The UK economy looks fragile at the moment. With the energy crisis driving inflation to historic highs and the pound falling, analysts expect the recovery to be sluggish and difficult. UK shares have been widely affected too, putting investors on high alert. 

Conversely, few sectors are currently witnessing a boom. But those companies that have continued to show strong growth are now receiving investor interest. I think this is the perfect time for me to diversify and pick up quality stocks on the way up. 

Shares that are defying trends

While the FTSE 100 is down over 6% this year, two overlooked gems on my watchlist have risen over 40% in three months. But looking at the fundamentals, they still look cheap. Let’s dive in. 

The energy sector is red hot right now. Despite the renewable energy push, oil is expected to power a majority of our industries for the foreseeable future. 

UK’s largest independent oil and gas business is Harbour Energy (LSE:HBR) and it has benefited greatly from this. Its shares are up over 41% in the last three months thanks to surging profits. 

In the first half (H1) of 2022, the company saw a 12-fold increase in pre-tax profits to US$1.49bn compared to $120m in H1 2021. The company cut down its net debt by 50% to $1.1bn and increased its 2022 shareholder payouts to $500m. 

Harbour Energy shares are trading at 448p with a price-to-earnings (P/E) ratio of 4.5 times. Given the current yield of 2.13%, which is expected to increase moving forward, this looks to me like a bargain. 

The next UK share on my list has jumped 47% over the last three months. 4imprint Group (LSE: FOUR) is a merchandise manufacturer that operates primarily in the US and controls 4% of the $23.6bn promotional products market.

The firm specialises in designing and manufacturing products that are functional adverts for large companies. 

In H1 2022, operating revenue was $515.54m, up 58% from H1 2021. Operating profits jumped a whopping 1124% to $43.98m primarily because of streamlined marketing and better pricing. 

4imprint doubled its new customer acquisitions and its order book grew 44% to 886,000 in 2022. The board is confident that the revenue target of $1bn will be achieved in 2022.

Its shares are currently trading at 3,645p at a P/E ratio of 20.9 times. Although this is not cheap on paper, I think its revenue growth in 2022 makes it a bargain. Many blue-chip businesses have struggled over the last few months, but 4imprint has shown considerable growth in a highly contested US market. 

Concerns and verdict

Tax cuts will plague oil companies moving forward. The world’s five biggest oil companies saw profits increasing by £50bn between April and June. This prompted a 25% energy profits levy in the UK that will bring the total tax on oil companies to 65%. 

Also, many US businesses are freezing hiring to improve margins. This is indicative of a slowing economy that could affect marketing spend. 

However, both businesses discussed here have reinvested smartly and have stronger balance sheets heading towards 2023. While there could be a slowdown, I think these shares have a lot of growth potential right now. I’ll probably make a lump sum investment in both shares when signs of market recovery become stronger. 

The post Up 40%+ in 3 months! These 2 fast-growing UK shares still look cheap appeared first on The Twelfth Magpie.

More reading

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

Suraj Radhakrishnan 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.

Fears of inflation dominated the first part of 2022. UK stocks in the oil and gas and mining businesses did well. Now fears of a recession are starting to dominate. I think it’s about time I looked for stocks and shares that could offer some protection for my portfolio if a recession hits.

Recession-proof UK stocks don’t exist

There’s no such thing as a recession-proof stock, but some stocks are more sensitive than others to the peaks and troughs — or booms and busts — of the business cycle. Cyclical stocks tend to follow the ups and downs in an economy. When a recession hits, cyclical shares tend to perform poorly and fall in price. On the other hand, defensive stocks are less affected by the economy. There are also sensitive stocks that fall somewhere in between. 

Defensive stocks can be found in the following sectors:

• Consumer defensive
• Healthcare
• Utilities

There are hundreds, if not thousands, of UK stocks in the consumer defensive, healthcare, and utility sectors. I can’t buy them all but I could look for a fund that invests in these sectors. Yet I would prefer to pick my own stocks. So I need something to help me select companies with a recession in mind. That something is quality.

Quality UK stocks

Quality stocks tend to have higher margins, profitability, and cash flow than their peers. Strong balance sheets and stable or improved business operations are also hallmarks of quality stocks. These features are sought after by investors when a recession is looming and during one. In my opinion, quality is never out of fashion.

Key quality measures

Two stocks have caught my eye for quality and defensive sector membership: healthcare stock Bioventix and AG Barr from consumer defensives. One quality non-defensive sector name also struck me as worthwhile. Given that I was looking for stocks to add to my stocks and shares ISA for a recession, this company’s business model had immediate appeal. That stock was FTSE 100 member Experian. The company owns a database of millions of consumers’ and businesses’ credit activity and repayment histories. It sounds like the sort of outfit that might see demand for its services holding up when the economy sours.

Taking stock of recession risks

I’m intrigued by these three stocks. They look good on measures of quality. Two are from defensive sectors, and one has a business model that seems like it should hold up well in a recession. So, do I buy these three UK stocks for my Stocks and Shares ISA? Not without further research.

Although consumers will likely cut spending on food and beverages less severely than on, say, eating out and cinema visits during a recession, will they switch from AG Barr’s brands to cheaper alternatives?

Bioventrix makes antibodies for diagnostic procedures and drug and compound detection. I want to know what proportion of its sales goes to organisations less likely to cut spending dramatically in a recession (like, for example, the NHS).

For Experian, although checking credit seems to make sense when times are tough, in a prolonged and severe recession, would reduced spending render its services redundant? These are some questions I must mull over before pulling the trigger on any of these three UK stocks. 

The post 3 UK stocks to consider for a recession appeared first on The Twelfth Magpie.

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James J. McCombie has no position in any of the shares mentioned. The Motley Fool UK has recommended AG Barr, Bioventix, and Experian. 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.

Thanks to the electronic vehicle (EV) revolution, lithium prices have surged nearly nine times since 2020. Car manufacturers are clamouring to secure lithium reserves after reports show that prices for the soft metal could continue this historic rise. To capitalise, I am looking at two UK shares in the EV space that fit my portfolio. 

Wonder metal 

While most commodity prices have taken a hit in 2022, lithium is still trading close to all-time highs of US$70,000/ tonne. And analysts expect lithium prices to rise anywhere between 150% and 250% year over year until 2028. 

To put the current inflation in lithium prices in perspective, let us look at the price action across 2022. In January, lithium cost $10,000 per tonne. Right now, it is trading close to $68,000. This 580% jump in seven months has made it one of the fastest growing commodities in history. 

And with European EV sales at an all-time high, I think this is the perfect time for me to look at lithium shares in the UK.

Two top UK shares I’m watching

To cut out crude oil, the first step is to develop the battery tech to power our machines. And Ilika (LSE:IKA) is a British battery manufacturer with a focus on lithium-based batteries for EVs and medical devices. 

The firm is working on its ‘Goliath’ battery line, which could become a premium option for the automobile belt in Europe. After years of research, Ilika is finally looking to scale up manufacturing efforts to meet this sudden spike in demand. 

The company is already working with the UK Battery Industrialisation Centre (UKBIC) to create a dedicated 100 MWh manufacturing line. Also, Ilika’s tech was recently accepted into the coveted APC programme to help the UK automotive industry reach net-zero emissions.

The next UK share on my list, Rio Tinto (LSE:RIO). The FTSE 100-listed mining giant has actively been securing lithium reserves across the world. These include the Rincon lithium project in Argentina for $825m and the highly promising $2.4bn Jadar lithium project in Serbia. 

The Serbian government recently revoked the license for the Jadar project, citing environmental concerns. This forced Rio Tinto to propose a new plan that promises a 15% reduction in emissions. According to estimates, lithium from Jadar would meet 90% of Europe’s current needs. And Rio’s board is confident that a resolution can be reached.

Concerns and verdict

Despite the estimated demand for batteries, projects like Ilika could meet huge roadblocks. The company is yet to become cash-positive given its high R&D budget. And the journey to being a new product to the market is tough, especially for smaller firms.

Miners like Rio always run the risk of government interventions that could affect operations. Also, with lithium prices skyrocketing, some analysts are wary of the instability. If the demand from China cools down, lithium prices could drop again, effectively ending the surge. 

However, the EV industry looks unstoppable right now. Even Elon Musk has stated that Tesla could enter the lithium mining market to cut costs. And the two UK shares on my watchlist can help address this demand. If the demand for EVs extends into 2022, I would be tempted to make an investment in both to cash in.

The post Lithium prices skyrocket: 2 UK shares I’d buy to capitalise  appeared first on The Twelfth Magpie.

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• The only FTSE 100 stock I own right now

Suraj Radhakrishnan 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 the global economy in turmoil, UK shares that were pandemic darlings are down significantly in 2022. But a lot of these companies are robust businesses operating in exciting sectors. Here, I’m looking at two such pandemic performers that seem to me to be primed for growth for the next market recovery. I’m searching for ‘future-proof’ UK shares available at a discount and these two companies look like good picks for my portfolio.  

The future of grocery 

Ocado (LSE:OCDO) was a big pandemic winner. With people restricted indoors, this online grocer’s sales blew up. And while Ocado is still an online grocer, it has slowly transitioned into a tech company that sets up automated warehouses for other big chains. And its designs and workflow systems are backed by over 500 patents. 

The economic slowdown has caused many UK shares to fall from pandemic and post-pandemic highs. And Ocado shares, which rose 160% between February 2020 and February 2021, have fallen 69% since. In 2022 alone, the Ocado share price is down 45%. And there are some solid reasons behind this drop.

Ocado’s operations are very cash-intensive right now. The company has reinvested earnings and borrowed over £4bn since its initial listing. And just this week, it placed a further £575m of shares on the market, which added up to 9.7% of its share capital. Its huge R&D spending means the company has recorded pre-tax losses for two consecutive years.

But I’m still very bullish on this fast-growing UK share. It’s clear to me that automated warehousing is the future of e-commerce. And Ocado’s recent partnerships with grocery giants like Morrisons and Kroger back this up. The board expects steady revenue when warehouses that are still under construction start functioning. And its automation products saw a 301% jump in contracts last year. 

I believe its tech will become immensely valuable in the next five years. Ocado tops my UK shares to buy watchlist but the market is still volatile and I think the current bear run could present a better buying opportunity in the near future.

FTSE 100 darling

Equipment rental company Ashtead Group (LSE:AHT) was a big winner in 2020-21. Its shares jumped over 310% between March 2020 and December 2021. However, so far in 2022 they’re down 45% at 3,400p with a price-to-earnings ratio of 14.8 times. And I think the company is a bargain growth option at this price. 

It’s already the second-largest equipment rental company in North America and the largest in the UK. And being a construction service provider, Ashtead avoids the pitfalls of construction like fluctuating commodity prices and environmental factors delaying deliveries.

The company will have to deal with growing overhead and repair costs and its sizeable £5.8bn net debt. This could eat into future revenue given its high acquisition spending right now. But the business is a strong cash generator, bringing in £1.1bn in 2022. 

This business is on my UK shares buy list because of its steady growth strategy and huge market share in cash-rich regions. Ashtead addresses a very specific problem in the construction industry and I’m bullish on its business model. I’d be tempted to invest in the company once the larger global economic climate shows strong signs of recovery. 

The post Down 45%, are these UK shares no-brainer bargains right now?  appeared first on The Twelfth Magpie.

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Suraj Radhakrishnan has no position in any of the shares mentioned. The Motley Fool UK has recommended 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.

An unfashionable stock

boohoo (LSE: BOO) is one of the UK’s biggest fashion retailers. The online fashion retailer had already been 30% down this year, but plunged a further 12% after it released its FY22 results. Nonetheless, it’s managed to recover most of its post-earnings loss since then.

The firm had already been starting to see a slowdown in sales growth due to “Significantly longer customer delivery times as a result of the pandemic”. Nevertheless, its new distribution centre in the US is expected to go live in mid-2023. With next day and two-day express delivery options available, this could help ease the supply chain constraints that boohoo is currently facing, and help the stock price.

However, with inflation continuing to weigh on consumer spending, I expect sales growth to continue declining. Management shares my sentiment too, as guidance for FY23 is for low-digit revenue growth. Expensive freight costs have also impacted its bottom line as the firm saw its profit margin decline from 5.2% in FY21 to -0.2% in FY22. For that reason, I won’t be buying this stock for now.

In the eye of the storm

The unfortunate events of the Russia-Ukraine skirmish has battered the Ferrexpo (LSE: FXPO) share price. Commonly known for being a high-dividend yield stock, the stock is now trading at 65% off its all-time-high.

The Ukraine-focused firm faces a large amount of uncertainty given the ongoing war there. Any further escalation might run the company out of business as its mining operations are located just east of Kyiv, where it’s more susceptible to Russian attacks. Additionally, China’s city-wide lockdowns have driven iron ore prices down. This will inevitably impact Ferrexpo’s top line in the near to medium term. Most importantly, the firm decided to defer its dividend payments. The board said that it will continue to assess the situation in Ukraine and make a decision on dividends when appropriate. With many investors initially buying the stock for its dividend, this is a stock I’m avoiding.

Getting the boot

Aside from sky-high inflation, Dr Martens (LSE: DOCS) will also have to worry about the recent retail sales figures. Although positive for the month of April itself, retail sales for the three months to April fell 0.3% as high inflation hurt purchasing power. That’s one reason why its stock is down 50% this year.

The majority of the firm’s revenue stems from the Americas and EMEA region. With inflation continuing to spiral out of control, this doesn’t bode well for Dr Martens’ near-term outlook. As central banks in these regions rush to raise interest rates, its debt levels start to become even more alarming. The firm has a debt-to-equity ratio of 140%, a declining free cash flow, and higher operating expenditure. These aren’t factors that are favourable when I invest in UK stocks, especially in a high interest rate environment. As such, I’ll be looking to purchase other shares with much more favourable fundamentals.

The post 3 UK stocks to avoid this summer appeared first on The Twelfth Magpie.

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John Choong has no position in any of the shares mentioned at the time of writing. The Motley Fool UK has recommended boohoo 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.

Dividend stocks are shares in companies bought primarily for their dividend payments, issued to investors annually or more often. These payments can seem small at first, but by adding to my position and reinvesting my earnings, I plan to grow my portfolio over time and build a passive income stream.

Rental properties

The cost of renting a home in the UK continues to rise. Tenant prices increased by 2% in 2021, according to the Office for National Statistics. This was the fastest growth rate in the last five years. Given the still constricted number of available homes, I believe rental rates will continue to rise.

However, I would not invest in buy-to-let. Instead, I’d put my money into Residential Secure Income. Not only could this save me money in the long run, but it means I can avoid the upfront costs and workload that buy-to-let can involve. This UK stock is currently yielding a 4.8% dividend. There’s a risk that demand for rental homes could slow or even reverse as new homes are built. This could negatively affect the share price and hurt Residential Secure Income’s ability to pay a dividend. But UK house prices have risen at a surprisingly fast rate in recent months leading me to believe that it could be an investment I want to hold for 10 years.

An insurance company

The cost of Storm Eunice is expected to be around £350m. Massive damage has been inflicted by record winds and may eat into revenues of companies like Admiral Group (LSE: ADM), which is part of the FTSE 100. However, I still expect this income investment to pay out large dividends this year via an estimated 5.8% yield. As climate change continues to take hold over the coming years, extreme weather events will become more frequent. The need for insurance (as well as its cost) is likely to go up as a result. But this does pose a significant risk to insurance businesses too if they end up paying out more than they can take in in premiums.

Admiral has a strong balance sheet though, which should enable it to resist any big cost increases and continue to pay out large dividends to shareholders. According to the company’s most recent financials, its Solvency II ratio was at a huge 209% in June. Admiral, I believe, might also be a good long-term investment because of its quick expansion into new regions.

A 5.1% renewable energy dividend stock

Today, I’m also inclined to buy SSE (LSE: SSE), a FTSE 100 energy provider with a 5.1% dividend. As an income investor, I appreciate this type of dividend investment because of its critical position in energy production. This implies revenues will be stable regardless of the weather and allows SSE to pay out big dividends year after year.

SSE appeals to me as well because of its green energy focus. Oil may be more expensive than ever, but I see this as only a short-term state of affairs. The Ukraine crisis has caused fossil fuel prices to skyrocket. Governments in Europe should now be very aware of the massive security risk fossil fuel reliance represents. At the same time, renewable energy is growing cheaper and more efficient. Even if new Ofgem restrictions might stifle earnings growth in the future, I’d purchase SSE shares.

The post My top 3 dividend stocks to buy and hold for 10 years appeared first on The Twelfth Magpie.

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James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has recommended Admiral 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.

Investing via the stock market is often labelled as ‘risky’. But I’m happy to take that risk rather having a lot of my wealth sitting in a cash savings account. Allow me to explain why I’m buying UK shares.

Cash savings erode in value

Let me start by clarifying that I’m not against setting some money aside. I actually reckon this is very prudent. Having cash ready for replacing something that’s broken down in the house, for example, can take a lot of the sting out when it (inevitably) happens. 

Once I’ve reached a certain amount however, the benefits that come from keeping my wealth in this asset diminish massively. The reason for this is that inflation — the ‘silent killer’ of the financial world — gradually (or not so gradually) erodes the value of money.

Inflation isn’t always a bad thing. However, anyone with an eye on the headlines can’t have failed to notice the rising cost of living in recent months. In fact, inflation sat at 5.4% in December, far above the Bank of England’s 2% target. The state of affairs is even worse across the pond. At 7.5%, inflation in the US is now at its highest rate since 1982. 

Since any cash savings I have are now being  impacted, I think it’s wise for me to keep less money in the bank and more in the stock market. There are a few reasons for this.

Why I’d buy UK shares instead

First, equities have been shown to generate higher returns than all other traditional asset classes over the long term. So even though inflation may have the upper hand right now, this is unlikely to matter if I can lock my money away in the market for years (and ideally decades). True, past performance is no guide to the future, but nor is it completely redundant, in my opinion. 

A second reason relates to the valuation of stocks. Whether we attribute this to the pandemic, Brexit, supply chain issues and/or tensions between Russia and Ukraine, many UK shares are very reasonably priced at the moment. As Warren Buffett would attest, the best time to buy is when brilliant companies are on sale.

Third, owning UK shares gives me access to a source of passive income in the form of dividends. Yes, not every company returns a proportion of profits to shareholders. However, those that do can serve as a defence against rising prices.

Get personal

Of course, the above is conditional on me having already built up the aforementioned cash buffer. I’d also not want to be carrying any debt (aside from a mortgage). Yes, inflation is high, but the interest I’d be paying on credit cards is even worse.

It’s also worth bearing in mind that the specific UK shares (or funds) I buy will be dependent on a number of other factors that vary between investors. As someone in his early 40s, my portfolio may not have the same asset mix as someone in their early 20s, or a retiree.

Investing is very personal. Therefore, it’s vital to evaluate my own risk tolerance, financial goals and time horizon before I buy anything with the cash I move over from my savings account.

The post Cash savings accounts? I’d rather buy UK shares as inflation soars appeared first on The Twelfth Magpie.

More reading

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

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.

At the ripe old age of 91, Warren Buffett has witnessed more than one market crisis in his long life. Despite this, he has managed to become one of the world’s wealthiest individuals, owing to his calm analysis and ability to find top-notch stocks. That, I believe, qualifies him as someone worth listening to in times like these.

Focus on the business

Warren Buffett is a firm believer in the necessity of sound business principles. Observing a stock’s rise and fall is, for the most part, frustrating, draining, and unproductive. Many inexperienced investors make the mistake of purchasing when prices rise and selling when they fall. However, a whole host of factors influence share prices in the short term. Not only is it hard to forecast these fluctuations, but they typically reveal little about a company’s health.

If, on the other hand, an investor learns how much debt a firm has, how much cash it has on hand, and whether it makes a consistent profit, they will be in a much better position to determine whether the company is healthy or not.

That doesn’t necessarily mean that Buffett would invest right away. He still believes in paying a fair price for a stock.

How Buffett gets a fair price

It can be thrilling to watch markets trending upwards. Often it can seem like the good times will never end and that we need to invest as much as possible. But the good times rarely last and many inexperienced investors will find themselves watching in terror as the market and their investments, fall in value. Warren Buffett believes this period presents an opportunity.

“Be fearful when others are greedy, and be greedy when others are fearful.”

Simply put, Buffett believes that when markets are down that’s when we should be making stock purchases. When markets are surging, this advice is inverted.

Going against the grain is never easy, especially when stock values are down. So, one of the ways I attempt to get around this is to be greedy in instalments. In other words, rather than seeking to buy at the absolute bottom to maximise my returns, I make several acquisitions of solid UK equities.

This makes things much more bearable from a psychological standpoint. It also prevents me from becoming paralysed by indecision and missing out on a terrific chance.

That’s not to say Buffett only buys when markets are down. He has made very few purchases throughout the pandemic. But Berkshire Hathaway, the company Buffett runs, is currently sitting on over $140bn in cash. This could imply that he believes a big crash is coming and that when it arrives, he intends to go shopping.

Time is on my side

Knowing that I want to stay invested for decades lessens the pain of market downturns.

This mindset also offers me an advantage over expert investors. Unlike them, I’m not compelled to justify my decisions or meet a quarterly goal to maintain my job. To put it another way, their chosen professions force these unquestionably gifted people to do everything Buffett warns against. They are compelled to become impatient.

It is because of this dedication to focusing on the long-term objective that I can withstand a crash or correction.

The post Why I’m listening to Warren Buffett and buying cheap UK stocks appeared first on The Twelfth Magpie.

More reading

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

James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking 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.

At the grand old age of 91, it’s fair to say that Warren Buffett has seen a market crash or two in his long life. Despite this, he’s still managed to become one of the richest people in the world, thanks to his level-headed approach (and awesome stock-picking skills). I think that makes him worth listening to at times like this.

Here are three bits of Buffett brilliance for troubled times. 

Buy the best

“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

As a general rule, most people like it when they can acquire something really nice for a lower price than expected to pay. That’s why Black Friday and Amazon Prime Day are so popular. In the topsy-turvy world of investing however, many people find it hard to buy when prices fall. To really benefit from a stock market crash, therefore I need to challenge this aversion.

Of course, this does not mean I buy any old thing because it’s now trading at a low(er) price. No, the point here is to look for UK stocks (and possibly a few from abroad) that have all the hallmarks of quality businesses. For Buffett, these are companies that have ‘economic moats’, competitive advantages that mean they can continue growing revenue and profits for many years.

Get stuck in

“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.”

If the previous quote from Buffett highlights what sort of stock I should be hunting down, this second bit of wisdom is all about how much of it I should be buying. Put simply, Buffett believes we should be snapping up as much as we can. Of course, this advice is reversed when markets are soaring. In such a scenario, the ‘Sage of Omaha’ thinks we need to be prepared to buy less or sit things out completely. 

Now, going against the crowd is never easy, especially when share prices continue to tumble. So one way I try to get around this is to be greedy in tranches. In other words, I make multiple purchases of great UK stocks rather than attempting to buy at the absolute bottom to maximise my gains.

Psychologically, this makes things much more bearable. It also ensures I don’t suffer from ‘analysis paralysis’ and miss a great opportunity.

Take your time

“The stock market is a device for transferring money from the impatient to the patient.”

As a long-term Foolish investor, these final words from Buffett are about as soothing as I can find. Knowing I plan to stay invested for decades helps take the sting out of nasty market moves like this one.

Adopting this mentality also gives me an edge on professional investors. Unlike them, I’m not required to explain my decision-making or outperform a specific benchmark every quarter to keep my job. Put another way, their chosen careers require these undeniably talented people to do everything that Buffett advises against. They are forced to become impatient.

It’s this commitment to focusing on the long-term outcome that makes a crash or correction easier for me to bear. It’s also what I believe will see me eventually accumulate a non-insignificant amount of wealth.

The post Stock market crash: I’m listening to Warren Buffett and buying UK stocks appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
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Business fundamentals and share price

I’ll ignore the immediate headlines about share prices and focus on the underlying business. What does the company earn and where does its revenue come from?

According to its annual report from September 2020 to October 2021, M&S brought in £9.2bn in revenue from its food and clothing & home operations, and £41.6m in profit before tax. This was down from £10.1bn in revenue last year and down further still from £10.3bn the year before that. Unfortunately, when I look at M&S’s own financial reports going back to 2014, it has been in a steady decline for the past six years. This downtrend can also be seen in the share price, which fell from 568p in 2015 to today’s much lower figure.

But all companies have good times and bad times. In fact, these years of decline can offer a great entry point to investors if the company is making changes to its model that bode well for the future.

Move online

And it certainly is making changes. The M&S investors page states the percentage of clothing sales made online. In 2021 that was 50.5%. I haven’t been able to find data on how much revenue clothing brings in alone, but lumped together with home products the two contributed £3.2bn in 2021. And 30% of sales for both were made online. That’s a company that was lagging behind its peers in its online sales just a few years ago.

M&S has been undergoing a multi-year effort to move more of its business into the online space, a move that comes with some benefits but a few potential downsides too. Online sales often have smaller profit margins than their in-store counterparts. This might seem counter intuitive, but I have to remember that online is the future of retail. The past 10 years have seen a gradual decline in retail profit margins as online shopping has taken over more of the market. But if Marks & Spencer can make up the difference in sales volume, this online pivot could really pay off. It certainly is large enough to do.

Moving online also allows M&S to reach new markets with lower initial costs. At the start of 2021 it announced the launch of 46 new websites around the world, including Argentina and Uzbekistan. Some of these ventures might fail, but a lot won’t, becoming new sources of revenue for years to come.

M&S branding and recognition 

The company has seen some tough years recently, but we are already starting to see some of these changes come into effect. In early November, Marks & Spencer’s share price jumped 20% in a single day after it announced a boom in clothing sales had pushed pre-tax profits to nearly £187m.

This amazing turn of events offset losses made over the rest of the year. If it can maintain even a fraction of that momentum, I think the share price could remain on the upswing through 2022.

That’s why I’ll be adding it to my portfolio.

The post The Marks & Spencer share price rose 52% in six months. Can it soar again in 2022? appeared first on The Twelfth Magpie.

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James Reynolds 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.