Investing tips are easy to come by, but few are geared to when the economy is in a period of uncertainty. With tensions in Europe affecting markets around the world, it can feel like it’s too dangerous to invest right now. But I believe this is the perfect time to prepare, pick up cheap shares, and be ready for when times are more certain in the future.

It’s all about the long game

Even in ordinary times, the stock market goes up and down in unpredictable ways. It may even trend down for a whole year. So, how are investors meant to feel comfortable parting with their hard-earned cash if there’s a chance it could drop in value? By remembering that investing over the long term is the goal.

Long-term investing means making a stock purchase and holding onto it for years and years, possibly even decades. This can be a tough proposition to some. I often struggle with imagining that far in the future. But it’s what gives me pause when the market isn’t moving the way I had hoped. All I have to do is look back in time at the share prices of companies like Amazon and Berkshire-Hathaway to see that they had their ups and downs.

Amazon grew in value by more than 5,000% in the last 12 years. Imagine how upset some investors must feel today if they sold their shares during the 2008 financial crash. Back then Amazon shares were worth around $150. Today, they’re worth $3,000.

Research, research, research

But how do investors build the confidence they need to hold steady through the storm?

The most important investing tip for any beginner is to look at a company’s financial status rather than its share price. These can usually be found with a quick Google search. Look at how much cash it has on hand, how much debt it owes. Look at the profit margins of the company then compare it with its competitors. Does the company offer a product that no one else does?

All of this information can help guide investors towards making a decision they can stick to. Warren Buffett himself believes that all investors should understand the business they’re buying.

Once an investor knows a business inside and out, they can feel comfortable knowing they want to buy it and hold it for years to come.

Buying when the market is down

No one can predict a market downturn, but when they come along that’s when it’s time to go shopping. If the business is sound, makes a good profit, and is likely to continue making sales during periods of contraction, there’s very little reason to think the share price won’t recover. Lots of investors refer to shares like this as ‘on sale’ and buy up as much as they can. This is how Warren Buffett usually makes his investments, although he’s been more cautious in recent years.

Of course, it’s scary watching a share drop in value. A part of my brain always cries out ‘What if it goes to zero?’ But when I’ve done my research and know that the company is profitable and growing, I can be confident that this share price movement is only temporary.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon. 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

• Iron ore sales surged 58.1%, quarter-on-quarter, in calendar Q4 2021
• The company’s trailing P/E ratio is higher than a major competitor
• Recent demerger of coal assets has increased share price volatility

As one of the biggest producers of steel in the world, Evraz (LSE: EVR) also operates iron ore and coal mines in the US, Canada, Russia, and Kazakhstan. Aside from providing exposure to these commodities, the Evraz share has been volatile lately. I want to investigate if this provides a good buying opportunity for the long term, or whether it is indicative of deeper problems with the business. Let’s take a closer look.  

Recent Evraz share price volatility

Shareholders have witnessed significant movements in the Evraz share price lately. In the past year, for instance, it has fallen 52%. Several recent events may explain these moves. In December 2021, a demerger of the company’s coal assets became more likely after the company updated the market that “certain documents have been approved”. This would establish the coal segment as a completely distinct entity.

Furthermore, businessman Roman Abramovich increased his stake in Evraz to 29% in February 2022. This caused even more confusion among investors, with the share price falling 5.5%. Finally, recent share price volatility may be partially explained by the rapidly unfolding security situation in Russia and Ukraine, as my Motley Fool colleague Cliff D’Arcy has recently noted. Needless to say, there has been a lot going on with the Evraz share price in recent times.

Do results bring some better news?

In a recent trading update for the three months to 31 December 2021, the company confirmed steel sales had fallen by 4.5% year-on-year. In addition, steel production declined slightly by 0.4%. The firm explained that this was partially due to “maintenance outages in November in North America” and a new Russian “export duty”.

Furthermore, raw coking coal and iron ore production grew by 12.7% and 1.4% respectively, year-on-year. This was primarily due to better work attendance following the Covid-19 pandemic. Also, sales of iron ore increased by 58.1%, quarter-on-quarter, after resuming exports to China.

In spite of this, both UBS and Goldman Sachs issued ‘sell’ recommendations in January and February 2022. While the target prices were 451p and 453p, I suspect these may fall in the near future owing to recent events potentially impacting the Evraz share price.

What’s more, the company has a trailing price-to-earnings (P/E) ratio of 4.08. While this might seem low, close competitor Ferrexpo has a trailing P/E ratio of 2.11. This may indicate that the Evraz share price is slightly overvalued.  

While certain elements of production are on the rise, there is simply too much going on with this business to justify my purchase. At the very least, I will be waiting to see how recent news regarding the demerger and military action develops in order to make a better informed investment decision. I will not be buying shares today.  

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.

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Key points

• Profits increased slightly between the calendar years 2016 and 2020
• Investment bank Berenberg recently cut the target price from 285p to 260p
• Its P/E ratio is higher than a close competitor   

Formed by the December 2017 £11bn merger of Standard Life and Aberdeen Asset Management, Abrdn (LSE: ABDN) is an investment management company. Based in the UK, the firm manages around £532bn of assets. In the past year, however, the Abrdn share price has tanked 28%. My Motley Fool colleague, Christopher Ruane, recently remarked that the share price was nearing a 12-month low. I want to know if this is a good time to buy, or if I should stand aside instead. Let’s take a closer look.

Company expansion and the Abrdn share price

In December 2021, the firm announced it was buying the online investment service Interactive Investor from US private equity firm JC Flowers. The deal is believed to be worth around £1.5bn. Part of the attraction of Interactive Investor is its rate of growth, as it added around 46,000 new customers last year alone.

It appear that Abrdn wanted greater exposure to web-based trading, that is at the heart of Interactive Investor’s operations. Indeed, Abrdn CEO Stephen Bird remarked that the purchase would help the firm to deliver its “growth strategy”. The deal, so Abrdn hopes, will compliment its core business of asset management.

The purchase had a immediate positive impact on the Abrdn share price, which rose over 5% in one day. It appears to be a constructive move, given the popularity of web-based trading. Whether this move supports the company in the long term, however, remains to be seen.  

Some mixed results

For the calendar years 2016 to 2020, the firm’s results have been a mixed bag. While profits have climbed slightly, from £789m to £838m, revenue has fallen substantially. This figure has slumped from £18.6bn to just £1.7bn. This collapse in itself worries me as a potential investor.

The trend resulted in investment bank Berenberg lowering its price target from 285p to 260p, citing scepticism about Abrdn’s “core investment management business”. It also stated that the Abrdn share price had underperformed UK indexes by 50% between 2017 and 2020.

What’s more, the company has a forward price-to-earnings (P/E) ratio of 16.21. On its own, this doesn’t really tell us that much, but comparison with a competitor can indicate if the business is over- or undervalued. Another big-hitter in the asset management sector, Schroders, has a forward P/E ratio of just 12.79. This makes me question if the Abrdn share price is even currently cheap.

While the purchase of Interactive Investor looks like the company is moving in the right direction, recent results suggest otherwise. I’m looking for bargain stocks that can provide long-term growth and Abrdn doesn’t fit the bill for me. I won’t be buying shares in this business.   

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended Schroders (Non-Voting). 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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At International Consolidated Airlines (LSE: IAG), the mood among investors seems very different today than a year ago. Back then, optimism was creeping back. But move forward a year, with travel restrictions all but gone, and the IAG share price is in the dumps. Since the pandemic, IAG shares have lost 84% of their value. And unlike many that have been recovering, it’s down 4% over the past 12 months. But is that depressed IAG share price presenting me with one of the FTSE 100‘s best buys right now?

A lot will depend on 2021 results, due on 25 February, but we already have some hints. At Q3 time, the company told us it had achieved 43.4% of 2019 capacity in the quarter. Compared to the 21.9% a quarter previously, and on the back of the pandemic hammering, that doesn’t look too bad at all. But compared to the levels we’ll need for a sustained IAG recovery, I found it disappointing.

IAG reckoned, at the time, that it planned to reach around 60% of 2019 capacity by the fourth quarter. We should hear how well that turned out when we see the final figures. If passenger numbers are in line with hopes, or ideally a bit better, I think we could see the share price picking up. But if the figures fail to meet expectations, the pessimism could continue.

Fundamental shift

I do think there’s been a fundamental change in the way investors are approaching the IAG share price. I see those who have been chasing the short-term ups and downs having largely moved on. And the market is getting back to examining it in terms of its fundamental valuation. For long-term investors, that has to be the only sensible approach to investing. So what does the valuation look like now?

Just prior to the Covid-19 stock market crash, the business was on an enterprise value of approximately £15.6bn. That’s what you would have had to pay at the going share price to buy the whole company and pay off its debt.

Today we’re looking at a market cap of £7.9bn, which isn’t that far below the March 2020 figure of £9.2bn. Despite the massive share price fall, the dilutive effect of issuing huge amounts of new equity has helped keep the total market cap relatively high. We won’t know the year-end debt figure until results day, so I’ll use the Q3 net debt figure of €12.4bn (£10.3bn at today’s exchange rate).

IAG share price valuation

It gives us an enterprise value for it of £18.2bn. That’s higher than it was before the crash, which seems a bit crazy to me. On the one hand, the IAG share price is down more than 80% since before the slump. And that does make it look like it could be ripe for recovery and a cracking FTSE 100 bargain. But against that, the total valuation of the company, accounting for the explosion in the number of shares in issue and its increased debt, is higher.

It’s arguable that IAG was undervalued before the pandemic, and that the price is about right now. But I think the likelihood of its being today’s biggest FTSE 100 bargain has flown right out of the window. I’ll wait, at least until we see those 2021 results, before I think further about buying.

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.

Warren Buffett’s company Berkshire Hathaway filed its quarterly report of its holdings as of the end of 2021. I found it interesting. Based on the stocks listed in the company’s filings, I think that I can see three Warren Buffett stocks that I would be willing to buy right now and hold for the next 10 years.

Amazon

The first Warren Buffett stock that I would buy now is Amazon (NASDAQ:AMZN). The online retail giant has been a part of Buffett’s investment portfolio since early 2019. The stock has performed poorly over the past year or so but I think that the strength in the underlying business makes this an excellent time for me to add to my existing investment in Amazon.

Amazon shares currently trade at a price-to-earnings (P/E) ratio of around 47. Investing at this level might be risky in an environment where rising interest rates challenge stocks that trade on high multiples of earnings. But I think that Amazon’s strong business performance — underscored by the 40% growth in revenue in its Amazon Web Services segment and the 32% growth in its advertising business  — justifies the current price.

Verizon

Another Warren Buffett stock that I would buy now is Verizon (NYSE:VZ). Berkshire announced its stake in Verizon stock at the start of 2021, after having received permission not to disclose its investment at the end of 2020. The shares currently trade lower than they did when Buffett was buying them. I think that the current price represents an attractive opportunity for me to buy shares that will do well over the next decade.

In many ways, Verizon is the opposite of Amazon. I don’t think that the underlying business is likely to see explosive growth over the next decade, but I believe that the stock’s lower P/E multiple reflects this. The risk here is that its debt level gives it limited financial flexibility. The company’s debt, however, is the result of significant recent investments, so I take the view that it has decent prospects ahead of it without having to look for further opportunities.

StoneCo

Lastly, StoneCo (NASDAQ:STNE) is a Warren Buffett stock that has been catching my eye recently. The Brazilian fintech is down a huge 88% from its highest point and now trades below its IPO price at which Berkshire Hathaway invested in it. I think that now might be a decent time for me to pick up some shares while the company’s shares are out of favour.

I think that the enduring risk comes from the fact that the business does most of its business in Brazil. This means that an investment carries currency risk since StoneCo makes its money in Brazilian reals. It also means that high inflation there might pressure the volumes of payments the company processes. In light of these risks, I wouldn’t have bought the stock at its highs. After an 88% decline, though, I feel better adding to my investment.

Warren Buffett likes to look for strong companies that are available at attractive prices. I think that Amazon, Verizon, and StoneCo fit the bill. As such, I’m buying shares in all three of these for my portfolio.

Stephen Wright owns shares of Amazon, Berkshire Hathaway (B shares) StoneCo, and Verizon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon. 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.

Many of the shares in my portfolio dropped lower today. But the interesting thing is some of my stocks went up. For example, stocks with businesses involved in the oil and gold mining industries moved higher.

And that underlines to me how useful it can be to own the shares of several businesses representing diversification across various sectors. After all, the fortunes of different industries don’t all move in lock-step.

Robust underlying businesses

I reappraised my portfolio today to make sure I’m still happy holding all my stocks. And despite the price weakness, I can’t see any factor that has diminished the attractive opportunities possessed by each underlying business. So, my conclusion was to sit tight, hold on to all my shares and ride out the current wave of market volatility.

And that’s often the case when pursuing a long-term investment strategy. But it works best after buying stocks with care in the first place. And to me, that means focusing on quality, valuation and prospects.

The great investor Warren Buffett is known for shopping for stocks when many people are worried about something and the stock market is weak. So, I reckon the current environment is a good time to search for shares to hold for the long term. And I’d aim to invest £1,000 with three lessons from Warren Buffett.

However, there are no certainties or guarantees. And it’s still possible for me to lose money with stocks and shares even if I apply these three Buffett lessons. Nevertheless, his advice is useful to me.

Searching for the wonderful

And the first lesson is to focus on what Buffett describes as wonderful businesses. To me, that means paying close attention to the quality of an enterprise in terms of its profit margins and returns against capital invested. But it also means appraising a company’s competitive advantage. And aiming to understand how the business can preserve its trading position in its markets.

We often hear Buffett talk about economic moats, meaning factors that help to keep the competition from stealing the company’s market share. Perhaps it’s the ownership of strong brands or patents. Or it could be geographical monopolies or network advantages among other things.

But those factors aren’t all that’s needed to make a business wonderful. There also needs to be a strong runway for future growth of operations and profits.

Valuation and tenacity

The second lesson is to buy stocks below what a company is worth. And that means focusing on valuation. Otherwise, it’s possible to pay too much for a wonderful and growing business. And that could lead to unhappy investment outcomes. For example, we’ve seen some huge share price reversals recently. But many of those falling stocks are backed by decent businesses. It’s just that their valuations had risen too high.

The third lesson I’d apply from Buffett is to approach stocks as if buying the entire business. And to me, that means avoiding the temptation to sell simply because of price fluctuations. And that’s the lesson I used when reappraising my portfolio today.

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.

It’s safe to say investors who bought FTSE 100 telecommunications giant BT (LSE: BT.A) five years ago would have been left feeling despondent today, with the stock down over 40% since. 

However, BT has seen a steady increase in its share price since the turn of the year, up 11% in that period. What’s more, in the past 12 months it has risen 45%.

So, while the stock has struggled in the past, I’m optimistic about what the rest of the year and beyond could have in store for BT. Here’s why.

BT debt concerns

Although I’m excited about where the BT share price could go in 2022 and beyond, let’s start by getting my concerns out of the way. My main issue is surrounding the firm’s debt, which is currently sat at £18.2bn – a rather large figure. And this is worsened by rising inflation and interest rates. As rates have begun to creep up post-pandemic, this will make the debt BT has even more difficult to pay off. This is a potential stumbling block for progress. 

BT share price optimism

However, there are multiple reasons why I remain bullish on BT.

Firstly, last month it was announced that the firm was in the final stages of selling its Premier League rights to streaming service DAZN. The deal is rumoured to be in the region of $800m. And while there have been reports of the deal stalling, this sum would provide BT with a cash injection. As such, it could leverage the firm’s ability to pay off some of the substantial debt mentioned above.

What also provides me with optimism, and as highlighted by my fellow Fool Rupert Hargreaves, is that the company’s projections and analysts’ expectations anticipate BT to grow in 2023 as customers slowly return to the business. This will be the first time since 2016. While these expectations may not be met, if they were I would expect to see a rise in the BT share price as the market reassesses its potential.  

Further, speculation continues over a potential takeover by billionaire Patrick Drahi. After increasing his stake in the firm from 12.1% to 18% late last year, some believe he could be setting the foundations to mount a bid. While we will have to wait until summer to see if this comes to fruition due to UK takeover regulations, a potential takeover will most certainly boost the BT share price.

Why I’d buy

I’d never buy a stock just because of takeover talk. But while some of the above may be speculative, I think it highlights the potential the BT share price has to rise. The firm will benefit from any cash injection received from the sale of its Premier League rights. And this income could attribute to reducing its debt. Potential growth for the first time in seven years also excites me. With BT currently trading for 192p, I would be willing to add the stock to my portfolio today.

Charlie Keough 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.