I’m on the hunt for high-quality value stocks that I can buy this month and hold for the decades ahead.

Multiple forces have combined to dampen investor confidence and drag down markets in the past few years. And while some might say it’s natural to avoid investing any hard-earned cash in the stock market in times like these, I’m on the opposing side to this opinion.

Indeed, I see now as a great buying opportunity. Here are two value stocks I’m contemplating buying!

Banking giant

I’m tracking banking giant Barclays (LSE: BARC). A poor performance as of late has meant the stock is on my watchlist. And while I already own some shares, I’m tempted to buy more.

Barclays isn’t an anomaly with its subpar record in the past year or so. It’s been a tough time for the financial sector and banking stocks. Inflation and the aggressive rate hiking cycles that have followed suit have seen large volatility in the sector. Naturally, investors are cautious.

However, at its current price of 156p, I see a lot to like about Barclays stock.

To start, it currently trades on a price-to-earnings (P/E) ratio of just 4.5. This sits comfortably below the ‘value’ benchmark of 10 as well as the average of its FTSE 100 peers.

What’s more, I’m always seeking investments that can provide me with a steady passive income. And with a dividend yield of around 5%, Barclays ticks that box. Its half-year results also revealed the firm has a new share buyback scheme in the pipeline.

Barclays’ US operations have been shaky in recent times, and more issues across the pond could have a detrimental impact on the share price. However, with its global presence and diversification, I think the bank is in a strong position.

I’m expecting more volatility in the months ahead as inflation continues its rampage. This may play out in the second half of the year. However, I’m happy to ride the wave and see Barclays as a solid potential long-term investment.

Storage behemoth

I’ve also been paying close attention to Safestore (LSE: SAFE). With it being the largest self-storage unit provider in the UK, the business is putting emphasis on expansion. I think now could be a chance to capitalise on a cheap share price.

The stock currently trades on a P/E ratio of six. And even with the cost-of-living crisis, the firm has posted consistent revenue growth in the last few years as people seek extra storage to tuck away their excess goods.

By the looks of things, European expansion is next on the agenda for the business as it moves forward. This was most recently seen with a new joint venture in Germany.

On top of this, Safestore also provides a yield of nearly 4%. In the last decade, its dividend has increased an impressive 400%.

Debt on its books could hamper the business should interest rates continue to rise. With hiked rates impacting the price of real estate, this has further impacted the firm.

However, at its current price, I think it’s potentially a steal.

The move

I’m keen on both of these stocks and, as long-term buys, view them as solid choices. If I have any spare cash come the end of this month, I’ll strongly contemplate buying both.

The post Should I be buying these value stocks right now? appeared first on The Twelfth Magpie.

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Charlie Keough has positions in Barclays Plc. The Motley Fool UK has recommended Barclays Plc and Safestore Plc. 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.

Retail investors have been through it all in recent times. And right now, it’s inflation that’s weighing down on market sentiment. That said, I’m not all too worried. Instead, I’m hunting for value stocks to add to my portfolio.

Markets have taken a beating in the last few years, presenting a great buying opportunity. And I fully intend to capitalise on it.

My plan is simple. Buy value stocks with attractive dividend yields that I can hold for the years to come.

Here are two that I’m tracking. If I had the cash, I’d strongly consider buying them today.

Safestore

First up is Safestore (LSE: SAFE). As its name suggests, the business is a provider of self-storage units, the largest in the UK of its kind, and a powerhouse in Europe. While the business of leasing storage space may seem far from thrilling, I see value in the stock.

To start, it currently trades on a price-to-earnings (P/E) ratio of around six. This sits comfortably below the ‘benchmark’ for value of 10 as well as the average of its FTSE 250 peers.

Regardless of a cost-of-living crisis, the business has experienced a consistent uptick in revenues in the past few years as consumers vie for extra storage space to tuck away their excess goods. Following its success in the UK, it’s also continuing to grow its presence in Europe, including a joint venture into Germany.

On top of this, Safestore stock also provides a solid source of passive income. As I write, it yields around 3.6%. In the last decade, its dividend has increased by a whopping 400%.

With some debt on its books, interest rate hikes could place pressure on margins and harm the firm going forward.

However, I see the demand for self-storage continuing its upward trend in times ahead. And with that, I consider Safestore shares a smart investment.

Barclays

A few weeks back, I opened a small position in Barclays (LSE: BARC). It’s not been the best 12 months for the stock, down 12%. But I’m remaining optimistic. And with a P/E ratio of just four, I classed it as an opportunity too good to miss.

What’s more, its price-to-book ratio also makes the stock look cheap. This measures how the market values a company compared to the value of its total assets. With Barclays sitting at around 0.4, I sense an opportunity.

The second half of my criteria, a meaty and reliable dividend yield, is also met by the stock. With it offering a yield of around 5.3%, this isn’t inflation-beating. However, it’s not only the now I’m buying for.

The business has placed an emphasis on returning value to shareholders in recent times. For example, its half-year results released at the tail end of July highlighted its latest share buyback scheme, totalling £750m. This represents a 50% improvement from the figure seen last year.

The risks surrounding Barclays revolve around rising interest rates. Rate hikes could see defaults jump. Moreover, banking stocks have experienced large volatility of late.

That said, looking undervalued with a solid source of passive income, I’d be willing to snap up some shares.

The post I’d rush to buy these 2 value stocks right now! appeared first on The Twelfth Magpie.

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• After a 160% rally, major brokers still see more gains for Barclays shares. Here’s why
• How many Barclays shares do I need to buy to get a £1,000 passive income?

Charlie Keough has positions in Barclays Plc. The Motley Fool UK has recommended Barclays Plc and Safestore Plc. 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 inflation floating around levels not seen for decades, naturally I’m on the hunt for quality value stocks that can generate some healthy returns in the long run.

There’s a variety of stocks that fit this bill across a host of sectors. And given current market conditions, I think there are plenty of opportunities presenting themselves.

But right now, my choice is Barclays (LSE: BARC).

A rough patch for banking

It’s safe to say this year hasn’t seen a top performance for the financial sector and banking stocks.

Inflation has weighed down on market confidence, while aggressive rate hiking cycles and events such as the collapse of Silicon Valley Bank and its implications have investors spooked.

With all the above combining, now may be deemed a bad time for investors to dip their toes into the market and, more specifically, banking stocks. But I’m taking a contrarian view.

Barclays’ positives

There are plenty of reasons I’m keen on Barclays. Let’s start with its valuation. As I write, the stock trades on a price-to-earnings ratio of just 4. This seems seriously undervalued. And compared to the FTSE 100 average, which is around three times the figure, this is reinforced.

To add to this, its price-to-book ratio, which measures how the market values a company compared to the value of its assets, is around 0.4. This again signifies the stock is massively discounted.

Moreover, Barclays stock offers a sizeable dividend yield that could tie me over for the time being, should the financial sector continue to experience volatility. Rewarding investors with a yield of around 5.3%, I could put my money to work to fight back against red-hot inflation rates.

Its recent half-year results saw the interim dividend hiked 20%. The firm further announced a new share buyback scheme totalling £750m, a 50% rise from the same period the year prior.

Of course, there’s always the risk that dividends may be cut at any moment. And judging by the current volatility, this is clearly a threat. However, with its dividend well covered by earnings, I’m confident of a payout.

Global presence

Granted, Barclays isn’t the only banking stock I have my eye on at the moment. But there are a few other characteristics that make it stand out.

For example, I like its diversification and its global presence, with operations in over 40 countries. And it has expertise in areas from retail to investment banking. This arguably gives it an edge over some of its competitors.

The risks

While its global diversification is a bonus, it does have some drawbacks. Namely, this relates to Barclays’ US operations and the volatility we’ve seen across the pond with its investment arm.

On top of this, we’ve already seen the impact defaults have had on banks. And with rates expected to continue rising this year and potentially beyond, further damage could be seen.

My move

The short-term outlook for Barclays is a rather bleak one. But as legendary investor Warren Buffett once said: “Be greedy when others are fearful.”

On top of its low valuation and sizeable yield, I think Barclays is well-positioned to succeed in the long run. If I had the cash, I’d snap up some shares.

The post Here’s one value stock I’d snap up today! appeared first on The Twelfth Magpie.

More reading

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• Up 50% in a year! That’s not the only reason I’d consider buying Barclays over Nvidia stock today
• Barclays shares could soon soar another 21%, according to the latest price target
• After a 160% rally, major brokers still see more gains for Barclays shares. Here’s why
• How many Barclays shares do I need to buy to get a £1,000 passive income?

Charlie Keough has positions in Barclays Plc. The Motley Fool UK has recommended Barclays Plc. 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.

Inflation continues to run rampant and hit consumers’ wallets hard. As such, I’ve been looking for stocks that have the potential to outperform the inflation rate, and Watches of Switzerland (LSE: WOSG) has caught my eye.

Luxury stocks clock in

There are several reasons to invest in luxury stocks during times of high inflation. The first is that customers purchasing luxury goods are usually least affected by inflation, given their financial position. The second is that retailers are able to pass on higher costs without impacting demand.

I imagine this to be the case for Watches of Switzerland. The company sells luxury watches and jewellery, while also providing servicing, repairs, and insurance services. It operates over 100 showrooms in the UK and 40 showrooms in the US. The FTSE 250 firm also operates through several transactional websites that include Goldsmiths, Mappin & Webb, Watches of Switzerland, Mayors Jewelers, and Betteridge brands.

Dazzling numbers

Keeping that in mind, the luxury retailer posted a rather robust set of numbers for its first quarter. Despite sales growth showing a slowdown, growth was still rather impressive for what I’d classify as a value stock. Shore Capital analyst Eleonora Dani echoed this sentiment as she described it as a “solid trading update“.

As a prospective investor, it’s nice to see broad-based growth across the company’s line of products. This was helped by continued improvement in its range of watches, but more notably, its jewellery. CEO Brian Diffy expects the strong momentum from Q1 to carry into Q2, and the rest of the year. Management even guided for the FTSE 250 company to finish the year strongly as it reiterated its outlook for its financial year.

Additionally, Diffy stated that the company’s products continue to show strength in demand, with client interest continuing to expand. Consequently, the trader will be focusing on attracting even more new clients and growing its market share in the UK and US. As travel across the Atlantic returns to pre-pandemic levels, this should serve as a tailwind, as all of its airport showrooms have now reopened.

Watch list

Although I’m no watch expert, the overall consensus seems to show that demand continues to strongly outstrip supply for luxury watches. And based on the latest results, the Watches of Switzerland management team has been showing its prowess by executing excellent strategic decisions while adapting to the tougher macroeconomic conditions.

With a rather steady balance sheet, boasting a debt-to-equity ratio of 33%, I think Watches of Switzerland is well equipped to continue its growth while remaining robust in the event of a recession. Therefore, I’m relatively confident that the firm’s share price can continue to perform. After all, it’s up 15% from its year-to-date low. Nonetheless, I’m slightly wary of the latest UK retail sales data, which showed non-food store sales declining 0.3% on a month-on-month basis, albeit still above 2019 levels.

Even so, this may not be truly indicative of the FTSE 250 company’s fortunes, given that it operates in a very niche market. So, with an average price target of £13.37, I’ll definitely be adding Watches of Switzerland to my watchlist for now and will be looking to purchase shares in the near future.

The post 1 FTSE 250 share to buy now as an inflation stock! appeared first on The Twelfth Magpie.

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John Choong 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.

Director dealings are essentially insider transactions for shares between directors and the companies they work for. These dealings are always made public, and are often considered a good indicator of a company’s future prospects. However, they don’t get nearly as much attention as other company news due to their complex nature. Nonetheless, here I’m breaking down this week’s biggest director dealings from three FTSE firms.

Vodafone

Vodafone (LSE:VOD) is a British multinational telecommunications company. It predominantly operates services in Asia, Africa, Europe, and Oceania. The company runs at least some form of operations in over 150 countries.

Following lacklustre numbers from its Q1 trading update, the share price dropped by 5%. It has stayed there since. Despite that though, it’s a sign of confidence when a high-ranking director purchases shares. And this week, Vodafone’s Chairman decided to reinvest his dividends into buying more Vodafone shares.

• Name: Jean-François van Boxmeer
• Position of director: Chairman
• Nature of transaction: Dividend shares
• Date of transaction: 10 August 2022
• Amount bought: 9,975 @ £1.21
• Total value: £12,069.75

Deliveroo

Deliveroo (LSE: ROO) is a British online food delivery company. It operates in over 200 locations across the UK, and is the second-biggest food delivery platform in the country. It also operates internationally with operations in France, Singapore, Australia, and many more.

In this week’s transaction, a director exercised his option to redeem stock compensation. Following this, he opted to sell approximately half of the shares received to cover tax liabilities. That being said, it’s worth noting that this is a monthly occurrence from the company’s CFO. As such, these actions shouldn’t impact investor sentiment surrounding the stock. It’s worth pointing out, however, that the sale of these shares dilute shareholders’ value. This is because there are now more Deliveroo shares floating on the market.

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Award shares
• Date of transaction: 15 August 2022
• Amount vested: 83,400 @ £0.96
• Total value: £80,247.48

• Name: Adam Miller
• Position of director: Chief Financial Officer
• Nature of transaction: Sales of shares to cover tax liabilities
• Date of transaction: 15 August 2022
• Amount sold: 40,402 @ £0.95
• Total value: £38,381.90

FirstGroup

FirstGroup (LSE: FGP) is a British multi-national transport group. The FTSE 250 firm is the leading transport operator in the UK and North America. It is widely known for being a provider of public transport, especially buses in the UK.

Rather surprisingly, its shares have managed to outperform the wider UK market index this year. But after the share price took an 11% hit last week, a couple of large director dealings were carried out. The first involves a non-executive director purchasing a substantial number of shares. But what really caught my eye were the conditional share awards that could be awarded to FirstGroup’s CEO and CFO. This should shore up investors’ confidence in the stock, as the group’s management will have to perform and meet investors’ expectations in order for these award shares to vest.

• Name: Sally Cabrini
• Position of director: Non-Executive Director
• Nature of transaction: Purchase of shares
• Date of transaction: 17 August 2022
• Amount vested: 10,000 @ £1.15
• Total value: £11,482

• Name: Graham Sutherland
• Position of director: Chief Executive Officer
• Nature of transaction: Award shares
• Date of transaction: 18 August 2022
• Amount vested: 972,590 @ Nil
• Total value: N/A

• Name: Ryan Mangold
• Position of director: Chief Financial Officer
• Nature of transaction: Award shares
• Date of transaction: 18 August 2022
• Amount vested: 1,003,226 @ Nil
• Total value: N/A

Types of Shares

To provide context, there are a few types of shares that can be purchased by directors. Some directors opt to purchase shares via the open market. Having said that, directors also have the option to purchase and receive shares via a share incentive plan (SIP).

A SIP is an employee plan for companies within the UK to flexibly award shares to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

In this week’s set of director dealings, a few types of SIPs were exercised. For starters, Vodafone’s Chairman opted to purchase more Vodafone shares from the dividends he received from his current shares.

On the other hand, Deliveroo’s CFO decided to exercise the option of redeeming his restricted stock units. These are a form of award shares which allow for directors to redeem shares at a later date, as either as part of their salary or based on meeting performance obligations.

FirstGroup’s CEO and CFO were awarded shares as well, but these will only be vested once performance targets are met. In this case, more than 1.5m shares are up for grabs between the two directors under the operator’s long-term incentive plan (LTIP). The LTIP award will normally vest on the third anniversary of the date of award, subject to satisfaction of performance conditions and continued employment. The award is also subject to an additional holding period of two years from the date on which the award vests.

The post Director dealings: Vodafone, Deliveroo, FirstGroup appeared first on The Twelfth Magpie.

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John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Deliveroo Holdings Plc and Vodafone. 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.

July’s UK consumer price index (CPI) came in hotter than expected at 10.1%. This is a 40-year high and has the potential to drive share prices further down as consumers struggle with a cost of living crisis. So, here are five shares I’m considering buying.

Lloyds

As the UK’s biggest lender, I believe Lloyds (LSE: LLOY) shares are a sound choice for my portfolio. It earns its money from the difference in providing and earning interest from loans. This is otherwise known as net interest income.

Interest rates are expected to go as high as 3% by 2024 as the Bank of England tries to combat inflation. As a result, the high street bank should get a top-line boost from higher lending costs, while benefiting from lower interest paid to customers. With enough cash to set aside for bad loan provisions, Lloyds doesn’t need to increase its savings rate to bring in more cash, thus allowing it to increase its profits. This was evident in the company’s latest half-year results, which saw it recording excellent numbers.

It’s worth noting, however, that the majority of its income stems from mortgages. With house prices and mortgage approvals starting to decline, it remains a possibility that Lloyds’ revenue could be impacted. Nonetheless, analysts think that the increase in rates should offset any declines for the time being. In fact, Lloyds stock is rated a buy as its dividend is also expected to increase. It has an average price target of 64.33p, or a 40% upside.

SSE

Energy prices have been the main culprit behind sky-high inflation. That’s because energy prices are at their highest levels since 2009. As such, I think SSE (LSE: SSE) is a share to buy for my portfolio given the circumstances.

When wholesale energy prices go up, energy suppliers increases their rates to cover the extra costs. This has allowed companies like SSE to benefit, with its top and bottom lines seeing modest increases. As a matter of fact, its profit and loss account saw its best numbers in FY22, which is why its shares are up 9% this year.

The latest inflation report shows that energy prices rose 3% on a month-on-month basis. And with a higher price cap expected in October, SSE should benefit from this. After all, its latest trading update indicates that it expects adjusted earnings per share (EPS) of at least £1.20 for FY23. This would bring its EPS to its highest level in five years.

Additionally, its dividend yield of 4.7% is rather modest and is expected to rise given its most recent increase in payout, from 25.5p to 60.2p. SSE shares are rated a moderate buy with an average price target of £20.78.

Unilever

Next on my list is Unilever (LSE: ULVR). Its share price has been rather volatile this year. Nevertheless, it has recovered by 5% since its reported its H1 numbers. Its shares are now only down by 1% on a year-to-date basis.

The fast-moving consumer goods conglomerate produces beauty products and personal care, foods and cleaning agents. Its brands include Lynx, Ben & Jerry’s, Dove, and many more. These are household names and have tremendous pricing power, given the inelastic demand surrounding most of its products. This is strongly reflected in the revised outlook given by CEO Alan Jope, when he improved the firm’s guidance.

Our guidance for underlying sales growth in 2022 was previously at the top end of a range of 4.5% to 6.5%. We now expect underlying sales growth to be above that range, driven by price with some further pressure on volume.

Unilever CEO Alan Jope

Nevertheless, it should be noted that Unilever shares are more of a defensive play to protect from potential downside at the moment. Analysts are forecasting an average price target of £40.81, which only means a potential 3% gain if I were to buy shares now.

Burberry

Burberry (LSE: BRBY) shares are a good inflation hedge, in my opinion. The brand’s status as a luxury retailer allows it to pass on many of its costs to consumers given the nature of its target market. This was confirmed by CFO Julie Brown in its Q1 trading update, with a positive outlook for the company.

The FTSE 100 retailer has benefited from the return of global travel, with a substantial amount of its sales coming from tourists. It saw its like-for-like sales numbers grow by 1% on an annual basis, despite lockdowns in key revenue driver, China. Excluding China, sales figures were actually rather impressive. They were 16% higher in Q1 overall, with EMEIA boasting impressive 47% growth. Moreover, the company’s most profitable products (leather goods and outerwear) also saw double-digit growth.

That being said, I should point out that China remains the firm’s achilles heel for the moment. With its government sticking to its zero-Covid policy, I don’t expect sales figures from that region to see an uptick any time soon. This is why its average price target currently sits at £19.34. Therefore, this is more of a long-term investment with a higher upside once China’s retail sales fully recovers.

Tesco

Last on my shopping list are Tesco shares (LSE: TSCO). Given that its core products are consumer staples, I’m expecting Tesco shares to be robust in a recessionary environment. It’s also been steadily increasing its dividend payouts, which should serve as an added benefit.

As the market leader in the UK supermarket sector with more than a quarter of the market share, I think Tesco will be able to outperform its peers. Its Aldi price match across hundreds of items has been a success so far. According to the last several Kantar grocery reports, the supermarket leader has seen its market share remain relatively robust. It has also managed to outperform most if its competitors with higher sales figures. And its Q1 trading update showed its strength in the industry.

Having said that, sales figures are expected to come in slightly lower for the year. The grocer no longer enjoys the tailwinds of the pandemic and faces slower sales as a result of high inflation. Even so, I still think Tesco can utilise its strong supply chain and relationship with customers to match last year’s stellar performance. Analysts seem to share the same sentiment, rating Tesco shares a strong buy with an average price rating of £3.19.

The post Inflation hits 10.1%! 5 shares to buy now! appeared first on The Twelfth Magpie.

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John Choong has positions in Burberry. The Motley Fool UK has recommended Burberry, Lloyds Banking Group, Tesco, and Unilever. 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 Taylor Wimpey (LSE: TW) share price has suffered this year amid fears of a recession. However, some data seems to suggest strength in the housing market, and could serve as catalysts to spark a further rally.

Builds are looking up

Compared to pre-pandemic levels, Taylor Wimpey posted an excellent set of numbers for the first half of 2022 with results coming in above analysts’ consensus. This then sparked a 10% recovery in the share price.

With such solid numbers and positive guidance, it doesn’t seem like Taylor Wimpey is likely to lose momentum any time soon. Cancellations in absolute numbers are down, while customer interest remains high, and orders for the rest of the year are almost filled.

In fact, management is so confident about the company’s future that they’ve decided to increase the interim dividend by 12%, to 4.62p per share. This confidence was further reflected in a couple of high-ranking directors purchasing £50,000 worth of shares in August, so far.

Moreover, the company recently launched its new range of energy efficient homes. With the national EPC rating currently at D, I’m expecting these new homes with average EPC ratings of A or B to capture more market share.

Rough landing

Despite the upbeat outlook though, the wider macroeconomic data hasn’t quashed fears of a house market crash. As a result, the Taylor Wimpey share price recovery has stalled. This is a reflection of stalling house prices seen in the most recent RICS House Price Balance and Nationwide House Price Index.

Furthermore, mortgage approvals have been steadily falling according to the UK’s biggest mortgage lender, Lloyds. Along with this, mortgage repossessions saw an uptick in the first three months of the year.

To make matters worse, mortgage rates are expected to go higher with interest rates. This would affect the 2m households currently on variable mortgages, and another 1.8m households on fixed rate mortgages that expire next year.

Additionally, Taylor Wimpey faces trouble building more homes due to a nutrient neutrality issue. This is a problem regarding new developments exacerbating nutrient burdens on the soil in the area. The issue is expected to affect up to 120,000 homes across England. Nonetheless, CEO Jennie Daly is confident that the FTSE 100 firm’s large and geographically diverse land bank puts it in a good position to overcome this challenge.

Curb my optimism

Having said all that, I’m still a fan of Taylor Wimpey shares. Its balance sheet is solid, and it boasts quality earnings with high margins. Its dividend continues to see healthy increases too, with CFO Chris Carney stating that it would still be able to pay £250m worth of dividends even in its worst projected economic scenario.

But as much as I am positive about Taylor Wimpey’s numbers, I don’t think its share price will be rebounding into the green soon. I just don’t think the company has a unique enough selling point to outperform the wider market. Not to mention, there’s also a potential recession on the cards. Therefore, I’ll be putting Taylor Wimpey on my watchlist for the time being, and may open a position if its share price continues to dip, as I believe that its upside would be rather attractive.

The post Will the Taylor Wimpey share price rebound soon? appeared first on The Twelfth Magpie.

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John Choong 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.

Director dealings are essentially insider transactions for shares between directors and the companies they work for. These dealings are always made public, and are often considered a good indicator of a company’s future prospects. However, they don’t get nearly as much attention as other company news due to their complex nature. Nonetheless, here I’m breaking down this week’s biggest director dealings from three FTSE firms.

Rolls-Royce

Rolls-Royce (LSE: RR) is a British multinational aerospace and defence holdings company. It is one of the world’s largest makers of aircraft engines, and operates in four different segments. These include civil aerospace, power systems, defence, and new markets.

After a disappointing set of H1 results, Rolls-Royce shares saw yet another decline. But this week, a number of director dealings were carried out. Most notably, there was a huge purchase of shares from Chairwoman Anita Frew. The purchase from such a senior director should improve sentiment surrounding the stock.

• Name: Anita Frew
• Position of director: Chairwoman
• Nature of transaction: Purchase of shares
• Date of transaction: 5 August 2022
• Amount bought: 50,000 @ £0.83
• Total value: £41,300

• Name: Lee Hsien Yang
• Position of director: Non-Executive Director
• Nature of transaction: Share purchase plan
• Date of transaction: 8 August 2022
• Amount bought: 1,161 @ £0.84
• Total value: £980.23

• Name: Wendy Mars
• Position of director: Non-Executive Director
• Nature of transaction: Share purchase plan
• Date of transaction: 8 August 2022
• Amount bought: 2,156 @ £0.84
• Total value: £1,820.31

• Name: Sarah Armstrong
• Position of director: Chief People Officer
• Nature of transaction: Share purchase plan
• Date of transaction: 9 August 2022
• Amount bought: 175 @ £0.86
• Total value: £149.84

• Name: Rob Watson
• Position of director: President (Rolls-Royce Electrical)
• Nature of transaction: Share purchase plan
• Date of transaction: 9 August 2022
• Amount bought: 175 @ £0.86
• Total value: £149.84

Admiral

Admiral (LSE: ADM) is a British-based insurance company. It specialises in car insurance products, but also has a line of other offerings. These include home insurance, travel insurance, pet insurance, and van insurance.

The FTSE 100 firm released its H1 results earlier this week. Although profits slumped by almost half, the stock still shot up by 15% this week. This was most likely due to the announced special dividend of 15.8p. This would bring its total dividend to 60.0p per share. Investor sentiment was also further boosted when the Chairwoman purchased shares worth over £25,000.

• Name: Annette Court
• Position of director: Chairwoman
• Nature of transaction: Share purchase plan
• Date of transaction: 11 August 2022
• Amount bought: 1,181 @ £22.44
• Total value: £26,501.64

Dunelm

Dunelm (LSE: DNLM) is one of Britain’s biggest home furnishings retailers with an ever-growing market share. It operates over a 170 stores throughout the UK and offers over 50,000 products across a broad range of categories.

The FTSE 250 firm released its Q4 trading update not too long ago, and the interim numbers resonated well with investors. Nevertheless, its bottom line figure is yet to be released, and investors are wondering whether their expectations will be met. Therefore, the recent purchases by its CFO and another director could be an indicator of an earnings beat. The company is expected to report its official FY22 results in less than a month’s time.

• Name: Vijay Talwar
• Position of director: Non-Executive Director
• Nature of transaction: Purchase of shares
• Date of transaction: 4 August 2022
• Amount bought: 9,670 @ £8.50
• Total value: £82,156.32

• Name: Karen Witts
• Position of director: Chief Financial Officer
• Nature of transaction: Purchase of shares
• Date of transaction: 5 August 2022
• Amount bought: 1,174 @ £8.45
• Total value: £9,922.18

Types of shares

To provide context, there are a few types of shares that can be purchased by directors. Some directors opt to purchase shares via the open market. Having said that, directors also have the option to purchase shares via a share incentive plan (SIP).

A SIP is an employee plan for companies within the UK to flexibly award shares to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

In this week’s set of director dealings, a certain number of directors opted to purchase shares via their companies’ share purchase plans. This allows employees to purchase shares through automatic deductions from their pay. And this was the case with a number of Rolls-Royce directors, as well as Admiral’s Chairwoman.

The post Director dealings: Rolls-Royce, Admiral, Dunelm appeared first on The Twelfth Magpie.

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John Choong has positions in Dunelm Group. 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.

The Taylor Wimpey (LSE: TW) share price has seen a 10% recovery since it bottomed in mid-July, although it’s still in the red. With that in mind, I could consider buying some of its shares before a stock market recovery gets underway.

Building momentum

The FTSE 100 housebuilder reported its half-year results recently, and I must admit that I was rather impressed. The increase in house prices has managed to offset inflation in build costs, leading to an increase in operating margin, and that sat well with investors as its share price saw a 5% increase.

Although several figures saw declines, it’s important to consider context. For instance, the lower level in completions is due to tougher comparisons from last year, which saw orders from Q4 2020 pushed into H1 2021. Additionally, the fall in EPS is attributed to the increase in the pre-exceptional tax rate from 18.3% to 22.1%, as a result of the introduction of the property developer tax. Finally, the decline in free cash flow was down to further investments in land and current projects.

So, despite the drop on the top and bottom lines, Taylor Wimpey is still growing healthily. The board even revised its outlook upwards for the full year. They’re now guiding for FY22 results to be around the top end of analysts’ consensus.

Strong pipeline

Even though management’s guidance is upbeat, it becomes a bit of a head-scratcher when taking the recent house price data into consideration. For example, the latest RICS house price balance indicates that house owners are expecting prices to decline over the next 12 months.

These expectations go hand in hand with the narrative that house affordability will dwindle as the Bank of England increases interest rates, thus driving mortgage rates higher. The effects of this can already be seen in the most recent Nationwide house price index, as house prices are beginning to stall. With inflation expected to only peak at 13%, the Bank still has a long way to go in its rate-hiking process.

Nonetheless, the Taylor Wimpey board still struck an optimistic tone in their H1 earnings call, and I can see why. For one, customer interest remains at high levels. Moreover, the property developer is already 92% forward sold for FY22, and has opened orders for Q1 2023. More importantly, cancellations in absolute numbers are down 9% year over year (yoy), and down 29% from 2019.

Solid foundations

Taylor Wimpey has got an excellent balance sheet. The company has a stellar debt-to-equity ratio of 2%, with £4.28bn in cash and only £87m of debt. Not to mention, the firm saw its profit margins increase by 2.5% (yoy). To complement this, its massive short-term land bank of ~88,000 plots leaves its business well positioned and flexible.

Therefore, despite macroeconomic indicators painting a gloomy picture, Taylor Wimpey looks to be heading in the opposite direction for now. But even with a decent price-to-earnings (P/E) ratio of seven, I’m cautious about buying Taylor Wimpey shares. The possibility of the UK staying in a recession for a prolonged period could send house prices and its share price lower. As such, I’ll be putting Taylor Wimpey on my watchlist for the time being, and may consider buying once housing data improves.

The post Should I snap up Taylor Wimpey shares at £1.30? appeared first on The Twelfth Magpie.

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John Choong 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.

PayPal (NASDAQ: PYPL) stock is up over 30% in the last month. After posting excellent Q2 results, it takes the spotlight as my stock of the week. With that in mind, I think PayPal could rebound in the current stock market recovery.

Investment pays off

After the fintech firm reported its Q2 numbers, PayPal saw its stock rise by more than 10%. This was because it beat a number of analysts’ estimates on both its top and bottom lines. In fact, the company managed to surpass its own guidance on the majority of metrics!

Nevertheless, the firm’s EPS saw a substantial decline. However, this was because of lower transaction margins from eBay, and the last year’s numbers getting a boost from the release of unneeded allowances for bad loans. Taking those factors into consideration, EPS stayed flat on a year-over-year (Y/Y) basis.

Pals bring quality

Since PayPal revised its goal of bringing more quality than quantity, it’s seen user growth decline, but PTPAA has gone up steadily. This was evident in this quarter’s numbers, with minuscule NNA, but robust PTPAA growth.

The growth can be attributed to two reasons. The first is the rise in core daily active users, which has seen a rise of more than 40% since 2019. This is crucial for PayPal because 80% of its transactions come from 30% of its most active users. The second is the continued growth of Venmo, which ended up driving more than 50% of PayPal’s revenue growth in Q2.

As such, management provided a decent outlook for the rest of the year. The Nasdaq-listed firm now expects Q3 revenue of $6.8bn, with an upwardly revised non-GAAP EPS of approximately $0.95. For the full year, it expects 10% revenue growth, with a non-GAAP EPS of approximately $3.92. The board also forecasts to grow TPV by 12%, add 10m more accounts, and have a free cash flow of at least $5bn.

Long way to grow

So, is PayPal stock worth a buy? Well, all signs seem to point towards yes. Aside from the excellent numbers and guidance provided, the impact on its cost savings are yet to be realised. Interim CFO Gabrielle Rabinovitch mentioned that PayPal expects $900m worth of cost savings in FY22, and a further $1.3bn next year. She also reiterated that the payments processor expects operating margin expansion of at least 0.5% starting in Q4. And with core markets yet to be fully penetrated, PayPal still has a long way to grow as it expands its digital wallet features to more regions worldwide.

Nonetheless, it’s worth noting that PayPal sits on $10.6bn worth of debt. But with no maturities for the rest of the year and margin expansions on the horizon, I’ve no doubt that incoming CFO Blake Jorgensen will be able to navigate through its debt pile without too much hassle.

Finally, the company saw its take rate remain flat at 2% (yoy), which is great news as PayPal continues to maintain its transactional margins while seeing TPV increase and growing its market share. Therefore, I think PayPal has a position on my portfolio with an average price target of $119.29.

The post Stock of the week: PayPal outperforms in Q2! appeared first on The Twelfth Magpie.

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John Choong owns shares of PayPal. The Motley Fool UK has recommended PayPal Holdings. 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.