For me, the FTSE 250 Index is an excellent place to look for smaller (compared to FTSE 100 members) companies that can grow their businesses and their share prices and dividends. I hold the following three FTSE 250 stocks in my Stocks and Shares ISA portfolio. I think they work well together because stylistically, they bring different things.

A high-quality FTSE 250 stock

Indivior (LSE:INDV) manufactures treatments to help patients overcome opioid addiction. Opioid addiction, particularly in the US, is a growing problem. Indivior has also brought the first subcutaneous long-acting injectable treatment for schizophrenia to market. That is an essential step in diversifying the company’s revenues.

Indivior looks like a company that is high in quality to me. The company has been profitable in five of the last six years, with 2020 being the exception. Operating margins average a respectable 13.9% and are fairly stable. Trailing 12-month returns on capital and equity come in at 21% and 144%, respectively, which beats most companies in the same industry and indeed the wider market. However, I am mindful that the company is named in a class-action lawsuit related to the opioid crisis in the US and legal risks remain elevated.

A good value mid-cap stock

FirstGroup (LSE:FGP) operates bus, coach, and train services in the UK and North America. First Group suffered large revenue and stock price drops during the pandemic, but it has survived relatively unscathed. Yes, balance sheet debt climbed during the pandemic. But the sales of US businesses in 2021 has softened the impact. These sales also explain why revenue forecasts for 2022 and 2023 are lower than pre-pandemic levels.

I think FirstGroup looks good from a value perspective. While its price-to-earnings ratio of 14.4 does not scream cheap, the stock’s price-to-book and price-to-sales ratios of 0.62 and 0.17 are well below industry and market averages. Ultimately, the stock’s fate will be decided by how well its operations bounce back from the pandemic. There is a concern that bus and rail services will never return to pre-pandemic volumes. In terms of non-work travel, I am not convinced. However, working from home is here to stay and will keep some workers off buses and trains some of the time.

A low-volatility FTSE 250 stock

The Twentyfour Income Fund (LSE:TFIF) holds a portfolio of UK and European residential mortgage-backed securities and collateralised loan obligations. The company aims to deliver a dividend yield of around 6% to its investors from this portfolio. In terms of yields, 6% is quite high, and it is not achieved without taking a commensurate degree of risk. Just shy of three-quarters of the portfolio is rated below investment grade, and the portfolio could be subject to large losses. This would particularly be true when there is stress in the markets.

However, on the whole, Twentyfour Income stock has shown low levels of volatility compared to other FTSE 250 members. A good deal of the fund’s portfolio is in floating interest rate securities. So, a rising interest rate environment should be good for the company’s stock price. This makes the stock different from other equities found in the FTSE 250 index, and that’s why I hold it in my portfolio.

James J. McCombie owns shares in FirstGroup, Twentyfour Income Fund and Indivior. 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 searching for the best penny stocks to buy for my portfolio in March. Here are two top low-cost shares on my radar today.

A top e-commerce share

Online shopping is predicted to carry on growing strongly in the post-pandemic era. So I’m continuing to pay Attraqt Group (LSE: ATQT) close attention. This UK tech stock allows internet retailers to create a personalised experience for their cyber shoppers.

Giving the best customer service is becoming ever-more critical as competition online grows. So I expect demand for this penny stock’s services to grow strongly over the next decade. Indeed, the penny stock chalked up 35 more multi-year contract renewals in 2021. This was on top of the 38 it sealed the year before.

I am concerned about the impact of runaway inflation on online retailers and by extension orders at Attraqt Group. Also, while Attraqt is expected to finally move into profit in 2022, the business trades on a high forward price-to-earnings (P/E) ratio of 105 times. Such a high multiple could cause a sharp share price reversal if trading shows signs of cooling down.

Playing the gold boom with penny stocks

I’d also stock up on Serabi Gold (LSE: SRB) shares as the outlook for gold improves. Sinking bullion prices around the turn of the year meant that this mining stock is 21% cheaper than it was at this time last year. As a long-term investor, I think this represents an attractive buying opportunity.

Firstly, let’s look at the gold price picture. The precious metal recently hit its most expensive since September 2020, above $1,970 per ounce as the tragic conflict in Ukraine escalated. Further sizeable gains for the safe-haven metal can’t be ruled out as the war continues, either. Indeed, analysts at Goldman Sachs now think the yellow metal will reach new record highs of $2,150 in the coming months.

It’s not just the worrying geopolitical landscape that’s forcing investors to run for cover with gold. Western sanctions placed upon Russia have raised fears over inflation rising still higher as energy prices have jumped. In fact co-ordinated financial action over the weekend has increased the chances of a ‘stagflationary’ storm, i.e., one of fast-rising prices and weak economic growth. This is the perfect scenario for gold prices to thrive in.

As I say, though, I’m a long-term share buyer. So I’d buy Serabi not solely on the gold price outlook for the next year or so. Mining for metal is a highly complex business that’s fraught with danger to a company’s profits. Output issues can hit revenues hard and drive costs through the roof. But I’m excited by the progress Serabi is making on the operational front. Total output rose 7% year-on-year in 2021. And development of its high-quality Coringa asset is coming along nicely too.

City analysts think earnings at the company will rise 4% in 2022. This leaves the penny stock trading on a forward P/E ratio of just 4.9 times. I think this could make it too cheap for me to miss.

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

It has been a turbulent couple of years on global stock markets. This year has started with yet more market volatility that could continue for a considerable period. But one thing I have learned from past market crashes is that once they bottom out, recoveries can come at very different speeds. Sometimes it takes decades. But on other occasions, a market recovery arrives quickly and shares are no longer available at the bargain basement prices for which they had been changing hands.

With that in mind, I have identified three shares I see as attractive options to buy and hold in my portfolio for the long term. I would consider adding them now, rather than waiting in the hope of further price falls. Although no-one knows when it will arrive, I feel confident that in due course we shall see a market recovery.

boohoo

The decline in the boohoo (LSE: BOO) share price over the past year has been more dramatic than in the online retailer’s sales. The share price has fallen 75% in a year and I think it could still fall further. Clearly a lot of investors are feeling negative about the shares. Cost inflation in boohoo’s supply chain could hurt profits. As it is focussed on low-priced clothing, it lacks the ability to pass on such cost increases to customers in the form of price increases without risking sales falling. On top of that, boohoo is still recovering from reputational damage about conditions in some of its suppliers’ factories. If that turns shoppers off the brand, it could hurt both sales and profits.

But if the boohoo share price does fall further, I would see it as a buying opportunity for my portfolio. I have started buying boohoo shares this year and would happily add more at the current price. In the short term, the shares may continue to move around a fair bit. But in the long term, I see a compelling investment case. Online shopping is growing, which helps boohoo. It has been expanding internationally, most notably in the massive US market. It has developed an appealing brand and its business model has been consistently profitable over the past few years. So I think the current difficulties faced by boohoo are obscuring the potential of the share to be a star performer in my portfolio if I hold it in the coming years. Once the market sentiment becomes more positive again, I hope that will lead to the boohoo share price recovering at least some of its recent share price losses.

JD Wetherspoon and market recovery

Another UK share I would consider buying now for my portfolio is beaten down pub operator JD Wetherspoon (LSE: JDW). Over the past year, its shares have fallen 32%. It has now lost 49% from its price in December 2019, before pandemic public health measures dealt a savage blow to the pub trade.

Spoons has definitely had challenges and many of them could persist. Wage and cost inflation threaten to eat into profits. Some customers may have abandoned pub drinking forever due to concerns about mixing with strangers. But I think pubs will continue to see brisk trade and Wetherspoons has a proven operational model. Its large estate and cheap prices could help it recover. I would be happy to buy Wetherspoons now for my portfolio and hold it in the hope of future business recovery.

British American Tobacco

A lot of investors choose not to own tobacco shares for ethical reasons. For those who are willing to own them, however, such stocks can be rewarding.

The most obvious way in which I am rewarded for holding shares in Lucky Strike owner British American Tobacco (LSE: BATS) is its dividend. The company recently raised its annual payout again, as it has done every year for over 20 years. Currently, the British American Tobacco dividend yield is 6.7%. That is substantially higher than most of the company’s peers in the FTSE 100 index of leading companies.

British American also announced in its annual results this month that it plans to restart its share buyback programme and promptly did so. That could also be rewarding for shareholders. As Warren Buffett explained in his shareholders’ letter released at the weekend, “When the price/value equation is right, this path (a share buyback) is the easiest and most certain way for us to increase your (shareholders’) wealth”. Buffett was talking about the company he chairs, Berkshire Hathaway, but his logic applies to British American Tobacco too. By reducing the number of shares in circulation, the company can increase the earnings per share even if total earnings are flat. That can help support a higher yield and share price.

I also see share price growth potential in the tobacco giant. Tobacco shares have been out of fashion for years. While the British American Tobacco share price has increased 28% over the past year, it remains over 40% below the levels it reached in 2017.

Of course there are risks with tobacco shares. As cigarette use declines in most developed markets, revenues could fall. Pricing power can allow British American to maintain profit margins as revenues decline, but that cannot help sustain profits if sales decline dramatically. However, the company’s line of non-cigarette alternatives is seeing rapid revenue growth. Sales hit £2bn last year and profits are expected to appearing in 2025. Despite the risks, I see British American Tobacco as a company to buy now and hold for my portfolio for the long term.

Christopher Ruane owns shares in British American Tobacco and boohoo group. The Motley Fool UK has recommended British American Tobacco 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.

Legal & General (LSE: LGEN) shares are near the top of lists for high dividend yield. And with the share price near 273p, City analysts are forecasting the forward-looking shareholder payment to yield just over 7% in 2022.

At first glance, that level of income is attractive to me. But I’m also wary that big yields sometimes flag a warning for investors. In some cases, dividends prove to be unsustainable at high levels. But when directors slash dividends, the share price of a company can become a casualty as well. So that’s a potential double whammy that could sink my investment in a high-yielding stock.

Beware of cyclical elements

Some of the worst dividend-slashing offenders can come from cyclical sectors. Famine or feast business economics don’t lend themselves well to a sustainable programme of dividend payments. So, I’m wary of high-yielding companies in sectors such as housebuilding, oil & gas production, retail, travel, airlines, and many others, including finance.

And Legal & General falls into the financial sector. The company earns its living via insurance, investment management, capital, and retirement services. But the company does have a good record of paying shareholder dividends. The payment has generally risen a little each year and didn’t stop during the pandemic either. And that’s despite a plunge in earnings in 2020.

However, apart from the 2020 blip, the trajectory of earnings, book value, operating profit, and dividends has been upwards since 2011. And analysts have pencilled in low, single-digit advances for earnings and the dividend in 2022.

Yet, despite all the progress with the financials, the share price is near to where it was in 2015 after moving essentially sideways. And I think that’s a further signal of the presence of cyclical operations.

When cyclical companies have been earning decent profits for several years, the stock market tends to keep their share prices pinned down by reducing the valuation. Yet, if earnings falter, the market can be brutal at marking stocks down. And we could be seeing such a set up now with Legal & General — limited upside for investors but plenty of potential risk on the downside.

An upbeat outlook statement

And such risks did bite around 2009 in the wake of the financial crisis of the noughties when the dividend was reduced. However, in August 2021, with the half-year results report, the company delivered an upbeat outlook statement. The directors said they were “confident” in LGEN’s strategy. And that is aimed at achieving resilient, organic growth, “supported by our strong competitive positioning in attractive and growing markets”. 

There’s no doubt that LGEN has been trading well and growing for more than 10 years. And, on balance, I would add a few of the shares to my diversified portfolio now despite my reservations.

We’ll find out more about the progress of the business with the full-year results report due 9 March.

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

Key points

• The company reported a £513m profit for the 2021 calendar year, increasing from a £1.97bn loss the previous year
• Rolls-Royce shares may be cheap at current levels when compared with two competitors
• The firm is building an increasingly sustainable business

The release by Rolls-Royce (LSE: RR) of its full-year results coincided with recent market volatility. Indeed, the shares tanked 13% in a single day. The announcement that CEO Warren East will depart the engineering firm at the end of 2022 and that revenue could potentially decline as a result of sanctioned Russian airlines, panicked investors. Looking at the underlying business, however, I’m more optimistic that a spare £1,000 would be well spent on this firm. I own shares in this company and I think now could be the time for me to add more at this bargain price. Let’s take a closer look.  

Recent results and Rolls-Royce shares

Rolls-Royce recently posted its full-year results for the 2021 calendar year. As a current shareholder, I was pleased to see the business swing to a £513m profit, compared to a £1.97bn loss in 2020. This is indicative of a much improved operating environment. Indeed, cash outflow for the period declined massively, from £4.18bn to just £1.44bn. This is a sign that Rolls-Royce shares are stabilising.

Furthermore, the group sold off a number of businesses in 2021, like AirTanker Holdings and ITP Aero, which contributed to expected proceeds of around £2bn. This may go some way to paying down the company’s not insignificant debt pile of £7.88bn.   

Why Rolls-Royce shares are cheap

By looking at the firm’s price-to-earnings (P/E) ratio, we are better able to understand if it is under- or overvalued. Rolls-Royce has a forward price-to-earnings ratio, based on forecast earnings, of 22.27. By comparing this with two major competitors, Safran and General Electric, that register 29.85 and 27.86 respectively, it is likely that Rolls-Royce shares are cheap. It is always worth remembering, however, that future pandemic variants could halt the company’s recovery.

Indeed, Deutsche Bank reiterated a price target of 130p. Furthermore, Berenberg issued a ‘buy’ rating this month with a target price of 160p. With shares currently trading at 101p, I think that the Rolls-Royce share price is going to climb even further.

Building a sustainable business

Recent efforts have focused on expansion into greener technologies. Only in December 2021, the Qatar Sovereign Wealth Fund invested £85m into the company’s plans for small modular reactors (SMRs). These will use nuclear energy to create power and should be added to the grid by 2030.

In November 2021, the firm was also testing electric aircraft in a bid to move the aviation sector to greener forms of power. These tests go hand-in-hand with tests of engines with 100% sustainable aviation fuel, which would be a major step in decarbonising the industry.

With recent results, I’m more convinced that Rolls-Royce shares are coming back. I will be using my spare £1,000 to add more without delay in an effort to increase exposure to exciting sustainability projects.  

Andrew Woods owns shares in Rolls-Royce. 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 like buying shares to set up passive income streams. Once I own them, they really are passive. I can just the let companies do their hard work and hopefully pay me dividends with the profits they make. That is never guaranteed, though, which is why I diversify my passive income streams across several companies. 

Here are a couple of firms I would consider adding to my portfolio in March for the potential long-term passive income streams they offer.

Direct Line

Insurers are often strong dividend payers. That can make them attractive from a passive income perspective. The business model lends itself to consistently generating surplus cash flow. That can be paid out to shareholders. Indeed, some insurers aim to pay out regular dividends but also, if their cash surplus reaches a certain point, to pay out a special dividend.

From a passive income perspective, I would consider adding Direct Line (LSE: DLG) to my portfolio this March. With the company due to announce its preliminary results on 8 March, it will be coming under more scrutiny than normal in the City. At the interim stage, the company raised its dividend by 3%. Although that is a modest increase, over the long term, regular increases could help increase my passive income streams significantly. Currently, Direct Line offers a yield of 7.5%. I find that very attractive as a potential addition to my dividend portfolio.

As well as being in an attractive business sector generally, I think Direct Line’s long investment in its iconic red telephone logo gives it a marketing advantage over rivals. That could help sustain customer loyalty and profits. One risk to profits the company flagged earlier this year was the increasing cost of second-hand vehicles. I will be keeping an eye on the preliminary results to see whether the company is managing such risks in a way that still enables it to raise the annual dividend.

DCC

Another company I would buy for its passive income potential is the domestic gas and technology conglomerate DCC (LSE: DCC).

With its yield of 2.9%, the company would offer me an attractive but not unusually large passive income stream. But with an eye on the years to come, I think putting DCC in my portfolio now could turn out to be more and more lucrative over time.

Passive income potential

DCC operates in diverse areas. That helps protect it from some of the risks to individual parts of its business. Still, they do exist and if there is a shift away from using gas as an energy source, which could hurt both profits and revenues.

One thing that impresses me is the company’s proven ability to manage its businesses efficiently and generate substantial profits. It has used its successful business model to increase its dividend for 27 years in a row. At the interim stage, the payout grew more than twice as fast as Direct Line’s, by 7.5%. Dividends are never guaranteed at any company. But I do think the potential for continued dividend growth at DCC could make it a rewarding addition to my portfolio.

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

The Russian invasion of Ukraine rattled the stock market last week. And on Thursday, the FTSE 100 shed 3.9% of its value to end the day at 7,207 points. So what should investors do? Well, not panic, for one thing. The very next day, the top London index regained 3.9%, and ended the week at 7,489 points.

That means the Footsie lost 24 points, or just 0.3%, in a week. That’s in response to a foreign invasion of a democratic country on the edge of Europe. And by none other than Russia, a nuclear power armed to the teeth. It’s a pretty resilient thing, the stock market, isn’t it?

We’ve now had a weekend of taking in the shock of last week’s events. We’re getting some clarity on their economic effects too. The price of a barrel of crude oil rose above $100 again, and prices at the pumps are higher. Fuel costs were already on the way up, and we really could do without any further economic squeeze.

But the UK stock market has gone through many economic squeezes in the past century and more, some far greater than we currently face. Sure, there have been some big dips. But if we look back at stock market charts over the decades, it’s actually quite hard to see them now. The long-term trend is just onwards and upwards.

Stock market strength

According to research by Barclays, the British stock market has beaten other forms of investment for more than 120 years now. What’s more, the longer the time slice we examine, the more often shares have outperformed cash in a savings account. Over rolling 10-year periods, the stock market has won out around 90% of the time.

The winning percentage for shares rises to 99% over 18-year periods. And over rolling 23-year periods, cash in the bank has never beaten UK shares. That’s over the entire 20th century and more. And it covers two world wars, the great depression, oil price volatility, and no end of worldwide crises.

Isolation

I have been wondering about one thing. What would I do if isolated from the world, solely with access to the goods and services I need to live? What if I heard nothing about the world outside of my personal horizon for another decade?

You know how my investing approach would change? Not one bit. I would carry on putting a bit aside every month, and making a new stock market investment every time I had a sufficient sum. Would I care if I saw the prices of shares falling for a few months and worry about what’s happening in the real world? Well, yes, or course I would. I can’t pretend I wouldn’t. But my confidence in the long-term strength of the stock market would mean I’d just carry on investing.

Cheap shares now?

The FTSE 100 has had a weak decade, and I think that’s left a lot of UK shares undervalued now. The resilience of the past week makes me think plenty more investors share that opinion. I’m going to carry on buying on the dips.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays. 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 weekend, the annual shareholders’ letter of Berkshire Hathaway by its chairman, Warren Buffett, was released.

As usual, it contained insights that could be of interest to all share owners, not just those of Berkshire. Upfront, Buffett explained his approach to finding shares to buy – and it may sound surprising.

Stock picking

Buffett said that he and partner Charlie Munger are “not stock-pickers”, going so far as to emphasise “not” to make sure the point hit home with readers.

Yet Buffett is famous as one of the most successful investors in stock markets throughout history. So, if he is not a stock picker then what is he? In his words, “Charlie and I are not stock-pickers; we are business-pickers”.

The clue to what Buffett means by this is in what he writes before it. Buffett asked readers to “note particularly” that “we own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves”. In other words, Buffett does not try to pick shares to buy now for his portfolio based on swings in the markets. Instead, he chooses businesses he wants to own a part of. He then buys shares in them if he thinks they are reasonably priced.

Applying the Warren Buffett method

Warren Buffett has billions of pounds he can use to buy whole companies. I cannot do that. But like Buffett, I can buy a piece of a company in the form of some shares.

He views shares as just that – a piece of a company. So he applies the same criteria when deciding whether to buy shares as he does when considering a whole company. Specifically, as the quotation above makes clear, he tries to figure out how a business is likely to perform over the long term. That is about the underlying value of a business, not its current share price. He then considers whether the price at which he can buy shares is attractive to him based on what he thinks are the long-term prospects for the business.

I can apply the same approach as Buffett when thinking about shares I might add to my portfolio. Instead of focussing on stock market moves, I would try to identify companies that have a specific driver for long-term business success. Then I would ask myself whether the company’s share price seemed like good value for me given what I felt the future prospects of the business to be. Note that I am not ignoring the share price – but it is not the leading motivation for me to invest in a company.

Learning from Buffett’s annual letter

The shareholders’ letter was the latest of many occasions on which Buffett has detailed how he chooses shares to buy for his portfolio. I find them to be a great source of inspiration, especially because Buffett explains why he invests the way he does. That makes it easier for a private investor like me to learn from a master – and apply the lessons to my own portfolio.

Christopher Ruane 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.

It sounds incredible right now that a FTSE 100 stock has a dividend yield of 53%! What could be better than knowing that I would earn half my invested capital back in a year’s time? Well, maybe the knowledge that the company in question would in fact continue to pay dividends. In this article, that is the key question. Can the stock continue to give me bumper dividends? 

Why has the dividend yield risen so much?

No points for guessing the stock I am talking about. It is the miner and steel manufacturer Evraz (LSE: EVR). It has had the highest dividend yield among all FTSE 100 stocks for a while, but recently its yield went through the roof. This might sound like a positive, but it has happened under very difficult circumstances. The company is based in Russia. As its home country attacked Ukraine last week, its price plunged, although it had been falling even before that. Its share price has now almost halved from a year ago. 

Now, dividend yield is the dividend amount as a percentage of the current share price. It follows that if the share price declines sharply, dividend yield increases quite a bit. And that is exactly what has happened in the case of Evraz. Without any change to its dividend, its dividend yield suddenly looks unbelievable. 

Can the FTSE 100 stock sustain the yield?

However, the yield could stay this elevated if the stock price remains low while its dividend is sustained through this time when Russia is at war with Ukraine. I think it is quite likely that the company’s share price will remain quite subdued for now. It has operations in Russia, which is facing sanctions, but it also has interests elsewhere in the world, including production sites in the U.S. and Canada. These could potentially face challenges as well if the situation becomes even bigger. We really do not know which way the tide will turn, but from what I can see, the signs do not look good. 

If Evraz’s operations are impacted, it is only a matter of time before its dividends are cut significantly too. Already, 2022 was expected to be a year of moderation for miners that had seen a big profits during the year before. So, I think we can expect smaller dividends from the company, though it is possible that its low share price will continues to keep its dividend yield elevated. 

What I’d do

I own shares in Evraz, and it had been a good stock to hold for a while, as its performance was strong. Now of course, my holdings are in the red. If peace returns quickly enough, I think it could bounce back. However, for now, we do not know what will happen next. And as I was saying earlier, the signs do not look good. I am holding on to whatever I own of the stock, but will avoid buying any more for now till the situation becomes clearer. 

Manika Premsingh owns Evraz. 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.

Companies receiving the least coverage by analysts can often generate some of the best returns for investors. With this in mind, here are two under-the-radar UK growth stocks (one of which I already own!) that I’ll be paying particular attention to in March.

Multi-bagging growth stock

With a market cap of £1.4bn, international research and data analystics firm YouGov (LSE: YOU) isn’t exactly the market’s best-kept secret. However, nor is it a company that frequently hits the headlines. As a long-term Foolish investor, that piques my interest, especially when looking at the performance of the shares. 

In the last five years, YouGov’s valuation has jumped almost 400%! This goes some way to explaining why I have a good proportion of my money invested lower down the market spectrum. Picked carefully, the potential upside is greater since it’s theoretically easier for relative minnows — like YouGov once was — to grow revenue and profits at a faster clip. Indeed, it’s why I’ve been buying this investment trust in February.

Momentum reverses

Like many growth stocks, however, YouGov hasn’t fared so well in 2022, dropping 20%. That’s perhaps to be expected given recent global events and the stock’s still-eye-watering valuation of 47 times forecast earnings. To pay this price, I’d expect the company to be blowing analyst projections out of the water. However, management recently stated that growth would likely be only “slightly ahead” of its own forecasts. That’s hardly a bad thing but it’s clearly not been enough for some investors to stick around.

All this brings to light a key risk with buying high-performing investments; the bar for what is considered successful trading is set so much higher. Since no company is capable of executing perfectly, the potential to disappoint is greater.

Interim results from YouGov are due on 22 March. If the share price drops further, I might have to consider adding the stock to my own portfolio. In spite of the high valuation, this looks to be a very decent company with great geographical diversification and a robust sales pipeline. It’s also worth pointing out that YouGov has consistently hiked its annual dividend by double digits for many years now. That’s never a bad sign. 

Off the boil

Kettle safety device-maker Strix (LSE: KETL) is another under-the-radar, AIM-listed stock that’s done well for early holders such as myself. Between March 2020 and September last year, the share price increased roughly 185%! No doubt some investors had become aware, like me, of the fat margins and seriously high returns on capital this company consistently achieves.

Unfortunately, recent performance hasn’t been so great, with shares falling 35% in the last six months. Like so many other businesses, Strix has faced supply chain issues and higher freight costs. Today’s news of a “cyber incident of Russian origin” won’t exactly boost sentiment either. That said, the company has already stated that there’s been “no impact on customer orders or sales“.

Speaking of which, the £500m cap business recently said that it would log revenue growth of around 30% for 2021. Pre-tax profit has also been in line with market expectations. Numbers will be officially confirmed on 30 March.

With the shares now trading at 15 times earnings and a new factory in China effectively doubling manufacturing capacity, I may well increase my stake in the near future.

Paul Summers owns shares in Strix. 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.