Global Online Learning operation grew 14%, so at least Pearson is benefiting from the wider digital shift.

The Pearson share price has more than halved over the last five years, and the pandemic obviously cannot be blamed for that. Its US educational business has suffered by the shift from print to e-books. However, the retuned business has been getting back on track, and its stock is actually up 20% over the last six months.

If you’re looking for a stock market crash bargains, Pearson could offer an opportunity. When we finally get a coronavirus vaccine, it could build on its recent transformation. It currently trades at 9.9 times earnings, but brace yourself for a bumpy ride.

Pearson’s earnings look set to drop 52% this year, then rebound 48% in 2021. You need to take a long-term view.

The post Stock market crash opportunities! I’d buy these UK dividend growth shares today appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Pearson. 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 you are on the hunt for dirt cheap FTSE 100 shares, these two look tempting buys, provided you take a long-term view.

The Pearson (LSE: PSON) share price is the fastest climber on the FTSE 100 this morning, leaping 12% on reports that activist investor Cevian Capital has bought a 5.4% stake in the education company. It has spotted “numerous operational and strategic opportunities to maximise shareholder value,” following years of struggle and disappointment.

Benefit from the stock market crash

Pearson’s stock was in long-term decline following a series of profit warnings, and is down 65% over five years. Its US educational business has been hammered by the shift from print to e-books. When I last examined the stock in February, I was in no rush to buy. Today’s positive news and its dirt-cheap stock price change that.

The group is looking for a new chief executive to replace the departing John Fallon, who was in the post for seven years. Stockholm-based Cevian wants a say in his successor. Investors are hoping this marks the start of a turnaround, but overhauling the company will take time.

I love dirt-cheap FTSE 100 stocks

In February, I questioned the wisdom of Pearson’s planned £350m share buyback. That has now been suspended but the group stood by its final dividend in April, and currently yields 3.38%.

It is offering free online digital courses for the furloughed and self-employed, hoping to boost its crucial online learning division in the longer run. A post-pandemic shift to digital learning could power sales and offset declines in its traditional business. Success is never guaranteed, but this dirt-cheap FTSE 100 opportunity is worth a closer look.

I’d buy into the Informa share price

Today, events and information group Informa (LSE: INF) warned revenues could fall by almost a third in 2020, with £300m worth of events cancelled. In normal times, that would have sent the Informa share price tumbling, but today it is up 10%.

Investors were encouraged by reports that events are picking up in China, with second-half trade show activity encouraging. The FTSE 100 group cautioned that lifting restrictions will be “patchy and slow” though. Its biggest market, the US, is unlikely to restart until September.

Investors have been cheered by news that Informa has identified £400m of cost savings, due to cancelled events and its pay and recruitment freeze. Its subscriptions and drug development operations are doing well, confirming my faith in this affordable FTSE 100 stock opportunity.

The group has also scrapped its dividend while strengthening its balance sheet by raising £1bn from shareholders. I regularly urge investors to buy top FTSE 100 stocks that have fallen hard in a stock market crash. Well, here’s one. Informa’s share price is 44% down this year and looks a top long-term buy and hold to me.

The post Don’t waste the stock market crash! I’d buy these 2 dirt-cheap FTSE 100 stocks today appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Pearson. 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.

Global growth

The FTSE 250-listed company has come a long way since issuing a profit warning in 2017, and is growing rapidly in the Americas, Asia Pacific, France, Germany and Spain, although UK revenues did temporarily slip due to network rationalisation.

The £3.9bn group’s Q3 statement in November hailed “continuing strong revenue growth, excellent franchising and enterprise account momentum”. It added another 66 new locations in the quarter, taking its worldwide total to 3,348, while revenues grew 15.5% across all its centres, with strong performance in every region, including the UK this time.

Cash is flowing, it has launched a share repurchase programme, spending £22.4m in the quarter, and cut net debt further to £301.2m, putting it in a strong financial position.

After striking master franchise agreements in Japan, Taiwan and Switzerland, IWG now boasts 27 franchise partners across 22 countries. Its strong pipeline of global franchising opportunities suggests scope for further growth.

The only obvious downside I can see is that the stock trades at 35 times forward earnings, which makes it a little expensive. That means it must continue to grow rapidly to keep investors happy and the share price bubbling along. However, with earnings forecast to rise 17% this year, and 19% next, IWG still appears to have momentum on its side.

Not so hot

By contrast, education specialist Pearson Group (LSE: PSON) has endured another dismal year, and is in danger of losing its place in the FTSE 100. The stock is down 37% over the last year, and 57% measured over five years.

Last September, a profit warning sent the Pearson share price crashing 15% in a day. That came as it continued to suffer problems in its US educational business, as the shift from print to e-books hit sales, and the internet broke down barriers for entry, allowing more nimble competitors to take market share. So far, the group hasn’t come up with an answer.

Pearson has been restructuring in response, but its latest update shows educational revenue down 12%, although it is growing other areas, such as Online Program Management, Professional Certification materials, and the Pearson Test of English Academic.

I was surprised to see the group preparing a £350m share buyback. This may reward investors, but I’m a bit old-fashioned, and prefer to see companies reinvesting that kind of money back into the business, to build growth.

City analysts expect earnings to fall 19% this year and 2% next, which hardly bucks me up. You do get a yield of 3.5%, though, covered 2.5 times, while its valuation of 12.3 times forecast earnings will tempt bargain seekers. Pearson might pull it off, but I’m not rushing to buy it at the moment.

The post £1k to invest? I’d buy this double-your-money FTSE 250 growth stock appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Pearson. 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.

Digital delight

The global education and publishing business has a long way to go to complete its turnaround, but investors clearly sees this a big step in the right direction. The Pearson share price could now be tempting for those looking for a FTSE 100 turnaround stock, although it’s not out of the woods yet.

Today, management reported “good progress” and “continued momentum” as declines in its US higher education course and student assessment revenues are offset by stabilisation elsewhere in the business.

Adjusted operating profit rose 30% in underlying terms to £144m, which reflected sales growth and savings from its recent restructuring programme. However, first-half statutory operating profit from continuing operations plunged from £233m to £37m, largely due to the lower profit on disposal of businesses and higher restructuring charges in 2019.

Netflix shows the way

Everything now rests on the success of its digital transformation, as it shifts from an ownership model to subscription-based access, Netflix-style, and looks to expand its global reach. The £7.19bn group is also simplifying its business, and is on track to deliver incremental cost savings of more than £330m a year, with the full benefits building next year.

2019 guidance remains unchanged with Pearson expecting to deliver adjusted operating profit of between £590m and £640m, with a return to top line growth in 2020. The future looks brighter after several troubled years, which sees the stock trading 20% lower than five years ago, against a 30% rise on the FTSE over the same period.

It isn’t as cheap as I’d hoped, though, trading at 15.5 times forecast earnings. The forward yield is just 2.3% against a FTSE 100 average of 4.3%, although nicely covered 2.8 times. Fiona Leake believes Pearson could be a worthy long-term investment.

After Sorrell

Investors in global advertising giant WPP (LSE: WPP) have had a similarly rough ride, with the stock down 45% in three years. It also needs to rebuild following the acrimonious departure of founder Martin Sorrell, but my colleague Paul Summers reckons the £12bn FTSE 100 stock is slowly turning itself around. 

If you are looking for a recovery play, WPP could be more exciting than Pearson. First, it’s cheaper, trading at just 9.2 times forecast earnings. It also offers a markedly superior yield of 6.4%, with decent-ish cover of 1.6. There are headwinds, though, as advertising revenues shift online and analysts warn of a slowing global economy.

Three, two, one…

WPP’s restructuring offers opportunities to release value, as seen with the recent sale of a 60% stake in its market-research business Kantar to US private equity company Bain Capital for more than $4bn. Most of that will be used to cut debt with the balance returned to shareholders. More of this, please.

As with Pearson, the WPP share price has yet to take off. Long-sighted investors happy with a bit of risk might want to get on the launchpad now.

The post Have £2,000 to invest? Here are 2 FTSE 100 turnaround shares I’d buy in an ISA today appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Pearson. 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.

For those new to investing, these tend to be sophisticated investors that bet on the share price of a company falling. I say “bet” but that’s probably doing the majority a disservice. Usually, these trades are the result of intensive research.

There’s a very good reason for this. While a share price can’t go below zero, a short seller’s potential losses are technically infinite because a stock can always go higher in price. In other words, they need to be very confident in their position. 

Sinking back

FTSE 100 publishing giant Pearson (LSE: PSON) is one example of a stock that many in the market continue to be pessimistic on.

While the shares performed well in the last quarter of 2018, they’ve sunk back 16% over the first half of 2019 — almost the mirror opposite to how stocks in the UK have behaved. 

That’s clearly aggravating for existing holders, including star funder manager Nick Train. The hugely popular Finsbury Growth and Income Trust remains invested in the £6.2bn-cap — a little problematic when you consider its commitment to running a fairly concentrated portfolio of only 22 stocks (as of April). 

Train clearly continues to believe that Pearson will survive and thrive in time. Maybe it will. Despite a big reduction in debt over the last few years and signs of progress with its new strategy, the stock is still the ninth most shorted on the market. 

A valuation of 14 times forecast earnings reflects fears over a proposed merger of McGraw-Hill Education and Cengage — a deal that would form the second-largest supplier of textbooks and higher education materials in the US — and the potential erosion of Pearson’s market share. 

With general market sentiment still looking fragile as a result of ongoing political and economic concerns, I’m not surprised some view Pearson as an unnecessarily risky proposition, at least over the short term.

A very average 2.5% yield, although expected to be covered three times by profits, is also questionable compensation for holders while they await a sustained recovery.

Debt-ridden dog

Another member of the ‘most hated’ list is breakdown and insurance firm AA (LSE: AA). Despite recovering slightly in the first few months of 2019, AA’s shares — like those of Pearson — have reverted back to their downward trajectory in recent weeks. They’re now down by more than 50% in the last 12 months alone.

With a valuation only slightly above £350m, this leaves the one-time FTSE 250 member rapidly approaching small-cap territory. 

As market participants continuing to bet against AA, it looks like it’s value might shrink again. It’s now the joint second most shorted stock on the London Stock Exchange, according to shorttracker.co.uk. 

That’s not altogether surprising when you consider the £2.6bn net debt the company still carries, dwindling membership numbers, and huge competition from rivals, particularly in the insurance business. 

A price-to-earnings (P/E) ratio of just 4 for the current financial year might be sufficiently enticing for the bravest of contrarians, but I can’t help thinking investors should leave this one to the traders. The forecast 3.4% dividend yield can be easily beaten elsewhere.

The post Warning: investors are still betting against this FTSE 100 loser appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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

They may not only offer an increasingly appealing income return, but a rising dividend may suggest they are performing well from a business perspective. In the long run, this could lead to a rising share price.

With that in mind, here are two FTSE 100 shares that may not have high yields at present, but could produce improving income outlooks over the next few years.

Bunzl

Support services company Bunzl (LSE: BNZL) has a solid track record of dividend growth. In fact, over the last four years, the company’s dividends per share have increased from 35p to 50p. This equates to an annualised growth rate of over 9%.

Despite such a strong rate of growth, however, the company’s dividends are covered 2.6 times by profit. This suggests they could rise at a faster pace than profit growth over the medium term without hurting the financial strength of the business.

Bunzl’s acquisition-focused business model has proved to be highly successful. The company appears to have the financial firepower to engage in further acquisitions should they become available. As such, its medium-term growth outlook appears to be appealing.

Although the stock has a dividend yield of only 2.5%, its potential to raise dividends at a rapid rate over the coming years could mean it offers an improving income investing outlook. As such, now could be the right time to buy a slice of it.

Pearson

Education specialist Pearson (LSE: PSON) has endured a difficult period in recent years, with its financial performance coming under severe pressure. In response, it’s put in place a revised strategy that appears to be working well.

In the current year, for example, the business is forecast to post a rise in earnings of 13%. With its share price performance having been mixed over the last six months, it trades on a price-to-earnings growth (PEG) ratio of 1.6, which suggests it may be undervalued.

Clearly, a period of change and investment for the business may mean dividend growth is more limited than it otherwise would be. Despite this, it’s due to post a rise in dividends per share of 9% in the current year. And, with dividends expected to be covered 2.8 times by profit in 2019, there seems to be significant scope to raise them at a rapid rate over the medium term.

Although Pearson may lack the defensive appeal other FTSE 100 dividend stocks provide, the company’s dividend growth potential could allow it to outperform many of its index peers on a total return basis. While its 2.5% dividend yield may be relatively low, its income returns could rise quickly as it implements its strategy.

The post 2 overlooked FTSE 100 dividend growth shares I’d buy in a Stocks and Shares ISA 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.

These expectations were punctured in mid-January, though, with the release of full-year financials in which the FTSE 100 firm advised that underlying sales dropped 1% in 2018. Investors were selling out in the run up to the release and have continued to do so, meaning that Pearson has shed around 20% of its value in little over two months. So do I think the price is right to buy in?

Clipped wings

A quick recap: Pearson had a reputation as a dependable dividend grower and a carrier of formidable yields up until 2016, its appeal as an income stock taking a hit when it was forced to freeze the full-year payout at 52p per share. The damage, though, really came the following year when it hacked the reward down to just 17p as its battered balance sheet and failing North American operations really hit home.

The education giant got onto the front foot again in 2018 by lifting the dividend to 18.5p as profits rose on the back of a one-off tax benefit and lower finance costs. And City analysts expect additional payout increases in the near term, even if they agree with Pearson’s estimates that adjusted earnings per share will drop to between 56.5p and 62p per share from 70.3p last year.

A 20.7p dividend is currently anticipated and this doesn’t seem an outrageous estimate given that it’s covered at least 2.7 times by expected earnings. This projection also yields an inflation-beating 2.5%.

Is it a buy?

That aforementioned share price weakness since the top of the year now leaves Pearson dealing on a forward P/E ratio of just 14.6 times. Does this dip provide a great opportunity for income hunters to grab a bargain?

I reckon not. It’s not that the company’s restructuring plans aren’t impressive, its aim to strip out costs running ahead of schedule and being on course to deliver annualised cost savings above £330m by the end of 2019.

It’s also not because Pearson isn’t making steps to put its struggles on the other side of the Atlantic behind it. Whilst investors may not have been impressed by the complicated terms of the $250m deal, the sale of its K12 courseware business to Nexus Capital Management last month finally rid the company of this failing North American business many months after putting it on the block and allowed it to concentrate more fully on its digitalisation plans.

Why am I so bearish? It’s due to the fact that the Footsie firm still has considerable exposure to the higher education markets Stateside, meaning that the revenues picture remains clouded by plummeting enrolment rates in higher education, rising competition in the textbooks market and the growing rentals segment. The move to become a major player in the digital market is the right way to go, but in the meantime, the worsening state of Pearson’s traditional markets will remain a major worry for the next few years at least. And for this reason, I reckon the Footsie firm should be avoided right now.

The post Is now the time to buy into this fallen FTSE 100 dividend angel? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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.

With that in mind, here are two FTSE 100 stocks that could generate improving investment performances in the long run.

Improving prospects

Releasing results for the 2018 financial year on Monday was insurance specialist Hiscox (LSE: HSX). Profit before tax tripled to $137.4m, recording a strong underwriting result and experiencing a busy year for claims. Gross premiums written grew by 15%, with double-digit growth recorded in all segments. Its Hiscox London Market returned to growth after three years of disciplined cycle management.

Hiscox Retail wrote over $2bn of premiums and served one million customers for the first time. The company continues to grow well within its chosen retail segments, with its small market shares meaning the size of its growth opportunity remains high.

Looking ahead, the company is forecast to report a rise in net profit of 19% in the current year. This suggests it has a sound strategy, while a price-to-earnings growth (PEG) ratio of 1 indicates it could offer good value for money compared to many of its FTSE 100 industry peers. As such, now could be an opportune moment to buy it after what has been a volatile period for its share price.

Turnaround potential

Also offering growth at a reasonable price is educational specialist Pearson (LSE: PSON). The company has experienced a challenging number of years, with its financial and operational performance having been disappointing. In response, it’s putting in place a revised strategy which includes asset disposals and a focus on digital growth.

So far, its strategy appears to be working well. Recent results showed its financial performance has the potential to improve. In the current year, it’s expected to report a rise in net profit of 12%. Even though its shares have risen sharply in the last year, the stock still offers a PEG ratio of 1.3. This indicates that there may be a margin of safety on offer.

Clearly, Pearson is in a period of intense change which may cause it to have a relatively uncertain outlook. Certainly, there are more stable stocks in the FTSE 100, while a cash ISA offers a significantly reduced risk of loss. However, with the company appearing to be well-placed to benefit from increasing demand for its products over the long run, it could generate impressive returns. As such, from a risk/return perspective, it could hold significant appeal as it delivers on its turnaround strategy.

The post Forget a cash ISA! I think these 2 FTSE 100 growth shares could be a better way to get rich 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.