Woodford may have been squeezed out, but most of those companies are still trading, and two have seen their share prices rise around 4% today, after their latest results. Is their future now brighter than his?

PurpleBricks Group

Woodford held onto online estate agency PurpleBricks Group (LSE: PURP) well after the cracks began to show, following its ill-fated foray into the US.

The PurpleBricks share price is now down 70% measured over two years, helped by the fire sale of one of Woodford’s more liquid stocks. However, it’s up today following a reasonably positive first-half trading update reported it had “modestly outperformed expectations over the period.”

The £346m group has maintained its 4% overall market share, and expects to report an improvement in marketing-to-revenue ratio as planned efficiencies are now being realised. That’s despite “a weakening in the overall UK property market as political and economic uncertainty impacted confidence, reducing home sale volumes,” particularly in the South East.

PurpleBricks expects revenues to be broadly flat in next month’s interims, but at least recent significant losses have been reversed, with the group enjoying profitable trading in the first half.

However, I remain wary. PurpleBricks was supposed to be a game changer, sweeping away the traditional high street estate agency model, rather than a company where flat revenues are seen as good news.

You have to strip away all the early aura before deciding whether to invest, as well as examine underlying issues, such as how its flat fee system of payment works in practice. The group has stabilised, but it’s real attraction was rapid growth, and I don’t see that coming.

Provident Financial

I never saw why the phrase ‘doorstep lender’ got Woodford’s juices flowing. He went massive on Provident Financial (LSE: PFG), a company launched by Bradford Methodists in the 1880s that ended up as a short-term lender run by a man called Peter Crook charging up to 1,550% on short-term loans to people who struggled to borrow elsewhere. It also sells high-interest Vanquis credit cards, payday loans and car finance through its Moneybarn brand.

The short-term credit market has come under pressure from City watchdog the Financial Conduct Authority, whose tough compensation rules have driven out payday lenders Wonga and QuickQuid. Last year, the FCA ordered Provident’s Vanquis unit to repay £169m to mis-sold customers, and also fined it £2m.

Today, the £1.15bn group reported “good momentum in new customer volumes and stable delinquency,” with “all three divisions producing good business volumes and a stable impairment performance.” Moneybarn did particularly well, with new business volumes beating internal forecasts to rise 36%, and client numbers up 24% to 73,000.

This will reassure some investors that management has put the bulk of its problems to bed, and the forecast yield of 5.7%, covered 1.9 times, and a valuation of 9.1 times earnings, may tempt some. Just remember, the FCA is watching.

The post These 2 Neil Woodford falling knives are climbing today. Here’s what I’d do now 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 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.

Could it be argued that Kier Group (LSE: KIE) and Purplebricks Group (LSE:  PURP) are a couple of such shares being unfairly treated by the trading community? These particular property stocks have lost 90% and 67% of their value respectively over the past year, a descent that leaves Kier for one dealing on a prospective earnings ratios of 1.5 times.

The question is, then, do these low ratings represent a great buying opportunity for against-the-grain investors? And if so, which is the better selection?

On the brink?

A share that carries a valuation as low as Kier’s is practically loaded with flashing red lights. Companies trading on these kinds of multiples are prime targets for hopeful punts, but what’s the sense of making such an investment when there’s a strong chance of it going bust?

And there’s certainly a strong chance of this particular small-cap dropping off the edge of the planet in the not-too-distant future.

Let’s face facts: Kier is absolutely swimming in debt. Take no notice of what the business’s balance sheet says as it looks as if it has more than a billion pounds worth of financial obligations for which it is struggling to pay.

Another rights issue could be just around the corner, but given the company’s trouble to attract fresh investment last time around — just 38% of shares were taken up during the autumn fundraising — and Kier’s worsening trading performances since then, I’d be amazed to see investors riding en masse to the rescue if called upon again.

A better buy?

The fact that Kier Group is trying desperately to avoid going bust leaves Purplebricks, at least in the context of this article, as the victor by default.

But the online property marketing play has considerable troubles of its own as the cost of its ambitious international expansion programme weighs. We only need to look at Wednesday’s disastrous trading update in which it advised that operating losses ballooned to £52.3m in the 12 months to April 2019 from £27.8m a year earlier.

Once seen as the road to explosive long-term profits growth, Purplebricks’ aggressive move into other global territories has proved a disaster, heaping enormous stress on the balance sheet — cash on the books more than halved last year to sit at £62.8m as of April — and forcing it to eat a large slice of humble pie in the process.

The company announced plans to pull out of Australia in the spring and this week declared its intention to slink out of the US too, following on from those latest results. Its travails on foreign shores are only one part of Purplebricks’ problems, though, as with the Brexit issue remaining far from resolved, the cyclical slowdown in the UK homes market threatens to drag on.

So whilst on safer ground right now, I consider this property play — like Kier Group — as one to avoid like the plague right now. You’d be much better off deploying your hard-earned investment cash elsewhere.

The post Kier Group vs Purplebricks: which is the best property stock to buy today? 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.

Generous lending conditions in the UK are preventing interest from first-time property buyers falling off a cliff. On the whole, though, toughening economic conditions is harming activity in the broader housing market, as is the uncertain outlook created by the country’s ongoing Brexit saga. And these are casting a cloud over online estate agency Purplebricks’ profits picture in the near term and beyond.

These troubles encouraged the business to downgrade its revenue guidance last month to between £165m and £175m for the fiscal year to April, slicing £10m off the upper limit it had previous estimated.

The prospect of worsening trading conditions in the UK are not the only thing to fear, either, as the cost of its international expansion strategy plays havoc with the bottom line. Operating losses more than doubled in the six months to October, to £25.6m from £11.4m earlier, because of swelling marketing and technology costs. Then there’s the huge expansion into North America that’s a very real danger to broker predictions that Purplebricks will finally break into profit in fiscal 2020. 

Safe as houses

If you’re looking for a property-based stock to help you ride out these troubled times then Cairn Homes (LSE: CRN) is a much better option that Purplebricks, in my opinion. The Irish property market is suffering the same homes shortfall prevalent in the UK, and this is helping to drive earnings higher at the Dublin-based business.

Cairn commented last week that “the supply of new homes is less than 50% of annual demand” and that “increasing capacity within the industry remains constrained by the lack of scaled homebuilders.” Some 35,000 new homes are required in the Republic and 20,000 in the company’s geographical sweetspot of Greater Dublin alone, it estimates. And by hiking production, it’s in great shape to ride the country’s supply imbalance.

The average selling price of the builder’s homes soared to €366,000 in 2018, from €315,000 the year before. And with the number of sold units having ballooned to 804 from 418 in 2017, revenues at the business leapt 125% to €337m.

6% dividend yields!

It’s no surprise that City analysts are predicting that Cairn’s profits will bulge 78% in 2019 and 22% in 2020, meaning that it deals on a dirt-cheap forward P/E ratio of 13.7 times. A cause for further celebration is that these bold numbers, and the company’s exceptional cash generation, mean that it’s expected to emerge as a big dividend payer, too. A maiden dividend of 4 euro cents per share is predicted for this year, resulting in a chubby 3.1% yield. And next year, the yield storms to 6.3% thanks to predictions of a doubling in the full-year payout to 8 cents.

Purplebricks offers plenty of long-term potential, sure. But at the moment, its trading troubles at home and arguably overambitious expansion plans make it far too risky. I’d much rather stick with Cairn and its gigantic dividend yields.

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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.

I would imagine that he is less enamoured with the stock today than he was when he bought it because it hasn’t had a good year. Since January, the share price is down around 66%, but my guess is that Woodford can still see potential in the company otherwise why would he continue to hold?

Rising revenue and rising losses

After such a prolonged slide in price, there is always the possibility that better value could emerge, as long as the underlying business is sound and continues to grow. Maybe 2019 could turn out to be a good year for the firm’s shareholders. The company could go on to deliver decent investment returns as it disrupts the estate agency sector, after all.

In case you don’t know – and haven’t seen the firm’s amusing TV adverts – Purplebricks is a real estate agency based in the UK and also operating in Australia, the US and Canada. It combines what it describes as “highly experienced and professional local property experts” with “innovative technology” to make buying, selling and letting property “more convenient, transparent and cost-effective.” But it seems to me the main differentiator is that Purplebricks offers a cheaper service to customers than many other estate agents can.

Today’s half-year report reveals that revenue rose 75% year-on-year to just over £70m, of which a little more than £48m came from the UK, up 39%. It seems that the company has been winning market share, but the problem is that the business hasn’t been profitable so far. The operating loss for the first six months of the trading year was a massive £25.6m, up 122% from £11.4m a year ago.

Are falling losses too much to wish for?

I can understand why the share price has been falling. The main thrust of today’s report seems to be all about the firm’s drive to win market share in the territories in which it is active. But at what cost? Fast revenue growth is one thing, but I want to see operating losses falling as revenue rises. What the figures tell us today is that operating losses have been growing faster than revenues – not good.

So, I’m sitting this one out until the figures justify the case for investing. And, to me, that means shrinking losses. My suspicion is that the share price will continue to fall as long as those losses keep expanding, no matter how big the revenue becomes. So, the firm can be as innovative and disruptive as it likes, but only profits will confirm that the business model is sustainable. And that’s a buzzword that would be a good addition to the firm’s reports – ‘sustainable’.

On top of being loss-making, the firm’s business is also cyclical, and a cyclical downturn could put the company in an extremely precarious position if it arrives. I continue to view Purplebricks as ‘risky’, so I have no plans to buy any of the firm’s shares for 2019.

The post Will 2019 be the year to return to Neil Woodford favourite Purplebricks? appeared first on The Twelfth Magpie.

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Kevin Godbold 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.

Its share price has fallen a whopping 62% in the year to date, and it’s now trading at its cheapest for two years. I can see plenty of reason to expect Purplebricks’s descent to extend well into 2019 too.

UK homes market to worsen?

For one thing, the Brexit-related turmoil that’s whacking the UK property market looks set to run until well into the first quarter of 2019 and possibly beyond.

Prime minister Theresa May’s so-called meaningful vote on her deal with the European Union has been kicked into the long grass and, as I type, no advice on the timing of a rescheduled vote has been given by Number 10 except that it will be held some time before January 21.

Will May still be in power by then, or even by the end of this week? Does it make the chances of a no-deal Brexit more likely?

The uncertainty that is crushing homebuyer activity in the UK looks set to linger for some time yet, threatening to push Purplebricks’ share price further south. And if the worst-case-scenario, withdrawal without a deal, occurs then the property market could be in the doldrums for many years, the Bank of England suggesting that property prices could tank by more than a third under such a scenario.

International mystery

Whilst a concern for Purplebricks investors in 2018, this has not been the main source of angst for them. Indeed, its solid trading update of a month ago has relieved some of the tension surrounding the company’s British marketplace in the coming year.

What’s been more of a worry is that the small-cap’s international expansion programme may fall well short of expectations. And as my Foolish colleague Graham Chester pointed out recently, that market statement I just mentioned shed no further light on the progress of its foreign divisions. Interims which are scheduled for later this week (Thursday the 13th, in fact) will therefore make for interesting reading.

Concerns that Purplebricks is running before it can walk and expanding much too quickly are nothing new, yet the Solihull-based business has continued to thumb its nose at those critics. Indeed, in October it entered into a joint venture to acquire a stake in German digital estate agent Homeday, which followed shortly after the acquisition of Canadian operator DuProprio for almost £30m earlier this year.

City analysts aren’t expecting Purplebricks to break into profit until the next fiscal year, the 12 months to April 2020, at the earliest. It’s yet to prove that it can replicate its success in the UK in its other territories of the US and Australia, so why is it still spending like it’s going out of fashion?

Despite the 2018 share price slide, the estate agent still trades on a huge P/E ratio of 72.4 times for fiscal 2020. This leaves plenty of scope for additional weakness in the months ahead, and for this reason I believe it should be avoided. 

The post The Purplebricks share price has sunk 60% in 2018! Will it rebound in 2019? appeared first on The Twelfth Magpie.

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• 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.

My bearish stance on these stocks stretches back a number of years, and the choppiness of BT’s share price over the past year, as well as the steady share price slide over at Purplebricks, suggests that the broader market isn’t exactly bowled over by their investment potential either.

That said, both businesses rose on the release of fresh trading details earlier this week. Does this mean that things are seriously looking up? And if so, which do I think is the better share to buy today?

A sweet release

Purplebricks put out a quite decent set of quarterly results in which it said revenues boomed 20% in the six months to October, a jump the AIM business put down to “double-digit growth in instructions along with a continuation of increasing average revenue per instruction from improved attachment rates of traditional and new ancillary products.”

It said that while the market backdrop in the UK remained “challenging”, it continued to win market share during May-October and that its share of the online hybrid sector reached 74% last month.

As a consequence, the business reiterated its full-year sales guidance of £165m to £185m.

It’s hard to pick faults in the update and I won’t. However, the company still isn’t a ‘buy’ in my book. It’s not expected to start generating earnings until after the current year, i.e. the 12 months to April 2020. And City forecasts make it eye-poppingly expensive at current prices, with a forward P/E ratio of 97.2 times for next year.

Such a reading in my book does not adequately factor in the worsening state of the UK marketplace, nor the possibility that its international expansion programme may well fall flat.

Jump in or stay away?

So is BT a better stock to buy, in that case? Well, its half-year update of recent days showed that, helped by the impact of higher smartphone volumes and restructuring-related cost savings, pre-tax profit shot 24% higher from April to September to £1.34m. The strong result encouraged BT to advise that EBITDA for the full year to March 2019 would likely reach the higher end of its £7.3bn to £7.4bn guided range.

But now the bad news. Revenues at the FTSE 100 titan dropped 2% in the six months to £11.59bn, reflecting further troubles for its enterprise operations as well as the impact of regulated price reductions at its Openreach infrastructure division.

What’s more, BT decided to reduce the interim dividend by 5% to 4.62p per share, a decision that doesn’t exactly shock me given the shaky conditions in its key markets and its gigantic net debt pile which, incidentally, jumped to £11.9bn as of September from £9.52bn a year earlier.

City analysts are expecting the telecoms giant to at least have the strength to keep the dividend locked at 15.4p per share this year. I’m not convinced, however, and therefore give little regard to a giant 6.1% yield.

It’s cheap, sure. But BT’s forward P/E reading of 9.7 times is a reflection of its travails in worsening market conditions. But is it a better buy than Purplebricks right now? For me it’s irrelevant — I wouldn’t touch either of them with a bargepole.

The post Purplebricks Group vs 6% yielder BT Group: which do I feel is the better investment destination today? 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.

The company features in three of well-known fund manager Neil Woodford’s funds. Somehow it qualifies as a decent candidate for his Income Focus fund, his Equity Income fund and the Patient Capital Trust, although the firm has yet to turn a profit, or pay a dividend. I guess Woodford has been thinking ahead.

Aiming to disrupt the sector

To me, the big story with Purplebricks is the possibility that it will turn the conventional estate agency market upside down across the world. If it does pan out to be a successful disruptor like that, the years of profitless expansion could be rewarded with bountiful earnings in the end.

That’s a bit like how the Amazon business model worked, for example. However, the jury is still out with Purplebricks, and I think that’s why we’ve seen such weakness in the share price. Perhaps the initial enthusiasm of investors has gradually deflated and been replaced with a stoic appreciation of the size of the task ahead for the company.

Today’s trading update for the first six months of the firm’s trading year trumpets that it is “on-course to meet full-year guidance,” which is for revenue of between £165m and £185m. Compared to the previous year, revenue will have grown between 76% and 97% if those figures come in, which is a brisk rate of growth. City analysts following Purplebricks estimate that the loss in earnings per share will halve to around 5p for the year. If the company can keep growing revenues as fast as that, it looks likely that earnings will move into modest positive territory in the year ending April 2020.

Chief executive Michael Bruce said in the report the UK housing market is challenging, which he thinks is shaking up the industry and highlighting weaknesses in some traditional and online estate agents’ business models. But Purplebricks is winning market share and he reckons it’s the best-known brand in the sector. The firm’s flexible business model and strong balance sheet will help it to “further strengthen its leading UK position and replicate this success overseas,” he said.  

Burning cash fast

The balance sheet looks robust at first glance. On 31 October, the net cash position was over £100m, after accounting for an acquisition that cost just over £29m, and the firm has no borrowings. But the stakes are high. The price for its brand awareness is high, and the firm spent more than £42m last year on marketing costs. The cash depletes at an alarming rate. As recently as April, there was almost £153m in the bank.

Let’s hope that profitable trading arrives fast because the money to keep the firm going is coming from shareholders. Last year, more than £100m flowed in from the issue of new shares, and the year before that, more than £50m came from investors. Each time there’s a fund-raising event, the interests of existing shareholders are diluted. Yet the estate agency sector is cyclical. If the bottom drops out of the market, all bets are off! I see Purplebricks as ‘risky.’

The post Is it finally time to return to the Purplebricks share price? appeared first on The Twelfth Magpie.

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Kevin Godbold 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 owns shares of and 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.

People were seeing the shares rising rapidly and, not wanting to miss out, piling in without really understanding the company’s valuation.

That, in turn, was pushing the share price up further, and it can carry on like that for some time. But common sense eventually sets in, the fad passes, and the share price descends towards a rational long-term valuation.

Price slide

Since I voiced my fears that it was happening to Purplebricks, the shares have fallen a further 27%. So how do you avoid jumping on, and falling off, bandwagons? I’d start by ignoring the marketing hype.

I don’t want to see big ad campaigns like the Purplebricks one. I want to see where a company’s profit is going to come from. And I want to have some way of relating the share price to that profit.

Competition

The property business is a very competitive one, and every company in it is getting paid one way or another, through commissions, fees, whatever. And I don’t see the “no commission” angle as a game-changer at all — folks selling their homes are going to weigh up the total costs of the alternatives.

Purplebricks is investing huge sums in an attempt at rapid international expansion, but a lot of investors are increasingly seeing it as too far, too fast, before it’s even come close to profitability in its home market.

While Purplebricks is certainly at the sharp end of the online estate agent business, it’s still tiny compared to the traditional market. And first movers are rarely the ones who reap the big profits.

Young upstart

Newcomer OnTheMarket (LSE: OTMP) has had a fiery start to life as a listed company, with its shares gyrating between 102p and 185p since flotation in June. As I write, we’re looking at a price of 141p, for an overall loss of 5%.

On Tuesday, the AIM-listed property portal announced a new deal with Belvoir Lettings. Belvoir is described as “the UK’s largest property franchise” and is set to list all of its residential sales and rental properties at OnTheMarket.com.

The tie-up will extend to shared marketing too, with Belvoir also set to “actively promote the portal brand with digital and branch-based marketing activity.” I don’t know much about marketing, but that sounds more cost effective to me than paying big money for people to shove their faces in cakes on primetime TV.

Both CEOs were, naturally, saying really nice things about each other’s companies, but I do see it as a pretty good move for both.

Would I buy OnTheMarket shares myself? Right now, no. But that’s simply because there are no profits on the horizon yet.

Profit watch

At the interim stage there was £24.3m in cash on the books, but forecasts suggest a pre-tax loss of £26.4m for this year and next, combined. I think OnTheMarket could do very well, but while there’s a likelihood of more funding being needed, I have no way of working out a fair valuation for the shares. I’m watching.

The post Here’s a property stock I reckon could smash the Purplebricks share price appeared first on The Twelfth Magpie.

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• 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?

Alan Oscroft 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.

Expanding its existing footprint in North America, the AIM-quoted business announced that it was about to launch in Florida and more specifically the Tampa and Orlando designated market areas. Purplebricks, which provides an online platform for property sellers to advertise their homes, already operates in DMAs spanning from Los Angeles to New York, San Diego, Las Vegas, Sacramento, Fresno and Phoenix.

Announcing details of the launch group chief executive Michael Bruce commented that “we are encouraged by our progress in the US and excited about the potential in Florida, and we continue to identify new markets in the US where our value proposition can greatly benefit both consumers and agents.”

The investment community is becoming more and more sceptical over Purplebricks’ ability to continue disrupting the traditional estate agency market in the UK and further afield, however, with sentiment worsening as its expansion programme is eating significantly into its bottom line.

The City is expecting the property play to finally move into profit in the year to April 2020, but as geographic expansion lifts costs and conditions in its UK marketplace worsen, I reckon this prediction is looking a little optimistic right now.

Profits poised to reverse?

I would be very tempted to sell Purplebricks today given the possibility of more scary details emerging when it releases its six-month trading update on November 6.

And another share in the Woodford Income Focus Fund that I’d be happy to cut adrift today is BCA Marketplace (LSE: BCA).

The car auctions specialist advised earlier this month that “the year has started strongly,” and City brokers are expecting earnings at the FTSE 250 company to continue rising too — a 5% advance is currently forecast for the 12 months to March 2019.

But I’m concerned that analyst estimates could be subject to swingeing downgrades in the months ahead as the Brexit saga hobbles economic growth and thus consumer and business confidence in the UK. And worryingly, the market does not seem to be factoring in the high probability of such forecast reductions, as reflected by BCA’s slightly-high forward P/E ratio of 16.2 times.

Latest car sales data from the Society of Motor Manufacturers and Traders (SMMT) outlined the precarious outlook for the used vehicle segment, August’s recent report showing that 2.09m units were sold during the April-June quarter, down 0.4% year-on-year.

This annual drop may not have been shocking but, as the deadline to Britain’s planned exit from the European Union draws ever closer, I for one am expecting the decline to become much more pronounced. The SMMT itself is also expecting the used car market to remain in trouble, the body advising last month that “with used sales so closely reflecting the new car market, some cooling is expected over the coming months.” In my opinion holding BCA shares is a high-risk business today.

The post Purplebricks isn’t the only Neil Woodford share I’d sell today 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.

Previously, fear of fresh military action was the primary driver for energy prices, but more recently, fears that President Trump was about to spike US involvement in Iran’s nuclear non-proliferation deal has given the Brent benchmark fresh fuel. The realisation of this news and the subsequent imposition of new sanctions has helped drive the crude price above $77 per barrel for the first time since 2014 today.

Against this backcloth, BP (LSE: BP) has seen its market value swell more than 20% over the past week, with a recent surge past the 560p per share marker on Wednesday taking the crude colossus to its most expensive since the turn of the decade.

However, I remain far from convinced over the sustainability of the current party in the oil market, and reckon that BP’s recent share price surge leaves it in danger of a severe reversal once the froth surrounding tensions in the Middle East inevitably die back.

Saudi Arabia has vowed to step in to plug any supply shortage caused by the fresh US sanctions on Iranian energy shipments, mitigating the impact on overall OPEC supplies. Besides, there is no sign that European signatories to the nuclear proliferation deal are prepared to follow Washington’s course of action. And demand for Iran’s oil from China is not likely to be hit either.

OPEC questions

I have covered the impact of surging North American shale output on wider crude values in the years ahead in some detail before. This is not my only concern though, as while the OPEC and Russian output freeze is supporting values right now, I remain worried about the sustainability of the Middle Eastern bloc’s current accord.

Indeed, Iranian oil minister Bijan Namdar Zangeneh told the state-run Shana news network in recent days about the country’s determination to keep a “reasonable” oil price, underlining the strategic faultlines between lawmakers in Tehran and Riyadh.

Now City analysts see no obvious reason for panic, and they are expecting robust oil values to deliver earnings growth of 177% and 4% at BP in 2018 and 2018 respectively. In my opinion though, a forward P/E ratio of 16 times does not fairly reflect the very real possibility of a sharp reversal in energy prices sooner or later. I would be happy to cash out of the FTSE 100 oil giant after its strong share price run.

Bricking it

I would be very happy to shift out of Purplebricks Group (LSE: PURP) too, despite the vast potential of its global rollout programme.

As my Foolish colleague Alan Oscroft pointed out recently, the vast cash injection given to the company from real estate giant Axel Springer provides its expansion scheme in the US with plenty more vim.

However, fears abound that Purplebricks is stretching itself too far and too soon in overseas territories, and this impatience could see its foreign growth plans eventually falter. This is not my only concern either, with the flagging UK marketplace exacerbating my bearish view — the firm warned in March that revenues would fall short of full-year expectations due to these pressures.

I think there are much safer shares out there to deliver strong long-term shareholder returns than Purplebricks.

The post BP and Purplebricks: two high-risk stocks I would sell today 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 recommended BP. 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.