As a relative newbie to financial markets, what’s unfolding with the Polymetal (LSE: POLY) share price is virtually unprecedented for me. On 23 February the share price stood at £10.97 a share. A day later, as the first Russian troops entered Ukraine, the price fell 40%. Then it bounced back 17%, only for it yesterday to fall an astonishing 56%. That included a fall to an intra-day low of £2.90, representing the lowest price it had ever seen.

As I write this article on 1 March, the share price remains under pressure and is down another 24% at £2.67. In times of rising uncertainty and heightened geopolitical tensions, gold and silver are traditionally seen as safe havens. However, as a large number of Polymetal’s mines are located in Russia, clearly there’s a great deal of uncertainty as to what will happen to its assets.

Fundamentals go out of the window

The most pressing concern for me is the hope that this human tragedy can be ended. For investors, an extra worry is the potential for the Russian government to seize Polymetal’s assets. As the country’s currency collapses, gold’s ability to maintain its value increases its prominence as a strategic asset. There’s also the prospect that it could be delisted. In any one of these scenarios, the share price could go down to zero.

In its latest production report at the end of January, Polymetal posted a promising set of figures. Gold production was up 2% year-on-year. As the company generated large sums of free cash flows, net debt fell by 13% to stand at $1.65bn. All-in sustaining costs (AISC) stood at $975 per gold equivalent ounce. Although 5% ahead of guidance, that figure was still considerably lower than many of its peers.

However, as the situation in Ukraine worsens and sanctions from the West become stronger, then fundamental analysis of the company has for all intents and purposes being thrown out of the window. Among the carnage, though, some institutional investors see value. Blackrock, the world’s largest asset manager, has just announced that it has doubled its stake in the company to 10%. However, the filing shows that it reached this position on 25 February. Consequently, at the moment, it’s sitting on large losses.

Time to buy?

I remember at the time of the Covid crash how the widespread shutdown of huge swathes of the economy meant that analysis of a company’s forecast earnings became completely irrelevant. To a certain extent, I’m in a similar position with Polymetal. However, arguably the situation is a lot worse here. As Western companies continue to sever ties with Russia – including FTSE 100 giants BP and Shell – predicting what could happen next is impossible.

There’s possibly money to be made with Polymetal for long-term investors who are brave. As gold heads toward $2,000 on the back of rising inflation, fears of fiat currency debasement after unprecedented money printing, together with the war in Ukraine, mean it should be a beneficiary. But I also see a clear path where its share price could go down to zero. Consequently, at the moment I’m sitting on the sidelines and won’t be buying.

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

I’m looking for top shares to buy now for the next bull market. And here are two on my watch list.

Branded luxury goods

Branded luxury goods company Burberry CLSE: BRBY) sells its products around the world.

And it does so online and via stores, outlets, concessions and franchisees in department stores. On top of that, the business licenses the manufacture and distribution of some products bearing the Burberry trademark to third parties.

There’s been some financial progress over the past few years. Since 2016, net profit has delivered average growth of just under 4% a year. And the compound annual growth rate of operating cash flow is running just below 10%.

The directors have been pushing up the shareholder dividend a little each year to reflect the progress. And the only blip in the recent dividend record occurred in 2020 when coronavirus caused a reduction. Nevertheless, the dividend has been growing at an average of just under 3% a year.

Burberry headed its third-quarter trading statement in January with the statement “momentum builds”. And the directors said full-price sales grew at a double-digit percentage compared with two years previously, before the pandemic arrived. And the directors reckon the firm is making progress attracting new, younger customers to the brand.

The outlook is positive. And City analysts expect earnings to advance by just under 12% in the trading year to March 2023. Meanwhile, with the share price near 1,951p, the forward-looking price-to-earnings ratio is around 19 when set against that forecast.

The valuation isn’t ‘bargain basement’. And that adds some risk for investors because the business could miss its forecasts causing the share price to fall. However, growth is on the agenda, the brand is strong and the company has a strong balance sheet. I like this one right now.

Food ingredients

Food ingredients company Tate & Lyle (LSE: TATE) delivered an upbeat third-quarter trading update in February. And today I’m looking at the business at an exciting point in its development.

The firm is on track to complete the separation of its operations into two businesses at the end of March. One will be Tate & Lyle focused on food and beverage solutions. And the other will be ‘NewCo’ specialising in plant-based products for the food and industrial markets.

Tate & Lyle will joint-own NewCo with a company called KPS Capital partners. And TATE expects to earn gross cash proceeds of around $1.3bn from the deal. After that, it will likely benefit from a stream of dividends generated from its 50% stake in the new enterprise.  

Chief executive Nick Hampton said Tate & Lyle has re-positioned itself as a “growth-focused”, global food and beverage solutions business serving “faster growing” markets. And he sees “significant” opportunities ahead. 

However, City analysts’ estimate lacklustre growth in earnings next year. And there is some risk the company could fall short of its ambitions. If that happens, the forward-looking earnings multiple running near 17 could become problematic and the share price could fall.

Nevertheless, the balance sheet is strong. And I’d be prepared to embrace the risks and hold the stock while the company aims for growth ahead.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry. 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.

BAE Systems (LSE: BA) shares have rocketed over the last month. Of course that’s because of the devastating war in Ukraine. Investors expect global defence budgets to surge on the back of the war, with Germany already pledging to up spending — something it had previously been reluctant to do.

However, with BAE shares up over 25% in just over a month, and most of that in the last few days, there’s a chance that part of this may just be a temporary reaction to the awful events happening in Europe and that further share price upside will be limited. I suspect that even with the dreadful prospect of the war continuing, much of the buying has driven the price up too high too quickly at the moment.

‘Mean reversion’, the theory used in finance that suggests asset price volatility and historical returns eventually will revert to the long-run average (or ‘mean’), seems very likely in this instance. I see investors piling in at present and although I do actually think BAE Systems is both a good company and good long-term investment, now isn’t the time to buy the shares, in my opinion.

BAE Systems shares: a longer-term view

I feel that if the shares do fall soon (and I accept that may not happen) then at a more reasonable valuation, BAE Systems is potentially a good buy-and-hold investment for me. It has ingrained relationships with governments, high barriers to entry, long-term contracts and a healthy 13% return on capital employed (ROCE). These metrics show a steady business that can provide income and growth.

Another steady FTSE 100 growth and income share

Were I looking to invest in a FTSE 100 company, I’d prefer to look at energy giant, SSE (LSE: SSE). A trading announcement is expected soon, which could lift the share price because I see SSE shares as having a number of attractions. One is the ongoing shift to so-called value stocks, which I think should include SSE.

Another is that it has already upgraded its full-year adjusted earnings per share guidance from 83p to 90p, so the business is clearly performing well. Then there’s the 5% or so dividend yield, making SSE potentially a decent income and growth share. Plus there’s its significant involvement in renewable energy projects in the UK and Ireland. And there’s the possibility of international expansion, which the company mentions on its website. 

Only the high levels of debt and the inconsistency of renewable energy would give me pause for thought when it comes to investing in SSE. I’ll research more before deciding whether to buy the shares. 

Its shares are up a much more steady 3% over the last six months, but the shares do have momentum. Taking a longer view, over five years, SSE shares are up 10.6%. This is much better than the FTSE 100’s 1.1% increase over the same period. Remember, dividends would boost the total return to investors. 

BAE Systems shares have risen too much in such a short period of time, on the belief global defence spending will increase long term. While this is likely, I feel the shares have been chased too high and could well plummet to a more ‘normal’ price. As such, SSE is a much better short-term investment for me, and probably also a better long-term one, in my opinion.

Andy Ross owns no share 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.

Despite the geopolitical and economic turbulence that has shaken the world over the past couple of months, the Saga (LSE: SAGA) share price has sailed through. Since the end of November, shares in the over-50s travel and finance company have increased in value by around 10%. 

I think this could be a sign of things to come. With the outlook for the company improving, I believe the stock could hit 400p or more by the end of the year. 

Earnings growth 

Over the past couple of years, Saga has faced numerous headwinds that have held the group back. Instability as its insurance business and the pandemic caused years of disruption for the enterprise. 

As the world starts to open up again, the outlook for the company’s cruise division is improving. At the same time, its financial services arm is still registering relatively attractive growth rates. 

According to the company’s latest trading update, published at the end of January, the number of policies sold by its insurance business increased 1% in the period from the beginning of August to the end of January.

At the same time, its cruise arm generated positive earnings before interest, tax, depreciation and amortisation (EBITDA) in the second half.

These figures appear to show a significant change in direction for the company. It seems to be moving on from its past problems, which could drive a substantial re-rating of the stock in the months ahead. 

That being said, I cannot ignore the geopolitical and economic risks that continue to dominate news flow at the moment. These challenges could impact demand for the company’s services, especially if inflation continues to eat away at the purchasing power of UK consumers. This challenge is something I will be keeping an eye on as we advance. 

Saga share price opportunity

Despite these potential headwinds, I think the stock looks undervalued at current levels.

According to current City analyst projections, the shares are selling at a 2023 price-to-earnings (P/E) ratio of 5.5. That is compared to the market average of around 14. 

These figures seem to suggest that the stock could double in value from current levels. I think that is a tad optimistic, even though in the past, the stock has commanded a P/E of around 8. If the shares can return to this value, the Saga share price could be worth as much as 400p. That suggests a potential increase of 43% from current levels. 

As such, I would be happy to buy this stock for my portfolio as an undervalued growth play. Even though the business might face a couple of challenges in the next few months, I think earnings growth could push the stock higher as investors buy into the recovery story. There is also the potential for the enterprise to reintroduce its dividend.

Rupert Hargreaves 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.

Over the past two years, I have warned investors about the risks of investing in Cineworld (LSE: CINE).

However, it looks to me as if the outlook for the company is now improving. Customers are returning to the group’s cinemas, spending money and helping the firm generate cash to meet its massive debt obligations.

It has also pushed forward with a significant marketing initiative to help draw customers back. After the company’s slashed its entry fee across the portfolio to £3 last week, it seems as if consumers hurried to take up the offer.

Risks ahead 

Now I am not willing to become a Cineworld share price bull just yet. I think the company’s outlook is improving. Still, I also acknowledge it will face some significant challenges over the next few years. It is still fighting a bitter legal battle with its peer, Cineplex, in Canada. The firm will also have to do something about its momentous debt pile.

The cost of this debt will only increase as the Bank of England hikes interest rates. This makes it even more critical that the corporation starts to reduce its obligations to creditors. 

Nevertheless, the fact that consumers are starting to return is incredibly positive. As I noted above, as consumers return, the company should be able to return to profit. More importantly, it should be able to generate cash flow to meet creditor obligations. 

Cineworld share price outlook 

Only a couple of months ago, City analysts were still expecting the corporation to report massive losses in 2022. According to current projections, the company will lose money, but losses are expected to be significantly below initial expectations.

Indeed, the company is set to report a net loss of $13m for 2022. It is disappointing that the business is still going to lose money as the world reopens, but a loss of $13m is a significant improvement on the $2.7bn deficit reported for the 2020 financial year.

These figures are subject to change, and I think they could improve to the upside if consumer sentiment across the UK continues to improve. Even though the cost of living crisis may impact consumer sentiment, the reopening of the economy may offset some of this headwind.

So overall, I think the outlook for the Cineworld share price is improving. As such, I would be happy to buy a speculative position in the stock for my portfolio.

However, I will also be keeping an eye on the challenges I have outlined above. The company faces numerous risks, from the cost of living crisis to rising interest rates, which could change its outlook overnight. And there is also the Canadian legal battle rambling on in the background.

With the enterprise dealing with so many challenges, I am not ready to go all-in just yet. 

Rupert Hargreaves 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.

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Defence stocks surged at the end of last week and this week so far. But stocks with links to Russia have understandably taken a kicking. This includes FTSE 100 oil major BP (LSE: BP). The BP share price is down 8% in just the last five days and it could fall further. The recent fall doesn’t quite reverse the positive trend though as the shares are still up 20% over 12 months.

A tricky road ahead

It’s hard to think that the short term will be anything other than volatile for the BP share price and tricky for the company’s management. It’s not as yet clear how it will exit its near-20% holding in Russian state-owned oil giant Rosneft at an expected cost of around $25bn in response to Russia’s invasion of Ukraine.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “The decision to exit the Rosneft stake will be an eye-wateringly expensive one for BP”. She was unclear how the firm would manage it and thinks it will be a very tough call to “recover anywhere near what was considered to be the full value of the stake, estimated to be $14bn at the end of 2021”. And of course, she pointed out that the move will also “strip BP of lucrative dividends which were due to pour out of the Russian business”.

So in the short term the share price still has plenty of potential to fall further, and it’s a punt to buy the shares now before more information becomes clear on the sale. At least the company was quick to respond and has laid out the scale of the write-down it will take. Swift action is often better than dithering and I think investors will forgive management for the losses.

A good company at a slightly lower price?

While I’d hold off on buying the shares until the situation becomes a bit clearer – and when the shares might even have dropped further  – there will come a time when the BP share price could be too cheap for me to ignore. The P/E is already near 13, so it’s cheap but not compellingly so. The yield is now around 4.4% so there’s also the potential for income with this share.

I feel higher oil prices should continue to offset the loss of value of the Russian Rosneft stake. The big problem for BP would come if for some reason, and unexpectedly, the oil price drops sharply. That would have a huge impact on its finances. 

Potential investors like me will also have to watch costs associated with moving into renewables, which BP seems to have been slower to transition to than SSE, for example. It will be interesting to see if the change goes well and how much capital it takes to go green.

Overall I’m steering clear of BP for now. But if the shares fell another 10% over the coming weeks I’d be tempted to take another look, at least when the situation regarding its Russian stake becomes clearer.

Andy Ross owns no share 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.

Value investing is all about buying companies (or shares in companies) for less than their intrinsic value. Sometimes, downward shifts in markets or in individual stocks can present value investors with opportunities. With that in mind, here are three stocks that I’m looking at buying in March with my value investing hat on. 

Ford

The first stock is Ford (NYSE:F). The company’s debt presents an investment risk that is worth considering. But despite this, I think that there might be an opportunity here from a value investing perspective.

Last year, Ford made just over $9.75bn in operating income. The company currently has a market cap of around $73.1bn. Including the company’s total debt of just under $140bn and $20.5bn in cash means an investment return of around 6% based on last year’s figures.

By itself, I think that’s okay. But the real value I see here comes from Ford’s electric pick-up, which is set to launch well ahead of its rivals. Last year, the top three selling vehicles in the US were all trucks. I think this means that the electric pick-up market will be important and Ford’s head start will prove valuable. That’s why I see Ford as a value stock to consider buying in March.

Tesco

Another stock on my value radar is Tesco  (LSE:TSCO). The company typically produces around £2.5bn in operating income. Right now, it has a market cap of just under £22bn. It has £15.67bn in total debt and £2.4bn in cash. Since Tesco is a fairly stable business, this brings me to expect a return of around 7.5% annually from the underlying business.

Tesco’s current assets don’t cover its current liabilities. For many, this is seen as risky. It means that the company isn’t as financially flexible as it might be. I view it as a strength, though. It means that the company is able to sell the goods it purchases before it has to pay its suppliers for them. I think that Tesco is a stable business trading at a great price. That’s why it makes my list of value stocks to buy in March.

Wells Fargo

Last on my list of value stocks to buy in March is Wells Fargo (NYSE:WFC). The company currently trades at a price-to-book (P/B) ratio of around 1.25 and has a return on equity of around 12%, which implies a business return of around 9% annually. Wells Fargo has been facing two major headwinds. The first is low interest rates, which pressure margins on its core business. The second is that it has been operating under an asset cap due to its past misdemeanours.

I think that these headwinds might be about to abate, though. I expect US interest rates to rise steadily and I expect Wells Fargo to meet the conditions for its asset cap to be lifted. The risk with this investment comes from how soon either of these might happen. But even if these take longer than anticipated, I think that the business will do well over the long term. This is why it makes my list of value stocks to buy in March.

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

If there’s one thing the world’s best investors have in common, it’s that they tend to invest in high-quality companies. Warren Buffett, for example, has large positions in the likes of Apple and Coca-Cola, both of which are leaders in their industries.

Here, I’m going to highlight three world-class companies I’d invest in today. I think these stocks could be great investments for me in the years ahead.

A British champion

Let’s start with FTSE 100 firm Diageo (LSE: DGE). It owns some of the biggest alcoholic beverage brands in the world, including Johnnie Walker and Tanqueray.

I’m bullish on DGE for a number of reasons. One is that the company looks well-placed to benefit from rising levels of wealth in the emerging markets in the years ahead. Diageo believes that by 2030, millions more emerging market consumers will be able to afford its brands.

Another is that the company is currently buying back a ton of its own shares. This should increase earnings per share which, in turn, should boost the share price over the long run.

ESG awareness is one risk to consider here. Analysts at Jefferies believe that alcohol following in tobacco’s footsteps might be the “single biggest risk” to the share prices of alcoholic beverage companies.

Overall though, I see a lot of investment appeal in Diageo. The forward-looking P/E ratio here is currently 24, which seems reasonable, to my mind.

A major financial player

The next stock I want to highlight is Mastercard (NYSE: MA), which is listed in the US. It operates one of the world’s largest payments networks, helping consumers, merchants, and financial institutions move money safely and efficiently.

Mastercard has attractive growth prospects in both the short term and the long term, to my mind. In the short term, the company should get a boost from the return of travel, as it generates a lot of revenue from cross-border transactions.

Meanwhile, in the long run, it looks set to benefit from the shift away from cash. Over the next decade, trillions of transactions are set to move from cash to card.

Disruption in the payments industry is the biggest risk here, in my view. This is certainly something to monitor. With the stock trading on a P/E of around 35 however, I’m convinced the overall risk/reward proposition is attractive.

A tech powerhouse

Finally, there’s Nvidia (NASDAQ: NVDA). It’s the world’s most valuable semiconductor company.

The semiconductor market is experiencing huge growth as the world becomes more digital, and this is reflected in Nvidia’s recent results. In the final quarter of 2021, revenue was up 53% year on year to $7.6bn. That’s amazing growth for a company of Nvidia’s size ($600bn).

Looking ahead, I think this tech giant is likely to get much bigger. Nvidia is active in a number of markets, including the video gaming, data centre, artificial intelligence, autonomous vehicle, and metaverse markets. All of these industries look set for strong growth in the next decade.

It’s worth pointing out that Nvidia is a higher-risk stock. It’s expensive (forward-looking P/E of about 43) and it has historically been volatile.

As a long-term investor with a high-risk tolerance I’m comfortable with the volatility here though. I think this is a stock to hold for the long run.

Edward Sheldon owns shares in Apple, Diageo, Mastercard, and Nvidia. The Motley Fool UK has recommended Apple, Diageo, and Mastercard. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

It’s the start of March, but I still have just about 10 months left to make a mark on 2022. In one specific regard, I’m trying to target £500 in passive income. Even though I can use different assets to make passive income, the one I want to focus on is dividends from listed companies. With that as my aim, here’s how I’m going about making it a reality.

Two factors to consider first

Firstly, I need to evaluate how much money I have to invest. Unfortunately, my plan is going to be dead in the water if I only have a few hundred pounds. Logically, I need to have very much more than £500 to invest in order to make £500 back from passive income this year.

Although it’s preferable if I can invest in one go, I’m also happy to invest a chunk each month for the first few months. This makes it a little easier on my cash flow in the short term. However, given that I want to avoid missing out on as many dividend payment dates as possible, I don’t want to wait too long in this regard.

The other main factor I need to consider is what dividend yield I want to target. At the moment the average FTSE 100 yield sits at 3.57%, with a range of companies offering generous yields above this. Four stocks are even offering a yield in excess of 10%.

As a general rule of thumb, the higher the yield the more risky the stock is. An example of this is Evraz, a mining company with operations in Russia and Russian significant shareholders. The share price has been plummeting recently, pushing the dividend yield above 50%. On the face of it this yield might seem attractive, but when I understand the reasons behind it, it’ll likely cause me to think carefully. 

Adding the numbers for passive income

Once I’m happy with the two above points, I can start to add in the numbers. I’m going to assume that my target yield for passive income is 7%. As this is an annualised yield, I’m going to increase this to account for the two months (out of 12) that I’ve missed this year. This means that I actually need a yield of 8.16%.

With a target of £500 in passive income, this would mean that I’d need to invest £6,128 now. Alternatively, I could split this up into a couple of payments over the space of a month or so. But I would struggle to invest monthly through to the end of the year, as my monthly investments in November and December would be unlikely to make me any income this year.

However, what the above shows is that it’s possible to start building a passive income portfolio straight away, and enjoy the benefits in a relatively short period of time. I should note that the dividend payment dates vary from business to business. Some pay quarterly, some annually. So the £500 is unlikely to be spread evenly each month. 

If I don’t have the lump sum available or spread in the next few months, I can still start anyway with what I can afford. After all, dividends should be paid each year. So even if I can’t reach my goal in 2022, it’ll be a lot easier to hit in 2023, given my existing investments.

Jon Smith and The Motley Fool UK have 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.