As far as businesses go, Shoe Zone (LSE: SHOE) was impacted more than most due to the pandemic. The high street was deserted, and lockdowns meant consumers weren’t exactly rushing to buy new shoes. But it seems the worst is over now. The UK economy has rebounded back to almost where it was before the crisis unfolded, and retail sales are higher than they were. The recovery at Shoe Zone has been impressive too. And the business is in a better shape than pre-pandemic. That’s why I think it’s one of my best stocks to buy today. Let’s take a closer look.

The investment case

In the recent full-year results to 2 October (FY21), revenue actually declined to £119.1m (from £122.6m in FY20). However, the company was still heavily disrupted due to lockdowns and only traded through its stores for 36 weeks, or five weeks less than the previous year. But it was digital revenue that was most impressive. This increased by over 50%, from £19.3m, to £30.5m in FY21.

Shoe Zone has been improving this sales channel over the pandemic, and sees it as a key growth area. Indeed, it said: “Our decision to invest in infrastructure and people pre-pandemic enabled us to take advantage of the change in buying habits and to cope with the increase in volumes through our digital shoehub platform.”

Digital returns rates are also very impressive at only 8.4%. This is a good sign because high returns rates have significantly impacted Boohoo’s sales recently.

Another thing that stood out to me in the recent results is that Shoe Zone has been able to reduce the rents it pays by renegotiating leases on its stores. Rent payments will now be 58% lower, which equates to £1.8m in annual cost savings. Not only this, but it’s closed 50 unprofitable stores. Therefore, Shoe Zone is coming out of the pandemic a much leaner business, with a growing digital offering.

Finally, the dividend should be reinstated soon. It was stopped during the pandemic as the company was loss-making, and made use of a government loan. But Shoe Zone is now debt-free and expects to recommence the dividend this year.

There are still risks though

One of the main risks to Shoe Zone is competition. There’s little to differentiate it against rival businesses. It competes heavily on price, but others can do the same. So it could lose market share. Inflation and UK economic issues would likely impact spending by its price-conscious customers, and hence its profits (although it could also benefit from shoppers trading down). And of course, another strain of Covid could lead to further restrictions.

However, a key strength of the business is the leadership team. The current CEO and chairman have been at the company since the 1990s and both own a significant number of shares themselves. This gives me confidence that their interests are fully aligned with those of shareholders.

Taking everything into account, I view Shoe Zone as one of my best stocks to buy on AIM. It’s a more streamlined business today, with a much better digital offering. The dividend is also an added benefit. I’d add to my position in my portfolio.

Dan Appleby owns shares of Boohoo and Shoe Zone. The Motley Fool UK has recommended 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.

FTSE 100 telecommunications giant Vodafone (LSE: VOD) was the most popular buy among Hargreaves Lansdown clients last week. Should I be filling my boots too? Here’s my take.

Why is Vodafone so popular?

Perhaps the most prominent reason for Vodafone’s sudden popularity is that it’s well-placed to benefit from the current rotation into value stocks. Interestingly, pharma giant GlaxoSmithKline, power provider National Grid and Vodafone’s peer BT have also been in big demand.

With the possibility of interest rates rising faster than expected, I fully appreciate why some would seek to ride this (temporary) wave.

Let’s not forget that Vodafone is a favourite among dividend investors as well. A yield of 5.4% is clearly an awful lot better than I’d get from a typical cash savings account. It’s also very attractive, considering the rising cost of living. 

Can this momentum last?

As a Foolish investor, I’m not interested in owning stocks for only a few days before dumping them. I’ll leave that to the traders who are happy to trust their ability to time the market. I know this is something I simply can’t do. So, I’m asking whether Vodafone stock is good enough to earn a spot in my portfolio for years.

In some ways, I think it is. Due to the nature of what it does, Vodafone possesses defensive characteristics that many companies would envy. It’s the largest mobile and fixed network operator in Europe and owns a highly valuable brand. It also possesses the continent’s fastest-growing 5G network.

That’s encouraging given the global 5G services market is expected to achieve a compound annual growth rate of 46% between 2021 and 2028. 

One might also argue that we’re only at the beginning of this stock’s recovery. Vodafone’s share price may be close to its 52-week high, but it’s still not even back to pre-pandemic levels. 

Costly FTSE 100 business

Having said this, I’m also of the opinion that there are far better businesses to buy than Vodafone. 

Considering just how costly it can be to keep its infrastructure in good working order (and update it when required), returns on capital are unsurprisingly low. That’s problematic, considering the best stocks to own over the long term tend to be those that bring in a lot of cash relative to the investment required. Margins are also pretty slim in this line of work. 

Then there’s the price I’m being asked to pay. Sure, a valuation of 16 times earnings isn’t unreasonable. But nor is it screamingly cheap, considering the amount of debt carried by the company.

Despite highlighting its income credentials earlier, it’s important to note that Vodafone has a consistently inconsistent track record when it comes to hiking its annual dividend. Personally, I’d much rather cash returns were modest but growing every year. This is more indicative of a company in rude health.

My verdict

Having endured an awful 2021, recent activity suggests Vodafone could be in for a better 2022. I can most definitely see the appeal of buying now if I were concerned about the short-term global economic outlook.

As someone with time on my side however, I’m sticking to snapping up quality growth stocks and funds while they’re on sale. Just like Warren Buffett suggests.

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

Investing in penny stocks — in other words shares that cost below £1 each — is rarely boring. But from an investment perspective, this is not always a good thing. 

Low-cost UK shares like these are often traded in large volumes because of their cheapness. This can result in huge share price volatility and an investor can see the value of their holdings vanish in the blink of an eye. The lion’s share of penny stocks are also pretty small — at least compared with most other listed companies — so the chances of failure can be higher when trading conditions worsen.

Why I like low-cost UK shares

Investors such as me need to be aware of these dangers. But, in my view, they don’t make penny stocks a sub-asset class to avoid. Like all UK shares they expose you and I to a higher level of risk than, say, investing in a bog-standard savings account. With some decent research though it’s possible to minimise the risk and separate the truly great stocks from the dangerous duds.

I like penny stocks because they often tend to be smaller companies that have plenty of room to grow. Sure, their business models and the markets in which they operate can often be highly untested. But if these companies get it right they can soar in value over a number of years and make their shareholders a fortune in the process.

US tech giant Apple is perhaps one of the most famous ex-penny stocks which has now taken on legendary status. As recently as 2009, the iPhone maker’s shares traded inside penny stock territory of below $5. Today, they change hands for $171.70 apiece.

3 penny stocks I’d buy right now

In this first of two articles I will reveal eight of what I consider to be the best British penny stocks to buy right now. Here are the first three low-cost stocks I’m considering snapping up for my own shares portfolio.

Brickability Group

One way I’d seek to make money from the UK’s colossal homes shortage is to buy shares in Brickability Group (LSE: BRCK). The government will have to ramp up housebuilding activity over the next decade to meet strong and enduring buyer demand. I therefore expect profits at this brick-making penny stock to rise sharply.

Brickability is already making waves as housebuilders steadily ramp up their construction activity. Last month, the building materials supplier actually said trading was ahead of forecast for the year to March 2022. This follows news of “strong” order books across the business in December, and news that orders stood at record highs at Brickability’s roofing division.

Brickability doesn’t just make bricks. It also supplies doors, windows, flooring, and various other products that give it extra opportunities to capitalise on the homebuilding boom. And it has plenty of liquidity with which to boost its product ranges through acquisitions, a stage on which it has been active in recent times.

I like Brickability a lot, even though a downturn in the housing market is an ever-present threat. This could happen for example if the Bank of England raises interest rates sharply over the next couple of years.

Pendragon

Auto retailer Pendragon (LSE: PDG) could face revenue problems in the short-to-medium term if inflation continues to soar. Latest data from Barclaycard showed consumer card spending rose 7.4% in January versus the same month in 2020. This was the slowest rate of growth since April 2021.

Sellers of big-ticket items like new cars are particularly vulnerable when shopping budgets come under pressure. But I feel Pendragon’s used-car operations will help take the sting out of things. Cars remain essential commodities for many people and they will switch down to cheaper, pre-owned vehicles in tough times.

I like Pendragon because I think the number of electric vehicles (EVs) it sells will soar over the next decade. People are rapidly switching to these low-emissions vehicles on a combination of rising environmental concerns and increasing fuel costs. They’re tipped to keep rising in popularity too as they become cheaper to produce and, by extension, to buy as well.

The Climate Change Committee, an independent advisory body to the government, predicts there could be 18m EVs on British roads by 2030. That compares with the 400,000 or so right now. I think Pendragon’s one of the best-value penny stocks to capitalise on this booming industry. Today, the retailer trades on a forward price-to-earnings (P/E) ratio of below 7 times.

Atlantic Lithium

Metals miner Atlantic Lithium (LSE: ALL) is another penny stock whose profits could soar as EV sales balloon. The raw material it plans to pull from the ground in Ghana is widely used in the batteries that power these next-generation vehicles.

Mining for any natural resource is highly risky business. And it could be argued that Atlantic Lithium carries more risk than many others in the industry. Exploration work at its Ewoyya lithium project remains highly encouraging.

Indeed, progress on this front has lifted the share price 70% higher over the past year. But the business hasn’t actually pulled any of the material out of the ground yet. In the absence of any revenues it could be forced to take on more debt. It may even tap shareholders to continue its operations.

Still, it’s my opinion that Atlantic Lithium is worth the risk, given the rate at which lithium demand is tipped to boom. Analysts at Statista think annual worldwide lithium consumption will hit 1.79m tonnes by 2030. That’s up considerably from the 497,000 tonnes predicted for this year. The final figure could be even higher if lawmakers — many of which are straining to hit their climate targets — introduce fresh incentives to boost EV sales.

Look out for Part 2 of this analysis tomorrow…

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple and Pendragon. 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.

After crashing at the start of the pandemic, the price of oil has soared to over $90 per barrel. This is higher than pre-pandemic, and many feel that the price could continue to rise. One company that has profited from this oil price rise is Shell (LSE: SHEL). Indeed, the Shell share price has risen 42% over the past year, and over 100% since its lows in October 2020. Is there more room to rise?

Recent results

Shell’s full-year 2021 results were excellent. In fact, adjusted earnings were able to rise to $19.3bn, up from $4.8bn in 2020. Earnings for the fourth quarter were also able to beat analysts’ estimates, hitting $6.4bn.

These earnings have also been accompanied by extremely large shareholder returns. These include a 4% rise in the quarterly dividend to 25 cents per share, and a commitment to buy back $8.5bn in shares in the first half of 2022. The dividend equates to a yield of nearly 4%, which is slightly over the average of FTSE 100 stocks. The large share buyback programme will also hopefully see the Shell share price rise, as it increases each individual shareholder’s ownership of the company.

Some of the problems

Despite these results, there are both short-term and long-term risks associated with Shell. For example, amid the soaring domestic energy bills, there has been some recent pressure on the government to levy a one-off windfall tax on UK oil and gas operators. This would negatively impact Shell, and profitability would decrease.

There are also some other signs that the Shell share price has reached its peak. For instance, CEO Ben van Beurden recently sold £3.9m worth of his Shell shares. They were sold at an average of 2,040p, very similar to the company’s current price. Although there are several reasons why he may have sold, and it is said to be a “private matter”, it is nonetheless not a good sign.

Finally, I worry about the long-term future of oil. This is due to the environmental consequences caused by using oil, and the subsequent efforts to make everything greener. An example includes electric vehicles, which may mean falling demand for oil one day. Although Shell is attempting to diversify into greener energy, the progress is slow and the company remains reliant on the price of oil. I’m not confident that its recent rise is sustainable in the long term.

Has the Shell share price got further to rise?

Evidently, Shell is currently operating in a very favourable environment, and this seems set to continue for at least the short term. The promise of excellent shareholder returns is also very tempting. This means that for now, I believe the Shell share price can continue to rise. But as a long-term investor, I’m far less confident. Therefore, I’m leaving this stock on the sidelines.

Stuart Blair 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.

We’re experiencing something of an energy crisis right now. Just this month, Ofgem has raised the price cap for household energy bills by a huge 54%. Natural gas prices have skyrocketed during the pandemic. Crude oil prices have also rallied due to a severe undersupply of the fuel. But this brings me to renewable energy stocks. There are going to be many opportunities to invest in this sector as the world transitions away from fossil fuels. If the current energy crisis shows me anything, it’s that there’s a long way to go before we end our reliance on fossil fuels. But here are two companies that I’d consider buying to help us get there.

One I’d buy

The first is The Renewables Infrastructure Group (LSE: TRIG), or TRIG for short. It’s an investment company specialising in renewable energy assets. Shareholders benefit from quarterly dividends, and TRIG aims to grow this each year. The net asset value of the portfolio has also increased since the initial public offering in 2013. This can provide capital returns for shareholders too.

TRIG’s portfolio is diversified across solar and wind infrastructure assets, with a small allocation to battery storage technology. I do note that onshore wind represents 58% of the portfolio at present. I’d like to see it expand its other renewables assets exposure to diversify the portfolio even more.

Indeed, it recently announced it was acquiring four solar panel sites in Spain. It’s going to more than double its exposure to solar energy, which is a positive sign in my view.

Nevertheless, it’s the first investment in Spain, and required the issue of over 161m shares to fund the acquisition. There’s a risk that the acquisition doesn’t work out, or that it overpaid, which would destroy shareholder value.

But taking everything into account, I’d add the shares to my portfolio today.

And one I’m watching

The next renewable energy stock is Velocys (LSE: VLS). It’s a company that I have on my watchlist right now. I see the huge potential, but it’s still early-stage and comes with high risk.

Velocys develops sustainable fuels made from waste materials, particularly for the heavy goods transportation and aviation sectors. Therefore, replacing crude oil as an energy source in these sectors would improve air quality, and reduce carbon-based emissions.

The company announced two agreements with Southwest Airlines and International Consolidated Airlines last year that look significant. Velocys says they have the potential to generate “multi-billion revenues”. And collectively, almost 9m tonnes of carbon emissions could be avoided by using its sustainable fuels instead.

Some caution must be noted here though. For example, the sustainable fuel is to be produced at the Bayou Fuels plant, which is still only in development as it stands.

But I do still see the potential here. Velocys could be a solution to replace fossil fuels for our transportation sectors. For now though, as it’s still in the development stage and loss-making, I’m keeping it on my watchlist.

Dan Appleby 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

• A high dividend yield won’t necessarily provide protection against inflation
• I explain how I’m aiming to beat inflation by focusing on reliable growth stocks
• Lessons from one of Warren Buffett’s most successful investments

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With inflation now running at around 5% in the UK, I’m finding it harder to find passive income stocks with a dividend yield above inflation. I can find just 20 FTSE 100 stocks with a forecast yield of 5%, or more.

A few of these shares are in my portfolio, but many of them are miners or housebuilders. I think these sectors could suffer if the cost of living keeps rising. Instead, to protect my investments from inflation, I’m following Warren Buffett’s strategy for building passive income.

The ‘Sage of Omaha’ probably wouldn’t describe himself as a dividend investor. But he has said many times that he likes investing in businesses which generate cash and can deliver steady long-term growth.

I think that earnings growth is the key to beating inflation, not dividend yield. Over longer periods, my experience is that share price and dividend growth are linked to profit growth. It makes sense, really. A company with rising profits is probably becoming more valuable.

Of course, this relationship isn’t guaranteed. In the short term, share price movements can happen regardless of earnings. Popular trends, or poor sentiment towards certain sectors, can lead to big share price movements which can catch investors by surprise. Plus, there’s always the risk of a market crash, as we saw in 2020.

Why I’m focused on growth

If a company’s profits are rising by 10% per year, there’s a good chance its dividend will rise by a similar amount. Typically, I’d also expect the share price to keep pace with this growth.

In this scenario, the total return from my investment may be rising by around 10% each year. If inflation is 5%, then my investment is beating inflation and providing a rising income.

On the other hand, if a stock I own provides an 8% dividend yield which stays flat each year, then the real value of my passive income is falling.

With inflation at 5%, the spending power of a fixed annual payment would fall by 22% in five years.

Passive income stocks I’d like to buy

I still care about dividend yield. But I’m happy to accept slightly lower yields today from stocks such as these, which I think will deliver reliable long-term growth. This is very similar to the approach that’s used by Buffett to identify his favourite type of “forever” holdings.

Buffett believes that “time is the friend of the wonderful business”. One great example of this is his investment in Coca-Cola. He has spent $1.3bn on Coca-Cola shares since 1988. But today, this investment is worth more than $20bn.

The dividend income from Buffett’s 9% stake in Coca-Cola is now more than $640m per year — around 50% of his original investment. What this means is that he doubles his original investment every two years.

I don’t know if I’ll ever find my own Coca-Cola investment. But my aim is to follow this model of buying good businesses with long-term growth potential. I reckon this is the best way to generate passive income and stay ahead of inflation.

Roland Head 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.

With geopolitical and economic risks growing, I think there is a rising chance of a stock market crash in the near future.

However, it is impossible for me to project what the future holds for the stock market. As such, I am not planning to take drastic action just yet. A stock market crash could happen in the next few weeks or months. Or it might not. I cannot tell at this point. 

With this being the case, I have been looking for FTSE 100 stocks to add to my portfolio with the potential to outperform even if the market slumps. 

FTSE 100 dividend champion 

One stock I have been buying for my portfolio along these lines is British American Tobacco (LSE: BATS).

While I cannot guarantee this stock will outperform the market in a crash, I can say it is unlikely sales of cigarettes will decline dramatically if the market falls. Cigarette sales tend to be pretty predictable, although they are steadily declining.

This is the biggest challenge the establishment faces right now. Traditional cigarette sales are falling, and the firm is having to invest heavily in its so-called ‘reduced risk’ business. These products mainly consist of e-cigarettes and tobacco heating derivatives. 

According to the company’s latest trading update, sales of these products are growing rapidly, but the division is still unprofitable. Sales expanded 42% in 2021, but the division still lost £100m.

Despite the losses, it is clear to me the business is moving away from its traditional tobacco business. That is a positive. Another positive is the corporation’s current dividend plan and cash return policy. At the time of writing, the stock supports a dividend yield of 6.4%.

What’s more, alongside the company’s full-year 2021 results, management unveiled a £2bn share buyback allocation. This should help reduce the number of shares outstanding and, as a result, boost earnings per share. Ultimately, this should lead to faster share price growth for investors, although there is no guarantee the market will respond positively. 

Stock market crash protection 

The FTSE 100 company might not be the perfect business. Any corporation that is suffering what can only be described as a terminal decline in sales of its main product is always going to be riskier than most.

However, based on my analysis of the tobacco market, British American’s own forecasts, and the outfit’s expansion into ‘reduced risk’ products, I think the company will protect my portfolio in a stock market crash. The firm expects to deliver revenue growth of 3-5% over the next year while reducing new product losses. 

With this steady growth on the horizon, I think the firm has the potential to offer my portfolio protection in an uncertain environment. That is why I already own the shares and would be happy to buy more today. 

Rupert Hargreaves owns British American Tobacco. The Motley Fool UK has recommended British American Tobacco. 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.

Investing via the stock market is often labelled as ‘risky’. But I’m happy to take that risk rather having a lot of my wealth sitting in a cash savings account. Allow me to explain why I’m buying UK shares.

Cash savings erode in value

Let me start by clarifying that I’m not against setting some money aside. I actually reckon this is very prudent. Having cash ready for replacing something that’s broken down in the house, for example, can take a lot of the sting out when it (inevitably) happens. 

Once I’ve reached a certain amount however, the benefits that come from keeping my wealth in this asset diminish massively. The reason for this is that inflation — the ‘silent killer’ of the financial world — gradually (or not so gradually) erodes the value of money.

Inflation isn’t always a bad thing. However, anyone with an eye on the headlines can’t have failed to notice the rising cost of living in recent months. In fact, inflation sat at 5.4% in December, far above the Bank of England’s 2% target. The state of affairs is even worse across the pond. At 7.5%, inflation in the US is now at its highest rate since 1982. 

Since any cash savings I have are now being  impacted, I think it’s wise for me to keep less money in the bank and more in the stock market. There are a few reasons for this.

Why I’d buy UK shares instead

First, equities have been shown to generate higher returns than all other traditional asset classes over the long term. So even though inflation may have the upper hand right now, this is unlikely to matter if I can lock my money away in the market for years (and ideally decades). True, past performance is no guide to the future, but nor is it completely redundant, in my opinion. 

A second reason relates to the valuation of stocks. Whether we attribute this to the pandemic, Brexit, supply chain issues and/or tensions between Russia and Ukraine, many UK shares are very reasonably priced at the moment. As Warren Buffett would attest, the best time to buy is when brilliant companies are on sale.

Third, owning UK shares gives me access to a source of passive income in the form of dividends. Yes, not every company returns a proportion of profits to shareholders. However, those that do can serve as a defence against rising prices.

Get personal

Of course, the above is conditional on me having already built up the aforementioned cash buffer. I’d also not want to be carrying any debt (aside from a mortgage). Yes, inflation is high, but the interest I’d be paying on credit cards is even worse.

It’s also worth bearing in mind that the specific UK shares (or funds) I buy will be dependent on a number of other factors that vary between investors. As someone in his early 40s, my portfolio may not have the same asset mix as someone in their early 20s, or a retiree.

Investing is very personal. Therefore, it’s vital to evaluate my own risk tolerance, financial goals and time horizon before I buy anything with the cash I move over from my savings account.

Paul Summers 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.

When I’m searching for FTSE 100 stocks to buy — or indeed any UK share for that matter — I always search for companies I’d be comfortable to hold for a long time. This usually means I look for stocks to own for a minimum of 10 years.

Of course things don’t always go to plan. I don’t have a crystal ball and unexpected company-specific or industry problems can come out of the blue. However, by taking a long-term view, I aim to succeed by buying undervalued companies that could soar in value in the following years.

Could these FTSE 100 stocks help me make a pile of cash if I own them to 2032?

Tesco

As a possible investor, I think Tesco (LSE: TSCO) has a lot going for it. By some distance it sits atop the throne as the UK’s biggest food retailer. This is, of course, a highly-defensive industry — we need to eat whatever social, economic or political crisis comes along — which can therefore provide excellent earnings visibility. Finally, I believe Tesco has the best online operation of all the country’s major supermarkets, putting it in prime position to exploit the e-commerce boom.

Having said that, Tesco also faces some substantial risks to long-term profits. It faces a colossal battle to stop its customer base eroding as Aldi and Lidl rapidly expand and Amazon boosts its online grocery operation. Tesco already operates with wafer-thin margins and it only has limited scope to cut prices to see off the competition. It is also experiencing significant cost pressures that are affecting its ability to stock its shelves that could last for some time (it recently stopped selling Colgate products due to a rumoured pricing dispute). So I’m happy to pass on the supermarket giant right now.

Fresnillo

Fresnillo (LSE: FRE), on the other hand, is a FTSE 100 stock I’d buy to hold for the next decade. In fact I might consider buying the Mexican silver and gold miner to own indefinitely. As we saw in 2020 when Covid-19 exploded, economic crises can occur at the drop of a hat. Having exposure to safe-haven shares — for example those that produce precious metals — is a good way to protect oneself as broader financial markets sink. You may recall that Fresnillo’s share price soared in summer 2020 when gold values hit their record highs above $2,070 per ounce.

Fresnillo’s share price has sunk in recent weeks. In late January it advised that pandemic-related disruption and changes to labour laws would see the business miss its production targets in 2022. The possibility of further share-price-damaging output revisions are something that investors need to be prepared for.

Still, as someone who looks to the long term, I’m still thinking of buying Fresnillo shares. The business is the world’s biggest silver miner and operates some truly world-class assets. It is also investing heavily in exploration to find the next generation of money-spinning mines. Furthermore, I think the long-term price outlook for silver is strong as solar panel manufacturing takes off and its use in jewellery grows.

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

Warren Buffett famously suggested that if we regularly buy burgers, we should want the price to fall rather than rise, so we can get more for our money. Should we think of shares the same way? If the idea is good, the Boohoo (LSE: BOO) share price crash would mean investors rushing to stock up.

Well, there is a weakness in the analogy. We do not hope to one day sell our collection of 20-year-old burgers to raise cash for our retirement. But I think it does hold well for our short-term outlook on share prices. And it’s part of the reason I’ve doubled down on my Boohoo investment. Have I made a sound decision, or have I thrown good money after bad?

When I first invested in Boohoo shares in late 2020, I paid 314p apiece for them. By the beginning of February this year, the Boohoo share price had crashed to around the 100p mark. I’d lost two thirds of my initial investment. Ouch!

Buy, sell, or what?

The question, as always when I’m looking at a losing investment, is what to do next. Well, there’s only one approach for me, and that’s to re-appraise the stock on its current merits. Forget where the share price has been in the past, today’s valuation is the only one that counts.

If I think I’m looking at a lost cause that’s really heading down the plughole, I’ll sell and walk away. If the fall seems justified compared to the company’s long-term potential, but the valuation looks fair to me now, I’ll probably just hold. But if I see the price fall as overdone, I’ll want to buy some more. And so I topped up on 3 February, doubling up on my original investment, paying 102p per share.

Loads more Boohoo shares

I got three times as many shares this time for the same money. It wasn’t an obvious no-brainer buy, though. That’s because the Boohoo share price slump was precipitated by genuine performance weakness.

A warning issued in December hastened the decline. Previous net sales growth guidance of between 20% and 25% for the year ending 28 February 2022 was cut back. The new figure of 12% to 14% is seriously down. What’s going wrong? A lot of it is to do with disruption to international deliveries and cost inflation in the aftermath of the pandemic.

For the three months to 30 November, all international sales fell. Only UK sales rose, by 32%. UK sales do count for more than 60% of the total though, so that helped soften the blow.

Boohoo share price risk in 2022

What’s the risk of my buying now? I suspect economic difficulties will continue for some time yet, and the Boohoo share price could be in for a prolonged weak spell. And we might not see much improvement until international infrastructure is boosted.

On the upside, I think the market currently undervalues the long-term potential of Boohoo. I don’t want to put too much reliance on forecasts at this stage, as we’re still some way from renewed stability. But analysts do seem to be bullish on long-term growth. I’m with them.

Alan Oscroft owns boohoo group. The Motley Fool UK has recommended 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.