The Cineworld (LSE: CINE) share price has fallen in value by around 50% over the past 12 months. Following this disappointing performance, the stock looks cheap compared to its trading history, but not on a fundamental basis. 

Cineworld share price outlook 

Fundamentally, the company is fighting for survival. It has a tremendous debt pile, which could take decades to clear, and management is currently locked in a legal battle with Cineplex. 

The Canadian cinema operator is seeking billions of dollars from Cineworld after the latter failed to consummate its deal to acquire its peer. 

Still, it is not all doom and gloom for the Cineworld share price. Thanks to an impressive slate of film releases over the past six months, the group generated positive cash flow in the last quarter of 2021. This marks a turning point for the company after nearly two years of losses and cash outflows.

Unfortunately, there is no guarantee this trend will continue. There are plenty of risks on the horizon that could hit consumer sentiment, and as a result, sales. And considering these risks, I am avoiding the Cineworld share price.

However, there is one penny stock that I would be happy to add to my portfolio in its place. 

Penny stock alternative 

When I am looking for portfolio additions, I like to focus on businesses with a competitive edge. This can be anything from a solid brand to a unique market position. Cineworld has neither of these qualities.

But estate agent group Foxtons (LSE: FOXT) does. The business exhibits some of the qualities I look for when seeking out great businesses. It has a strong brand in the London market and a recurring income stream from its rental division.

On top of these factors, it has a relatively strong balance sheet and has been spending cash to acquire peers across the UK to expand its footprint.

Admittedly this strategy has pushed the company from a net cash to a net debt position in the past three years, weakening the balance sheet. Still, the firm is highly profitable, so this debt seems sustainable. 

Foxtons stock has also slumped 50% over the past year. However, unlike the Cineworld share price, the firm’s profits have been expanding. 

An exciting opportunity 

I think this presents an opportunity for investors like myself. While the company may encounter some risks over the next 12 months, such as a property market slowdown due to higher interest rates, I think it has a strong position in the UK property market. This should enable it to navigate any challenges. 

This is why I would buy shares in the penny stock over Cineworld today. I think the rest of the market is overlooking the investment opportunity and potential for the company over the next few years.

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

This year is going to be financially tough for many families. There is already talk of a cost-of-living crisis due to an increase in the energy price cap in April. In fact, my wife and I calculate that we are going to be around £400 a year worse off. However, I might be able to profit from soaring energy costs by investing in oil and gas shares.  

An oil and gas ETF

There are a few different ways to do this. I could invest in individual energy companies, for example. But for my own portfolio, I’ve always been a fan of exchange-traded funds, or ETFs.

The ETF I’m interested in is iShares S&P 500 Energy Sector UCITS GBP ACC (LSE: IESU). This allows me to invest in large US oil and gas companies by just holding one share that is listed on the London Stock Exchange.

This was a very high-performing fund last year, increasing by over 55%. Though the past is no guarantee of the future, this may be a good place for me to start looking for potential gains.

This exchange-traded fund aims to track the S&P 500 Capped 35/20 Energy Index, which represents the energy sector of the S&P 500 but is cap-weighted to promote diversification. The largest holding is capped at 33% and all the other holdings are capped at 19%.

The ETF is diversified in terms of holdings with 21 companies in the fund. As you’d expect of a US energy focussed fund, some of the major holdings are big household names like Exxon Mobil Corp and Chevron Corp. 

The profits of the companies in this fund are heavily dependent on the price of oil and gas. If they continue to soar, then this ETF might see a significant price increase.

Is there still an opportunity to profit?

Despite the phenomenal returns during 2021, there are some questions marks about this ETF going forward. First, some commentators think that the upside potential to some of these firms might have already been priced in last year. Second, the big energy companies are definitely going to have to spend billions of dollars to reduce their dependency on fossil fuels and grow their focus on renewables. In the short run, this will definitely hurt their bottom lines.

That said, overall, I’m optimistic. Vaccine rollouts should hopefully keep the world economy free from lockdowns, which will help to keep demand for energy strong. Indeed, the International Energy Agency projects oil demand to recover to pre-pandemic levels in 2022. Such an increase would see the oil price rallying further.

This ETF has already increased by around 17% year-to-date, buoyed by the price of oil reaching $90 a barrel. If black gold hits $100 this year, as some commentators think, then iShares S&P 500 Energy Sector UCITS GBP ACC should rise even further.

On balance, this ETF seems a good way for me to invest in oil and gas shares and try and profit from rising energy prices. I would be happy to consider adding this to my own holdings as part of a balanced portfolio. 

Niki Jerath does not own 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.

Boohoo (LSE: BOO) has frequently topped analysts’ lists of the best growth stocks to buy over the past couple of years. However, the City has started to move away from the fast-fashion retailer over the past year. Its corporate governance challenges, labour relations and rising costs are causing analysts to question its potential. 

But I think these criticisms ignore a significant factor in the company’s growth story, namely its relationship with customers. Based on my recent experience using the group’s services, I think this could be a significant mistake. 

The customer is always right

The biggest challenge for any retailer, especially ones in the fashion industry, is customer service. Companies need to offer consumers what they want at the right prices and answer any queries or resolve any issues when they emerge. 

I have used Boohoo several times over the past couple of months. Each time I have been incredibly impressed with its service. When there has been an issue with an order, the company has been more than happy to offer a resolution. The range of clothes on offer is expansive, and delivery is fast and cheap.

I am also impressed with the quality of the clothes, and the use of recycled materials in some of its products. Compared to Boohoo, other retailers appear worlds behind, in my opinion. 

These qualities do not make the company the best growth stock for me to buy now. Nevertheless, this experience is invaluable in helping me make a decision about the enterprise and its outlook. 

Growth stock potential

By maintaining a high level of customer service and a wide product range, I think the company can continue to surpass the competition. 

Still, it will have to overcome some significant challenges in the years ahead, which could hold back growth. These include rising prices and other inflationary pressures, such as wage costs. 

There is also a continuing question mark over the company’s labour practices. It has made a great deal of progress in improving its supply chain over the past two years. However, stories occasionally surface suggesting that some of its suppliers are underpaying their workers. 

Until these issues are entirely resolved, I think investors will continue to view the business with a degree of scepticism.

The Boohoo share price looks cheap

Still, I think this is an opportunity for long-term growth investors like myself. Over the long run, I believe the company’s focus on customer service will yield results. This should translate into steady earnings growth.

At the time of writing, shares in the enterprise do not appear to reflect this potential. The stock is currently trading at a forward price-to-earnings (P/E) multiple of just 15, compared to the company’s five-year average of around 50.

Based on these factors, I would be happy to add the growth stock to my portfolio today as a long-term investment. 

Rupert Hargreaves has no position in any of the shares mentioned. 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.

Dividend stocks can be a great source of passive income. They can also be used as a way of taking on the battle against inflation.

Many investors will be drawn to the ‘usual suspects’ for their dividend fix, namely FTSE 100 companies. However, I think looking further down the market spectrum can also be a good idea. Here are three less-well-known shares I’d be prepared to buy today.

Liontrust Asset Management

Like many other listed companies, fund manager Liontrust (LSE: LIO) hasn’t had the greatest of starts to 2022. Actually, that’s an understatement. Its share price has now tumbled 24% year-to-date, most likely due to concerns that profits will fall due to people pulling their money out of the market. 

That’s said, it’s still up 34% over the last 12 months. And, of course, the beauty of investing for dividends is that I can take such volatility in my stride so long as the passive income keeps rolling in. 

Importantly, Liontrust has consistently hiked its annual payout by a double-digit percentage for many years. Analysts have the company returning 64.1p per share in the current financial year. At today’s share price, that equates to a yield of 4%. It’s also sufficiently covered by profits, making a cut unlikely.

That said, investors need to be aware that the fund management industry is notoriously competitive and there’s always a risk Liontrust may need to cut fees to help retain clients.

Redde Northgate

Redde Northgate (LSE: REDD) provides “mobility solutions and automotive solutions” to businesses. It also strikes me as a great source of dividends.

The £1bn-cap company looks set to return 19.4p per share to holders in FY22, giving a chunky yield of 4.9%. This should help holders to keep up with rising costs. Like Liontrust, the payouts are safely covered by expected earnings. With the exception of 2020, Redde Northgate is also a regular dividend hiker. 

The shares aren’t exactly expensive either, changing hands for nine times forecast earnings. That’s despite the company’s value rising 45% over the last 12 months!

I suppose one thing to bear in mind here is that Redde Northgate may need to replenish its fleet of vehicles every now and then. That could end up reducing margins significantly, especially at today’s prices.  

Synthomer

Chemicals firm Synthomer (LSE: SYNT) is a final secret stock offering a tempting dividend yield. It’s a leading supplier of aqueous polymers that are used in things such as latex gloves.

Just like the aforementioned asset manager, Synthomer’s share price has been on a downer since the beginning of 2022. In the last 12 months, it’s fallen 22%. On a positive note, this does leave them looking cheap at just seven times expected earnings. 

Unfortunately, the dividend is expected to fall by 22% this year. However, I’m including it here for two simple reasons. First, the yield is still expected to be 5%, which is a far more passive income than I’d get from a cash savings account. Second, this payout looks thoroughly secure based on predicted profits. 

Similar to Redde Northgate, a risk with Synthomer is that supply chain hold-ups may impede growth. This may explain why the shares have been out of form recently.

Notwithstanding this, the vast majority of brokers covering the company remain positive. This suggests now might be as good a time as any for long-term investors like me to load up.

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Synthomer. 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.

Whether the recent sell-off in stocks was technically a correction or a stock market crash (or something else) doesn’t really matter. Either way, when the stock market falls sharply as it did, it’s all too easy to make mistakes and lose money. Many investors — myself included — have learnt this the hard way. That’s why I’m looking at whether another crash may come in the months ahead and importantly, at a potential route to weather the storm if it comes.

The main triggers for a stock market crash

Many long-term investors will likely feel that despite low economic growth in the UK over the last decade, with ultra-low interest rates, the stock market has by and large been a good place to be. That’s not the case for everyone of course, but generally speaking, shares have done well relative to other forms of investment.

But does the future look so rosy? The problem with the future is nobody can really predict it with any accuracy. The one thing that can be said at this point is that there are reasons to suspect another stock market crash could occur. I think these mainly relate to inflation, but also to the stretch in valuations of some companies, especially in technology and in the US.

One of the biggest threats, and we’ve seen it clearly already, is persistent inflation. The Bank of England now expects inflation to rise to 7.25% in April — the highest level since summer 1991. That affects interest rates, which tend to then affect shares, especially those with high valuations and promises of future profits — those ‘jam tomorrow’ stocks.

On top of that, there’s the winding down of quantitative easing, which has arguably inflated the price of shares, as it has made borrowing money so cheap since the 2008 financial crisis.

The point is there’s a lot for investors to fret about and if panic sets in after further interest rate rises, there could be another stock market crash.

Other possible triggers

There are two other potential triggers of a stock market crash in the UK. One would be a dramatic fall in the US stock market. The saying goes that when America sneezes the world catches a cold. So if the US economy trips, the UK stock market is sure to be caught up in the malaise.

Also, given its size and the reliance of some of its property companies on debt, there’s a risk that the Chinese economy falters. Once again, given its importance to the global economy and decades of growth, this would send shockwaves through financial markets.

The plan to cope

These are just some of the bigger triggers to watch out for. In any stock market crash, when share prices drop sharply, what I plan is to sit tight and do nothing until the storm blows over. Once it has started, it’s too late for me to start selling my shares, without selling at a loss.

The best move I can make during a crash is to update my watchlist of the shares I like, set price targets for them and be ready to buy more at a lower price when markets settle down.

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

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Lloyds (LSE: LLOY) shares seem to have stagnated over the past 30 days, currently sitting at 52p. However, broadening that horizon to six and 12 months, the shares have risen 12% and 39%, respectively.

Like most other stocks, this one was hit hard in March 2020 by the pandemic. But with encouraging growth since then, should I be considering buying Lloyds shares now? Let’s take a closer look.

Explaining the Lloyds share price

In 2020, global lockdown restrictions, alongside other measures, meant that many businesses had to shut their doors temporarily or permanently. Consequently, loan repayments became strained. This was bad news for lenders like Lloyds. As my fellow fool Zaven Boyrazian pointed out, it incurred a hefty £4.2bn loan impairment charge as a consequence of this.

However, the good news for Lloyds is that the economy has been steadily improving. This has helped push up its share price over the past year.

In addition to this, it has announced some pretty exciting growth plans. Through its newest venture, Citra Living, Lloyds is aiming to be the UK’s largest private landlord. What’s more, under new leadership from Charlie Nunn, the budget from this venture has quadrupled from £250m to £1bn.

In addition to Citra Living, it has planned to expand back into the wealth management and investment banking sphere. All of these moves came along with encouraging 2021 third-quarter income of £4.1bn for the first nine months. I think using these funds to expand Lloyds’ industry presence is a great move from management.

Risks for the shares

Although the shares have been able to benefit from the bounce-back of the UK economy, it’s now faced with a new problem. The Bank of England is in the process of raising interest rates to combat high levels of inflation. While this means that Lloyds can charge more on its loans, it also means the UK economy will slow in growth. This could be bad news for the shares.

In addition to this, analysts estimate for fourth-quarter results are significantly lower than third-quarter results. Net income is predicted to be over £200m lower than the previous period, with pre-tax profits falling by almost £800m. If these estimates prove true, then investors could turn sour on the stock.

Lloyds valuation

Trading with a forward price-to-earnings (P/E) ratio of 8.2, Lloyds shares look pretty good value to me at the moment. Comparing this to competitor HSBC, with a P/E ratio of 13.2, highlights this value further. In addition to this, the 2.3% dividend seems appealing to me.

Therefore, I like the look of Lloyds shares for my portfolio. I think that at the current share price, the bank offers great value, especially considering its expansive growth plans. Therefore, I am going to consider adding some shares to my portfolio today.

Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings and Lloyds Banking 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.

I think these FTSE 100 shares could help me make a lot of cash in the coming years. Let’s jump straight in.

Playing the green revolution

The probability that electric vehicles (EVs) will soar over the next 10 years makes Glencore an attractive stock for me. This FTSE 100 miner produces a wide range of elements that’ll prove essential for the EV revolution. Glencore pulls copper, cobalt, zinc, lead and nickel from the ground across a number of world-class assets.

Metals production isn’t a piece of cake and problems can be common. Exploration results can disappoint and production stoppages can happen too. But it’s my opinion that the potential rewards on offer from Glencore as EV sales boom outweigh these risks. Researcher Rystad Energy thinks copper demand alone will jump 16% between now and 2030.

Retail giant

I believe soaring inflation makes B&M European Value Retail a hot stock to own today. Households are becoming increasingly concerned about the cost of living which means they’re watching the pennies more carefully. This bodes well for this FTSE 100 firm as its B&M and Heron Foods brands sell a wide range of household products below usual market prices.

It’d be a mistake to think that this rush for value is temporary however. The importance of value to consumers has been growing steadily over the past decade and is expected to continue. I’d buy B&M to exploit this theme, even though its lack of an e-commerce channel could see it lose out on sales to online operators.

TV star

I think ITV’s video-on-demand (VoD) service might make it a big FTSE 100 winner this decade. It’s spent a fortune on technology and on programming to make its ITV Hub a favourite among British viewers. And it’s a strategy that’s already paying off handsomely. The number of registered users jumped by 2.7m year-on-year between January and September to 34.8m.

ITV has also signed multi-year contracts with Sky and Virgin Media to carry its VoD service across their platforms. This carries huge sales potential as viewer habits continue to evolve. Statista analysts think the VoD market will be worth $135.7bn by 2026, up from $98.7bn today. I’d buy ITV even though trouble for the economic recovery would hit advertising revenues hard.

Combat veteran

Global tensions underline how volatile the geopolitical landscape is becoming. Sad though it is, they also illustrates why defence analysts believe global arms spending will keep on rising. According to Jane’s, defence expenditure will total $2.23trn in 2030, up from the $1.93trn recorded in 2020. It seems then, that hardware orders over at BAE Systems should remain strong.

I’d buy BAE even though a failure of its systems is a constant threat that could significantly damage future orders. I like the group because it’s a critical supplier to US and UK militaries. Its technologies help the West meet their mission objectives on land, at sea, in the air and in cyberspace too. I’m also a fan because of its growing footprint in emerging markets, regions where defence spending is expected to soar over the next decade.

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

If there’s one stock that Warren Buffett loves, it’s Apple (NASDAQ: AAPL). At present, the stock market guru has over 40% of his portfolio invested in the iPhone maker.

While I’d never invest 40% of my portfolio in Apple, I do see the stock as a bit of a ‘no-brainer’. Here’s a look at three reasons I’d follow Buffett and buy Apple shares for my portfolio today.

Why I’d buy this Warren Buffett stock today

One reason I see Apple as a great long-term investment is that the company has a number of competitive advantages.

Its strong brand is one. According to Kantar, Apple was the second most valuable brand in the world last year (behind Amazon). Ultimately, its brand power keeps consumers coming back for more. When consumers think of Apple, they think of quality, reliability, innovation, and performance.

Another competitive advantage comes from the ecosystem it has built. The beauty of Apple’s products is that they all connect to each other. For example, my iPhone is connected to my Mac, which is connected to my MacBook. This ecosystem means consumers are less likely to switch to a rival’s product. Warren Buffett has stated that one of the key reasons he invested in Apple is because of the value of its ecosystem and “how permanent that ecosystem could be”.

Long-term growth potential

Another reason I like Apple is the growth the company is generating.

Despite already having a high market share of the smartphone market (nearly 50% in the US), Apple is still growing at an impressive rate. In the last quarter of 2021, for example, revenue grew by 11%. Growth was boosted by its services division (iTunes, the App Store, Apple Music, iCloud, Apple Pay) which saw revenue growth of 24%.

Looking ahead, I see the potential for further growth. One area that could generate solid growth for the company is payments. Another is healthcare.

“If you zoom out into the future, and you look back, and you ask the question, ‘What was Apple’s greatest contribution to mankind?’ It will be about health,” said CEO Tim Cook in 2019.

Defensive in nature

Finally, while Apple is a growth stock, it’s actually quite ‘defensive’ in nature. For starters, it has a strong balance sheet and a huge pile of cash. At the end of 2021, it had around $64bn in cash on its books. Second, it continues to generate a ton of cash and pay regular dividends to shareholders. Third, it’s buying back its own shares. Over time, these buybacks are likely to push its earnings per share up.

I’ll point out that, as a tech stock, it’s not as defensive as some other stocks. Its share price can be volatile at times. However, overall, it offers a nice mix of offence and defence, to my mind.

I’d buy this Buffett stock today

Of course, like any stock, Apple has its risks. One is its valuation. Currently, Apple has a forward-looking P/E ratio of around 29. I wouldn’t say that’s overly high, but it probably doesn’t leave a huge margin of safety. If future earnings are disappointing, the shares could experience a pullback.

Technological disruption is another risk to consider. Apple will need to keep innovating if it wants to keep growing.

All things considered, however, I think the long-term risk/reward proposition here is attractive. That’s why I’d buy this Warren Buffett stock today.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Edward Sheldon owns Amazon and Apple. The Motley Fool UK has recommended Amazon and Apple. 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 has decades more experience investing in the stock market than I do. Therefore, with some spare funds, I want to follow his advice. Here are three solid points that I’m taking on board with my £1,000 right now.

Knowing what I’m buying

A great quote from Buffett was to “never invest in a business that you cannot understand”. To begin with, I might think this is odd, as most FTSE 100 companies are straightforward enough to understand. Yet on further research, this isn’t always the case. It’s more to do with understanding where revenue comes from, what profit margins the business works with and how sensitive consumer demand is.

For example, I might have considered investing in Ocado, arguing that it’s just an online grocer. Yet by delving further I would have found out that the business also has ops with huge future potential — its distribution and robotics arms. 

So when investing right now, I need to take this advice in two ways. Firstly, not to rush into buying a stock before I’ve done my homework. Secondly, if after I’ve done my homework I still don’t really understand the business, it’s probably best I put it to one side. 

Avoiding overpriced companies

Secondly, I want to apply the advice from Warren Buffett when he said that “a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.”

This stresses the importance of buying stocks that are undervalued or at a fair value. One metric I can use for this is to look at the price-to-earnings (P/E) ratio. For example, in the FTSE 100 at the moment, Royal Mail has a P/E ratio of just under 7. I think this is a great company at a low price, and helps me to avoid the pitfall Buffett was referring to.

Taking on Warren Buffett’s long-term mantra

Finally, there’s much I can learn from this comment that “calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.”

What Warren Buffett was referring to here is the value of being invested for the long term. When looking for options with my £1,000, I don’t want to buy a stock with the mindset of short-term gains. If it does move higher, great, but I want to have the mindset of holding it for a long time.

One of the main reasons for this is that undertaking many trades within my account costs money in transaction fees. It’s expensive to keep getting in and out of the market. Another key reason for wanting to avoid this is that it’s very hard to perfectly time the market. I could be left sitting in cash waiting for a dip to buy that simply never comes.

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