Hurricane Energy (LSE: HUR) shares are up 10% as I write on Monday, after hitting 13% during earlier trading. The oil price breaking the $115 level is boosting oil shares generally. But the HUR share price was already on a run before the Russian war on Ukraine started.

Over the past 12 months, Hurricane shares are up 170%, but that hides the fact that they didn’t really start picking up until May 2021. From its low point that month at a meagre 0.6p per share, HUR has now spiked by a massive 1,400%. I can’t help thinking that momentum might finally have turned.

Hurricane has been dogged by a number of problems. Some prospects turned out bad, and then the Covid-19 pandemic hit. From November 2019 to that low of May 2021, we saw a the HUR share price collapse by 98%.

But it looks like things are turning around. Importantly, Hurricane is now profitable. At the 2021 interim stage, it recorded $124.5m revenue from its Lancaster field, offshore Scotland.

Hurricane profits

That generated $75.9m in operating cash flow, and profit after tax of $42.8m. At 30 June 2021, the company had $132.3m in net free cash on its books. But possibly the biggest cause for optimism is Hurricane’s cash production cost, which came in at $24.80 per barrel. When oil crashed to $20 in 2020, that was not great. But at today’s price, it suggests a hefty margin of close to 80%.

But it brings me to what I see as the biggest risk. The soaring oil price looks to be the main factor behind the HUR share price acceleration, rather than growing production.

The company’s latest update, in February, showed the Lancaster field producing 299 Mbbls during the month, at an average rate of 9,639 bopd. That’s not a bad rate of production, but it’s not accelerating. In the first half of 2021, Lancaster production averaged 11,100 bopd.

HUR share price pressure

 I expect to see pressure on the HUR share price when the oil price falls back again. There’s still potential for very healthy margins, mind. And if oil should stabilise in the $50-$70 range, I’d be optimistic about Hurricane’s long-term prospects.

That brings me to the debt situation. In its February update, Hurricane told us that following early problems, “the regulator has now formally requested that the company lodge additional funds as decommissioning security.” The firm expects that will “increase the amount of funds placed into trust, and which are therefore classified as restricted cash, from £28m to £33.7m.”

Cash squeeze ahead?

Some cash has come in from tax rebates, and net free cash at 31 January reached $85m ($77.3m after the anticipated security effect). That’s up from $50m at 31 December, which is a pleasing trend. But the company does note that “not all of the net free cash would be available for repayment of the remaining outstanding Convertible Bonds at their maturity in July 2022.“

I do think I see an oil exploration company on the verge of making it into sustainable profits here, and I’m tempted to buy. But on the other hand, I think the HUR share price is likely to depend heavily on the oil price. And I fear there might be a financial squeeze ahead. I will keep watching.

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.

At around 6,890, the FTSE 100 index is down about 10% from its level in early February near 7,670.  And to put that in perspective, it’s still just over 2% higher than the 6,730 it reached a year ago. So perhaps the stock market correction isn’t as severe as it feels.

In fairness, some stocks have moved lower than a mere 10% decline since hostilities in Ukraine accelerated. And some have moved higher, particularly those in the resources sector as commodity prices such as oil, gold, copper, iron ore, platinum and others have elevated.

Not all stocks deserve to fall

War is a terrible thing. And the geopolitical and economic fallout will have changed the dynamics in some sectors. So it’s probably rational for some stock prices to trade lower now and in the immediate future. But as with all periods of uncertainty and investor concern, a falling stock market can drag down stocks that don’t deserve to fall.

Some businesses will be unaffected by the current turmoil in Europe. And others will suffer a mere short-term setback from which they will likely recover quickly. And that’s why it’s often a good idea to hunt for good businesses selling at better valuations when the outlook is a little murky. After all, that’s been the strategy of ultra-successful billionaire investor Warren Buffett for decades.

But shopping for shares at times like this requires some courage and a good plan. And a key part of my plan is constant attention to building a watch list of stocks to one day own for the long term. With regard to courage, I’m working on it!

However, I think it’s a good time to become interested in investing a £10,000 lump sum in the stock market. And my approach to investing involves a two-pronged strategy, Firstly, I invest regularly in a spread of low-cost index tracker funds with the aim of capturing the overall returns of the market. And in an effort to get the compounding process on my side, I select the accumulation version of each fund. That way dividends reinvest automatically.

There’s nothing complicated about my tracker strategy. My portfolio contains trackers following the UK and US stock markets. And there are also a couple following emerging markets.

Three pillars of potential support

The second part of my strategy involves making investments in the stocks of individual companies. And if chosen carefully, there’s potential for some of those to do well as we emerge from the current bear market. But, of course, a positive investment outcome isn’t certain. All shares carry risks alongside their potential to deliver positive returns.

However, I’m focusing on the three pillars of quality, value and operational momentum when it comes to analysing businesses. And after bear markets like this one, I reckon some interesting opportunities are developing among big-cap FTSE 100 shares.

For example, I’m watching analytics and decision tools provider Relx and information services company Experian. And I have a keen eye on speciality chemicals business Croda International. However, I wouldn’t buy any stock without first undertaking my own thorough research.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International, Experian, and RELX. 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.

Key points

• The recent market sell-off may be providing good buying opportunities
• IAG’s losses narrowed significantly for the 2021 calendar year
• Boohoo has a compound annual EPS growth rate of 31.8%

The escalating military conflict between Russia and Ukraine is continuing to appal the world and to negatively impact share prices. In particular, many companies operating in Russia have suffered. Evraz, a steel firm, is down 59% in the past week and 88% in the last year. Polymetal International, a gold miner, has fallen 73% in the past week and 87% over the past year. The move is much wider, however, with the FTSE 100 down 0.5% at the time of writing. This has prompted me to think about buying the dip. International Consolidated Airlines Group (LSE:IAG) and Boohoo (LSE:BOO) are two companies I currently own and I’m thinking of adding to. Let’s take a closer look.

Buy the dip: the travel recovery

Down 16% in the past week and 42% over the last year, the IAG share price has only been heading one way. It’s currently trading at 112p. For the 2021 calendar year, however, the company’s results were quite positive. Losses narrowed significantly to €2.7bn from €7.4bn in 2020. Furthermore, revenue over the period increased by just over 8%.

These results suggest that the firm is starting to benefit from the reopening of borders and resurgence of international travel. Given the recent sell-off of IAG shares, this could be a perfect time for me to buy the dip.

It should be noted, however, that any future variant could be a stumbling block for the recovery of international travel. In addition, rising fuel prices mean the cost of jet fuel will also likely rise in the near future.

Furthermore, Q4 2021 capacity increased to 58%. This was just 21.9% in Q2. As many more countries begin opening their borders and removing all pandemic-related restrictions, I think the future is bright for this airline industry giant.  

A cheap growth stock

Similarly, Boohoo shares have fallen 14% in the past week and 78% over the last year. It currently trades at 65p. For the years that ended in February, from 2017 to 2021, earnings-per-share (EPS) grew from 2.23p to 8.89p. By my calculations, this results in a compound annual EPS growth rate of 31.8%. This is both impressive and consistent. I think it makes sense for me to buy the dip at the moment.

Furthermore, revenue over the same period increased from £294m to just over £1.7bn. This is a strong indication that Boohoo is growing quickly. That said, in an update for the three months to 30 November 2021, expected profit margins fell by around 2%.

Shares in this company may also be cheap. With a forward price-to-earnings (P/E) ratio of 15.02, this is lower than ASOS, a major competitor. ASOS has a forward P/E ratio of 22.99. This could suggest that I would be getting a bargain.   

The recent sell-off provides me with a great opportunity to buy the dip. IAG has great potential as the world reopens and Boohoo displays strong growth. I will be adding to my current holdings of both companies. 

Andrew Woods owns shares in IAG, boohoo and Polymetal International. The Motley Fool UK has recommended ASOS and 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.

Key points

• For the six months to 30 September 2021, revenue increased by 43% year on year
• Although seating capacity increased 86%, the load factor fell
• Jet2 has a lower forward P/E ratio than both easyJet and Wizz Air

With strong indications that the worst of the Covid-19 pandemic is behind us, I’m looking to buy shares in travel firms. One such company is Jet2 (LSE:JET2), an operator of flights and package holidays to destinations like the Mediterranean and the Canary Islands. Although recent results have been mixed, I think I would be getting a bargain at the current share price. Should I add this stock to my long-term portfolio? Let’s take a closer look.

Recent results 

Interim results for the six months to 30 September 2021 showed that revenue was up 43%. It increased from £300m to £429m year on year. Furthermore, the company’s cash balance stood at £1.5bn. This is a significant gain from the same period in 2020, when it was just £650m.

On the other hand, the business posted an operating loss after tax of £163m, greater than the 2020 interim loss of £68.7m. 

While seating capacity increased 86% to 2.68m, the load factor declined to 57.3%. During the same period in 2020, the load factor was 69%. What this tells me is that the firm is flying more aircraft, but the number of passengers per flight is lower. This combination may have a negative impact on the Jet2 share price.

The company stated that the fall in passengers was down to the UK government’s traffic light system for international travel. In addition, it barely operated between April and June 2021.

Why I think the Jet2 share price is cheap

The firm has a forward price-to-earnings (P/E) ratio of 11.85. On its own, this figure doesn’t mean that much. When compared with competitors, however, it may indicate if the company is over- or undervalued. easyJet has a forward P/E ratio of 142.86 and Wizz Air is 21.14. Both of these airlines are rivals within the short-haul European market. This strongly suggests that the Jet2 share price is a bargain at current levels. It is currently trading at 943p.

It is worth noting, however, that any future pandemic variant could halt the recovery of international travel. What’s more, rising oil prices will likely translate into higher jet fuel costs. This may eat into the company’s future results.

Conversely, some countries, like Norway, have started reopening their borders and removing all pandemic restrictions. While this relaxation is still yet to fully affect Jet2’s destinations, I think this may only be a matter of time. This could be good news for the share price.

Although the company’s results are mixed, the shares do seem to be cheap at current levels. While I won’t be buying shares today, I won’t rule out a purchase in the future when I can better understand whether more European countries are dropping entry restrictions.  

Andrew Woods 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.

As markets seesaw, thinking calmly is important to my long-term returns as an investor. Here are three ways I could handle a market correction. I like two of them and will avoid one. Let me explain why.

Do nothing

One way of handling a market correction is simply to sit back and do nothing, for months or even years in some cases.

That may seem at odds with the always-on culture and need for constant action that have become more common in the digital age. But some leading investors reckon that the key to long-term success is not frequent activity, but making a small number of high-quality investments. Let’s say I own Unilever or Tesco, for example. Their share prices could well fall along with other shares in a market correction.

But if the underlying investment case that attracted me to the shares before a market correction has not changed, then my valuation of the businesses will probably not have changed much either. Falling share prices may shake my confidence in the shares, but if I felt the investment case was solid when I bought the shares and the facts have not changed much, as a long-term investor I could do nothing and wait in the hope that the share price will recover in future.

Use a market correction as a buying opportunity

In fact, if a share I own has crashed in price, it could be a buying opportunity for my portfolio. Basically I can buy what I bought before, on sale. Sometimes that can be hard psychologically, as it could make me feel I overpaid before. But if I am confident in the investment case and the price has fallen, logically I think it makes sense to consider buying more of the shares for my portfolio. One thing to watch out for with this approach, however, is the importance of maintaining a diversified portfolio as a way of reducing risk. Buying more shares in companies I already own could make my portfolio less diversified.

I would also apply this approach to companies I like but have seen as overvalued. For example, stocks like Howden Joinery, Victrex and Judges Scientific have all caught my eye. But I have seen their share prices as too high to add them to my portfolio. If a market correction leads to their prices tumbling, that could present me with a buying opportunity.

Jump in and out

A lot of people see a market correction as a chance to jump in and out of shares, hoping to make fat profits from wild price swings in a short period of time.

The downside I see to that approach is that it is not investing, but simply speculating. Instead of buying shares in companies based on the attractiveness of their long-term business prospects, it involves making choices based on price. In a market correction, there can be far more volatility then normal on stock markets.

As an investor with a long-term horizon, I do not adopt this approach in a market correction. Instead, I focus on the same investment style I use when markets are calm: identifying great businesses at an attractive price I can hold in my portfolio for the long term.

Christopher Ruane owns shares in Unilever. The Motley Fool UK has recommended Howden Joinery Group, Judges Scientific, Tesco, Unilever, and Victrex. 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.

Key points

• The company is working to sign a joint venture that would provide access to new sports channels, including Eurosport UK
• Communications giant Patrick Drahi increased his stake in the firm from 12% to 18% in December 2021, prompting talk of a potential takeover
• For the nine months to 31 December 2021, revenue and profit declined by 2% and 3% respectively 

An instantly recognisable FTSE 100 company, telecommunications mammoth BT (LSE:BT.A) owns brands including EE and BT Sport. With ongoing discussions regarding the sale of the BT Sport segment and rumours of a takeover bid, are the shares soon going to surge? Furthermore, I want to know if recent results show the firm to be going in the right direction. Is it time to buy shares in the business for my long-term portfolio? Let’s take a closer look.  

Recent activity and BT shares

Over the past couple of months, there has been increasing interest in BT Sport. It was reported that US streaming company DAZN was in the final stages of a deal to purchase the brand. This was estimated to be worth around $800m. In February, however, this deal fell through. 

BT is now in discussions with Discovery Communications for a joint sports venture. This would expand the company’s presence in the sporting world and provide access to Eurosport UK, among other channels. I will be waiting patiently to see if these two parties can strike a deal.

The news that attracted the biggest attention, however, was billionaire Patrick Drahi’s actions in December 2021. The Frenchman, who controls Altice, increased his stake in BT from just over 12% to 18%. This left many investors wondering if Drahi was attempting a slow-motion takeover. This would avoid the costs that come with a traditional bid offer.

Due to UK takeover rules, we will have to wait until the summer to see what Drahi is really up to. If he is planning a takeover, however, BT shares could rise significantly.

Lukewarm results

But I don’t buy based on takeover speculation. Instead, I want to see results. Recent results for the nine months to 31 December 2021 were mixed. Free cash flow increased by 6%. This is positive news and the firm could use this for either controlled expansion or paying down its not insignificant debt pile of £18.2bn.

On the other hand, revenue fell by 2% and profit declined by 3%. Despite this, investment bank Berenberg increased its target price from 200p to 225p. Given that BT shares are currently trading at 163p, I think there’s significant upside potential, even if the shares aren’t necessarily set to suddenly take off at the moment. 

There’s a lot going on with BT shares. While the joint venture and takeover talk is exciting, I’ll need to wait a bit longer to find out about these activities. With increasing free cash flow, the company is becoming increasingly attractive. While I won’t be buying today, I won’t rule out a purchase in the future when I have more results to analyse.

Andrew Woods 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.

Between the end of February and the beginning of March, the Evraz (LSE:EVR) share price collapsed by over 90%. This is among the fastest declines ever experienced by a FTSE 100 company. And later this month, the stock will be removed from the index.

But today, shares are up by more than 40%! What’s going on? And should I be considering this business for my portfolio?

The volatile Evraz share price

As a reminder, this is a mining company that focuses primarily on extracting coal, iron, and vanadium. The latter is particularly interesting due to its applications in renewable energy technologies, such as large-capacity batteries.

Given the demand and, in turn, the price of these materials is rising, why did Evraz shares collapse last week? That’s simple. All of its operations are located in Russia. And once the invasion began in Ukraine and the world looked on in horror as Russian actions, the shares tanked as investors ran for the hills to try and protect their wealth.

The location of the mines doesn’t appear to be near the area of conflict. Therefore, I feel it’s unlikely that any military activity will result in direct disruptions to operations. However, with sanctions being placed against Russia, the situation could still be pretty problematic for the mining group.

Apart from potentially making it difficult to export resources, the decision to cut off Russian banks from the SWIFT payment network makes funding the development and operations of mining sites exceptionally challenging. With that in mind, it’s not hard to understand why the Evraz share price tanked.

But this morning, it skyrocketed. So the question is, why?

Time for a comeback?

The short-term future of the Evraz share price seems to be tied to the ongoing geopolitical situation in Ukraine. And this morning, round three of peace negotiations began between the two states. It seems investors (just like everyone else) are hopeful for a peaceful resolution to the ongoing crisis.

If this assumption is correct, I think it’s more than likely the Evraz share price could make a full recovery within a few weeks. After all, once sanctions are lifted, the company can resume its operations as usual. And looking at the 2021 results before this tragic conflict started, performance was quite encouraging.

The rising demand for metals has allowed the group to significantly improve profitability. This effect has only been amplified courtesy of inflation. And subsequently, underlying profit margins climbed from 22.7% in 2020 to 35.4% today. Combining this with soaring revenue as pandemic-related disruptions loosen their grip, the firm’s free cash flow more than doubled. Needless to say, this is very positive news.

Time to buy?

As encouraging as last year’s financial performance has been, I’m doubtful the firm can continue to grow if the conflict between Russia and Ukraine doesn’t come to a speedy end. As it stands, there remain plenty of unknowns. And it’s entirely possible that negotiations fail to lead to a peaceful resolution.  

With the fate of the Evraz share price entirely out of management’s hands, this is not a stock I’m interested in adding to my portfolio.

Zaven Boyrazian 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.

Dividend stocks provide the perfect opportunity to boost passive income and earn without even lifting a finger. These two cheap dividend stocks have high yields, and they are likely to be trading below their fair value – showing good growth potential and giving me the best of both worlds!

A robust passive income stock

The FTSE 100 insurance and capital management giant Legal and General (LSE:LGEN) offers an impressive and consistent 6.9% yield. The company prides itself on delivering a comfortable dividend, and last lowered it 14 years ago in 2008. Unlike some other high-yield stocks, L&G doesn’t sacrifice financial health for a high dividend with the company still retaining 50% of earnings to pump back into operations and retain future growth.

I also believe Legal and General shares to be slightly undervalued with good growth potential over the next few years. They are currently trading with a low price-to-earnings ratio (P/E) of 6.8 and a fair price-to-book (P/B) of 1.5. Regardless of what the next few years bring, I am confident there will remain strong demand for its pension services as the UK’s population continues to age.

Of course, there are some risks with this FTSE 100 dividend stock that must be considered. Due to having over £1trn in assets under management in its investment division, the company’s income would be affected if a stock market crash was to materialise. However, Legal and General has diversified into several different business areas, which helps to mitigate extreme risks linked to stock market performance. As a result, I believe L&G is a strong dividend stock, and I am increasing my holding by a small amount to boost my passive income in 2022.

A 9.5% yielding mining giant 

The global FTSE 100 mining behemoth Rio Tinto (LSE:RIO) is treating shareholders to an incredible 9.5% dividend yield – one of the largest for all Footsie shares. It has profited from a recent surge in metal prices such as lithium, which looks to continue as the world shift towards lithium-demanding electric vehicles. Concerns about supply disruption from the Ukraine-Russia conflict sent metal prices higher last week and look to prop them up over the coming months.

This dividend stock is trading at a low P/E value of 6.25 and, with £12bn in cash and short-term investments, the company has the liquidity and mobility to protect or invest over the next few months.

As with most of the mining industry, Rio Tinto is extremely vulnerable to external factors such as commodity prices, regulation and global politics, which can increase the volatility of the stock. I also do consider Rio Tinto’s 60% dividend pay-out to be slightly high for my liking as it could indicate the dividend to be slightly unsustainable.

I still believe that the passive income opportunities of this cheap dividend stock outweigh the long-term risks, though, and I will be opening a very small position in the stock as a result.

Finlay Blair owns shares in Legal and General. 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.

April is fast approaching, and that means time is almost up for me to make the most of my Stocks and Shares ISA allowance. After all, who doesn’t love tax-free capital gains? With that in mind, let’s explore two FTSE 100 stocks I think are starting to look rather cheap, courtesy of the recent market sell-off.

Is this FTSE 100 stock the new king of streaming?

Most people instantly think Netflix or Amazon Prime when talking about streaming services. But as it turns out, ITV (LSE:ITV) is actually the biggest advertisement-funded streaming platform in the whole of Europe.

Looking at its latest full-year results, the group expanded its top-line by 24% after achieving record-breaking advertising income throughout 2021. And with pandemic-related disruptions almost out of the picture, underlying profits exploded by 46%, reaching £519m.

In my experience, seeing a FTSE 100 stock achieve such impressive growth is pretty rare. But it doesn’t come without risk. Management plans to spend £1.23bn on creating new content for the platform this year. Needless to say, that’s a pretty hefty investment with the potential to backfire if content production doesn’t satisfy the ever-changing landscape of consumer tastes.

But with a history of shrewd capital allocation, I think ITV is up for the task. And with the share price down nearly 40% in the last 12 months, I believe now could be an excellent buying opportunity to buy it for my Stocks and Shares ISA ahead of the looming deadline.

Investing in an army of robots

The last 12 months have been pretty tough for Ocado (LSE:OCDO). In fact, the FTSE 100 stock is down over 40%. But with the adoption of e-commerce going through the roof, the need for more efficient order fulfilment solutions is on the rise. And that’s why I’m considering this business for my Stocks and Shares ISA.

The firm is predominantly known for being an online grocery retailer. But that’s just one part of the enterprise. And not the one that management seems to be focusing on. Instead, all eyes are on its robotics division that provides warehouse automation solutions to drastically improve efficiency and cut costs.

That’s probably why forecasts estimate the warehouse automation market could double in the next five years, reaching as much as £22bn by 2026!

So far, Ocado has only captured only around 3% of this market opportunity, opening the door to substantial long-term growth potential. But it’s not the only company trying to capitalise on this technological shift. AutoStore is one of many competitors trying to steal market share. And if the FTSE 100 stock cannot maintain its technological advantage, its share price could continue to tumble.

However, given the potentially massive reward, this is a risk I’m personally willing to take to add it to my Stocks and Shares ISA.

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