The Ferrexpo share price now yields 12%. Should I buy?

There are some very juicy yields available right now in the mining sector, including double-digit ones. An example is iron ore producer Ferrexpo (LSE: FXPO). After the Ferrexpo share price slid 11% in a year, its current yield is a hefty 12.4%.

So, is this a high yielder I should add to my portfolio today – or a possible value trap?

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

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Ferrexpo and business risk

Ferrexpo mines iron ore, which it sells in pellet form. Such pellets are in demand for industrial use worldwide. Indeed, Ferrexpo is the third-largest exporter of iron ore pellets on the planet.

Iron, like many metals with large-scale industrial applications, is a cyclical market. Right now, prices are high – which is good news for Ferrexpo’s revenues and profit margins. I also see reasons to be optimistic about pricing in the next few years. While economic contraction threatens demand in some markets, large users like China are expected to maintain a big appetite for iron ore pellets.

So far, so good. But I see a big risk with Ferrexpo’s business model. Not only it is it concentrated on iron alone, unlike more diversified mining groups such as Rio Tinto, it is also focussed on production from a single complex of mines. That concentration means that if something unexpected affects production in that area, it could hurt Ferrexpo’s revenues and profits badly.

On top of that, those mines are in Ukraine. So with political risks around Ukraine currently elevated, that could also be bad news for Ferrexpo. For example, foreign customers may seek to diversify their iron sources to limit their reliance on Ukrainian exports. 

Double-digit yield

A high yield often signals elevated risk. So, although there are risks in owning Ferrexpo shares, I think to some extent those are already reflected in the company’s yield of over 12%.

I still would feel uncomfortable buying a company with such a high geographic concentration of production. The unusually high yield might make me think hard before deciding not to add Ferrexpo to my portfolio. However, I would still not buy the company. That is because I see another long-term risk that is not connected to its Ukrainian focus – iron ore pricing.

My next move on the Ferrexpo share price

While I think iron ore pricing could stay high for now, there is no guarantee it will. Sooner or later, if demand stays elevated, more production will probably come online and that could hurt pricing. That could be bad news for Ferrexpo’s profitability.

The company’s dividend has moved around with iron pricing. So, while it was 73c in 2020, the year before it was only 20c. That is a big movement, and a good reminder of what shifts in commodity prices can mean for the dividends of listed mining companies. When iron ore prices next fall, I expect the Ferrexpo dividend to follow. So I am looking beyond the immediate temptation of a current yield over 12% and will not be adding Ferrexpo to my portfolio.

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Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

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

I’m listening to Warren Buffett and buying these UK shares

This year is off to a rocky start, even for billionaires. Global markets have remained volatile with fluctuations driven by inflation and lockdowns. These have caused the top 10 billionaires in the world to lose wealth in January. Well, all except Berkshire Hathaway CEO Warren Buffett.

According to the Bloomberg Billionaires Index, Elon Musk, Jeff Bezos, Larry Page, Sergey Brin, and Mark Zuckerberg have collectively lost over $120bn in January. Out of the nine richest individuals in the world, only Buffett’s net worth has increased so far in 2022, and by $2.4bn.

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

The most popular investor in the world has remained a stock market success for over six decades. And along the way, he has left us with nuggets of investing wisdom that I try and use to build my portfolio. Here are two UK shares on my watchlist that I think Warren Buffett would approve of.

Warren Buffett’s hunt for value stocks

Price is what you pay; value is what you get”. I think This Warren Buffett quote from 2008 is a lesson every new investor should take on. This rings true in the age of crypto where every new coin attracts a horde of what I like to call crypto zombies. Ignoring the fundamentals and future potential of a company and simply jumping on a bandwagon usually ends badly.

Let me explain this with an example. The electric vehicle (EV) boom since the COP26 summit is common knowledge. And Elon Musk’s Tesla (NASDAQ: TSLA) is the big driver behind this market. In late 2021, I thought an investment in Tesla stock was a no-brainer. The company always had a huge order book and has managed to constantly wow customers and remain in the public eye.

But when I peeked under the Tesla curtain, I noticed several issues preventing expansion, including procuring raw materials and regulations. And then there’s the incredibly inflated valuation of the Tesla stock in December, when it was trading at a price-to-earnings (P/E) ratio of over 200 times.

Had I purchased Tesla stock in December, my investment would be down nearly 20% today. Although it is plausible that Tesla stock will grow well over the next decade or so, I think the downside outweighed the value that the company offered in December.

However, I see many value investments for my portfolio right now and Bloomsbury Publishing (LSE: BMY) stands out. Its latest trading update showed that group pre-tax revenue is on track to exceed previous guidelines. Figures show that the publisher is on track to finish 24% above the previous profit estimations. This also puts the company on track to raise yield to over 2.5% in the next two years.

There are risks to consider as well,  like rising competition from other publishers and the changing landscape of storytelling. The visual medium is far more popular than the written word and it is bound to eat into the market slowly but surely. But I think Warren Buffett would approve of the value it offers as an investment and I am definitely considering it over several trending stocks right now.

Using cash in hand

Warren Buffett is a lot more than just a value investor. His company, Berkshire Hathaway, also looks at prudent factors like how a company reuses the revenue it generates. And it is not all about dividends or share buybacks either.

Buffett believes that acquisitions are a great way for a company to grow its ‘moat.’ And Buffett describes a business moat as assets that a company can fall back on in testing times. This includes patents, intellectual property, trademarks, and brand recognition. By acquiring smaller businesses, companies can eliminate competition, gain access to restricted resources, and grow faster.

An example of such a buy from Warren Buffett is the US$1bn investment in Amazon (NASDAQ:AMZN) in 2019. At the time, the e-commerce giant was trading at a P/E ratio of 60, which points to an overvalued stock. A big no-no for the Oracle from Omaha. But what impressed Buffett was Amazon’s aggressive expansion through acquisition strategy. The company managed to turn revenue from the razor-thin margins of the e-commerce business into a media empire by purchasing distribution rights to major productions. 

Buffett bought Amazon stock at $1,850. It is currently trading at $3,158, up 70% since 2019. Although I wouldn’t invest in Amazon stock today, there are some UK companies that reinvest cleverly. One company that stands out is Diageo (LSE:DGE). With a huge cash reserve of over £1.6bn, the interim report shows how the company has grown its sales and revenue figures steadily by amassing a large number of popular alcohol brands. The company also recently acquired Casa UM, a premium artisanal mezcal brand, to grow regional alcohol offerings as well.

And despite growing regulations with overseas alcohol trade and increasingly health-conscious youth, I think Diageo has a strong hold on the alcohol market for the foreseeable future. The large portfolio of brands, international presence, and robust financials means this is a must-have value stock for my portfolio today.

Invest in what you know, but do not overdo it

This old Buffett adage is well-known investing advice. But I don’t see a lot of my young investor friends really following this. As a tech reporter and gaming enthusiast, I follow the sector a lot. And this puts me in an optimal space to invest in UK’s booming gaming market today. But this does not mean I invest in every promising UK gaming venture. In fact, Warren Buffett is big on holding onto excess savings and picking the right stock at the right time. 

The gaming market is huge and just broke the $300bn barrier. The metaverse expansion and the sudden expansion in the potential of the industry is very uplifting. But the sector is still recovering from unchecked progress during the pandemic. Inflated valuations have left most UK gaming stocks bloodshot in the last six months. And despite my bullish stance on the industry and the growing involvement of UK gaming studios in global projects, I think the wise thing for me to do here is to watch UK gaming companies closely over the next few months and invest when the whispers of recovery grow louder.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Suraj Radhakrishnan has no position in any of the shares mentioned. 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, Bloomsbury Publishing, Diageo, and Tesla. 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 penny share’s merger is under threat. Here’s what I’m doing now!

Penny share Stagecoach (LSE:SGC) has been in the headlines recently and shares have been on an upward trajectory. Should I consider adding the shares to my holdings? Let’s take a look at recent developments before I decide.

Merger issues

As a quick reminder, Stagecoach is a bus, train, tram, and express coach operator with operations in the UK, US, and Canada.

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

In September, Stagecoach and its rival National Express revealed a potential merger. National Express is a provider of long-distance coach journeys. Well, in December, an agreement was made and SGC shares surged on that news.

As I write, Stagecoach shares are trading for 92p. At this time last year, the shares were trading for 79p, which is a 16% return over a 12-month period. Since the December announcement, the shares have increased by over 20% to current levels. It is worth remembering penny shares are identified by trading for less than £1.

The merger, which looks more like a takeover of Stagecoach by National Express to me personally, is worth £468m. As part of the deal, SGC shareholders receive 0.36 of a share of the combined company. The deal was tentatively set to be completed by the end of this year, but last month, the Competitions and Market Authority (CMA) announced an investigation into the deal. Competition concerns could cause the deal to fail, in my opinion.

An excellent penny share

Putting the potential merger to one side, I believe Stagecoach is an excellent stock with lots of potential ahead too.

Stagecoach possesses a strong brand with a vast profile in key markets. In addition to this, it is involved in a market with little competition.

Prior to the pandemic, performance was strong but restrictions, fear of a spreading virus, and working from home led to performance dropping. Interim results released in December lead me to believe results could be on an upward trajectory once more. Revenue, profit, and earnings per share all rose compared to the same period last year. Passenger levels and sales were edging closer to pre-pandemic levels and net debt had reduced.

Stagecoach does have risks, however. Firstly, many consumers who now actively avoid public transport due to the pandemic and its effect on future choices, may never come back. This could hurt performance and financials over time. Next, there has been a huge labour shortage with drivers affecting operations across all markets, especially HGV and bus driver shortages. When operations are affected, consumer confidence and performance is also affected.

My verdict

I believe a few things could happen with Stagecoach. Firstly, the combination with National Express could go through after the investigation concludes. This will become clearer in the coming months. Or, the deal could fail to pass the CMA investigation and not go ahead. I believe other private equity bidders could swoop in and buy SGC, which could boost the penny share upwards. 

At current levels, I believe Stagecoach is an excellent penny share with an established track record and growth potential too, with or without the merger. It looks very cheap at current levels too. I would add the share to my holdings and keep an eye on developments in regards to the merger.

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We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
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Jabran Khan 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.

Here’s 1 penny stock to buy now and hold!

One penny stock I am considering for my portfolio right now is Lookers (LSE:LOOK). Here’s why.

Automobile dealer

Lookers is a multi-franchise car dealer group with relationships with over 30 car manufacturers throughout the UK and Ireland. It has roots stretching back to 1908, when it was founded by John Looker, and it has been listed on the London Stock Exchange since the 1970s.

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Penny stocks are those trading for less than £1. As I write, Lookers shares are trading for 96p. At this time last year, the shares were trading for 37p, which is a 159% return over a 12-month period.

Despite semiconductor supply issues halting the supply of new cars, as well as supply chain issues, Lookers has performed well. I believe this is because many consumers have turned to buying used and nearly new cars here in the UK. In fact, the used car market is booming. Dealerships like Lookers, who sell new and nearly new cars, have benefitted.

Penny stocks have risks

Lookers’ progress is at the risk of factors out of its control as well as competition. Competition in the automobile sector is intense and there are many players in the market. As well as this, there are now lots of avenues for consumers to buy cars as well, such as private sales. 

Next, Lookers could see performance affected by macroeconomic issues. The semiconductor shortage shows no signs of easing. These parts are vital components in new cars. Supply of new cars has been hit massively in the past six months or so. In addition to this, inflation, rising costs, and supply chain issues could also affect Lookers and its progress.

A penny stock I’d buy

Lookers has a unique business model that I quite like. It owns the property its dealerships operate from, giving it a property portfolio that it can leverage into further revenue. So as well as an excellent automobile business, it has a property arm too. I like stocks with diversified interests.

Next, at current levels, Lookers shares look dirt-cheap with a price-to-earnings of just 5! This looks like really good value to me. There is also talk of dividends returning which would make me a passive income.

Lookers has a good track record of performance too. I do understand that past performance is not a guarantee of the future, however. Looking back, I can see revenue between 2017 and 2019 was consistently over £4.7bn. The 2020 levels were slightly lower due to the pandemic.

Coming up to date, a post-close FY trading update released last month made for good reading. Lookers reported trading and performance has returned to pre-pandemic levels. Full details will be available in the coming months. I wouldn’t be surprised to see the Lookers share price surpass the £1 penny stock barrier after these results are released.

Overall, I think Lookers could be a good addition to my holdings. It seems to have a solid, lucrative business model. It is also fighting off new car manufacturing issues and performing well in the currently burgeoning used car market. I am excited for full-year results coming soon. I would buy Lookers shares and hold them for a long time.

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While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

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Jabran Khan 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.

Here’s 1 of the best shares to buy now and hold!

I believe Photo-Me (LSE:PHTM) could be one of the best shares to buy now for my holdings. Here’s why.

Self-service provider

Photo-Me describes itself as an instant service equipment group. In simpler terms, it operates a number of technology driven-machines to help consumers with day-to-day tasks. It operates photo booths, laundry machines, and digital printing stations as well as other self-serve equipment.

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

As I write, Photo-Me shares are trading for 75p. At this time last year, the shares were trading for 47p, which is a 60% return over a 12-month period.

The best shares to buy now have risks

Photo-Me focuses on providing its products and services in public areas. The pandemic changed the face of retail operations and footfall dropped substantially. Any new variants that could cause restrictions to come into force once more, could hurt Photo-Me’s recovery and growth prospects.

Photo-Me’s photo booths are a core part of its offering. As the digital revolution throughout the world continues, these machines could eventually be moot and no longer required. This could put a severe dent in financials and growth prospects looking ahead.

Why I’d buy Photo-Me shares

I like the Photo-Me business model as a whole. It earns revenue without the worry of high staffing costs. Many of its machines are unmanned and only require limited servicing. In addition to this, the rise of card payments has further reduced the need for someone to physically attend a machine and remove cash from it. Some of my best shares to buy now have a low-cost, high margin business model too.

Photo-Me has a good track record of performance and the signs are things are only set to grow. I do understand past performance is not a guarantee of the future, however. Coming up to date, a trading update Photo-Me released in December made for good reading. The post-close update for the year said that Q4 had seen better-than-expected trading. Its photo booth business continued to recover and laundry machines did well also. Profit is expected to be around £25m-£30m.

Due to the pandemic, the need for self-serve consumer equipment is a growth market, in my opinion. A focus on self-service and the lack of a need to physically interact with a retail assistant to manage day-to-day tasks, has led to the rise in use of self-serve machines. I believe Photo-Me’s presence throughout the world should help boost performance and returns.

Finally, Photo-Me cancelled dividends in 2020 due to the pandemic, as did some of my other best shares to buy now. Analysts reckon a dividend could be declared when full-year results are fully announced later this month. With low costs, this dividend could grow in the year ahead, which is an attractive prospect for me.

Overall, I believe Photo-Me shares represent really good value right now. I would add the shares to my holdings at current levels as they sport a price-to-earnings ratio of just over nine. There looks to be growth potential ahead and its international presence and business model should serve it well for growth and returns which, is why I class it as one of my best shares to buy now and hold for a long time.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Jabran Khan 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.

2 ‘no-brainer UK shares to buy in February

As the US market has underperformed in 2022, UK shares have held up far better. This is mainly due to the abundance of value stocks in the UK market, which are far more resistant to rising inflation than American stocks. Therefore, I’m keen to add more home-grown shares to my portfolio. Here are two that I think have significant upside potential and would consider adding in February.

A top housebuilder

Housebuilding shares have slightly underperformed the market this year. This is due to two reasons. Firstly, higher interest rates may see reduced demand for houses because mortgages are becoming more expensive. As such, there is always the chance that the housing market may see a large correction. In a worst-case scenario, there could be a crash. Furthermore, the government has announced that housebuilders should meet the costs of rectifying cladding on high-rise blocks, which could cost as much as £4bn. Despite these risks, I feel that Bellway (LSE: BWY), which is down nearly 13% over the past six months, has the potential to recover these losses.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Indeed, today’s trading update was excellent, and it stated that both market conditions and consumer confidence were “strong”. This meant that the company was able to reinstate its target of delivering volume growth of 10% and delivering over 11,100 homes for this financial year. The forward order book also looked good, as underlying demand for new housing showed no signs of slowing. In fact, the company’s forward order book is 12.5% higher than last year, at 6,628 homes.  

Finally, I am also extremely impressed by company’s operating margins, which should be above 18% for the full year. This is slightly higher than the 17% recorded in the last financial year. This demonstrates that the company is coping well with inflationary pressures. For these reasons, I feel that this UK share is a ‘no-brainer’ buy for me, which should see growth over the next few years.

Another high-quality UK share

Diageo (LSE: DGE) has outperformed the FTSE 100 year-on-year, thanks to its reputation for excellence and brand loyalty. Indeed, the drinks giant has a portfolio of over 200 different brands, ranging from Guinness to Baileys. Such a large portfolio helped the company continue to record big profits during the pandemic, and it has continued to see growth since.

In its recent half-year results, Diageo reported net sales of £8bn and operating profits of £2.7bn. These figures represented a rise of 20% and 24.7% year-on-year respectively. Due to such strong results, the drinks giant was also able to raise the interim dividend by 5% and continue its £4.5bn share buyback programme. Although a dividend yield of 2% is fairly insignificant compared to some other UK shares, it’s both extremely sustainable and growing.

There are some risks related to the shares, however. For example, the company has a price-to-earnings ratio of over 20. This indicates that strong growth is expected over the next few years. If there is any slowdown, or a failure to meet such high expectations, the Diageo share price could plunge as a result. The effects of inflation may also strain profit margins.

Even so, I’m confident that the excellent set of brands owned by Diageo will continue to attract significant consumer loyalty. Hopefully, this will allow further growth and offset any negative impacts of inflation. This is a UK share I’ll continue to add to my portfolio.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

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Stuart Blair owns shares in Diageo. The Motley Fool UK has recommended Diageo. 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.

Gen Z Financial Ombudsman support requests skyrocket over 200% in 5 years

Gen Z Financial Ombudsman support requests skyrocket over 200% in 5 years
Image source: Getty Images


It looks like 2022 is going to be a tough year. Omicron seems to be holding back the recovery in sectors like hospitality and travel, and soaring inflation and energy prices are increasing the financial pressures on British households. 

It’s quite common for people to experience financial difficulties in times like these. The economic fallout from the pandemic was hard for many but especially rough for younger people. Considering this, it’s no surprise that in the last five years alone, the number of help requests received by the Financial Ombudsman Service (FOS) from 16-24 year-olds has more than trebled. 

What are young people struggling with the most? 

After a series of Freedom of Information requests, financial services company W1TTY released data highlighting that young people are struggling to manage their finances. The number of young people seeking help with servicing debt (including current accounts) increased by 205%, rising from 951 in 2016/17 to 2,899 in 2020/21. 

Another area that saw a similar increase was complaints filed with the credit services. The number rose by 42% a year or 210% over the five years period. Credit cards and other forms of consumer credit, as well as credit information services, are all within the remit of the credit services, according to the FOS.  

The data also indicates that a significant number of Gen Zers enquired about loans. Over the same period, the number increased from 947 in 2016/17 to 2,858 last year – a rise of 213%. 

How can young people offset their debt burden?

The data provides valuable insights but also shows a worrying trend that young people are more inclined to turn to loans and credit to ease their financial pressures.

And according to Ammar Kutait, CEO and founder of W1TTY, to avoid “Gen Z’s becoming the generation of debt”, it is paramount for young people to have access to education and support on how to manage their finances.

With this in mind, here are four steps young people can take to address their financial issues. 

1. Speak to debt experts

For those struggling with debt, one of the best places to start is seeking the help of a specialist in the field. Debt experts can provide professional and impartial advice on how to manage your finances. A number of charities, including Citizens Advice, Step Change and National Debtline, offer free advice and a range of services to help people with clearing their debt.  

2. Use a balance transfer credit card

According to research by MoneySupermarket, nowadays almost three in five 18-24-year-olds own a credit card. For the fortunate ones, balance transfer cards are a great way to avoid expensive interest payments by grouping everything in one place.

Balance transfer cards work by allowing you to pay off your debt when you transfer everything you owe to a new card. This way, instead of paying interest on several accounts you only worry about one payment, and you may be able to access a significant 0% interest window when you take out the card. 

3. Speak to your lender

Ignoring debt is the worst thing you can do. Burying your head in the sand won’t make the debt disappear. Instead, you run the risk of your debt spiralling out of control and ruining your credit score.

It’s always worth speaking to your creditors. You might be able to come to an agreement that includes having more time to pay or reducing your payments. But remember that this is not a guarantee and will depend on your circumstances. 

4. Use a money management app to budget

There are tons of apps that can help you with managing your finances more effectively. Some apps use your spending history to calculate what you can save and automatically put it aside.

Others round up your purchases to the nearest pound and save the difference in a savings pot. For more adventurous savers, there are even apps that help with setting financial challenges over a set period.

What they all do is help to build a consistent habit of putting money aside without you worrying about it.  

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. 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 Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.


I’m buying Scottish Mortgage Investment Trust for these 3 reasons

Key points

  • Scottish Mortgage Investment Trust prides itself on long-term growth
  • Investors gain global exposure to listed and unlisted stocks
  • The upcoming Federal Reserve rate hike may cause shares to fall further

The recent sell-off of technology stocks took no prisoners. Indeed, Scottish Mortgage Investment Trust (LSE: SMT), which is largely composed of tech holdings, was not immune from the downturn. Since the beginning of 2022, the stock is down 20.7%. By contrast, its index, the FTSE 100, is up 2.5% in the same period. Yet this stock has many good points that warrant investigation. I think I should add it to my portfolio for three reasons. 

Long-term outlook

Scottish Mortgage Investment Trust is proud of the long-term nature of its investments. Indeed, it says: “We look to add value over five-year time frames, preferably much longer. We don’t see that we can add much more than anyone else in the short term”.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

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It is easy to see how well the stock has performed over this timeframe. In the past five years, holders have enjoyed a 211% increase in the value of their shares. This is quite remarkable considering the FTSE 100 has only managed 4.1% in the same period.   

Geographical and sector diversity

While primarily tech-focused, Scottish Mortgage Investment Trust has Moderna, a pharmaceutical stock, as its largest holding. Moderna is now known as one of the companies that manufactured a Covid-19 vaccine. This stock accounts for 7.77% of the trust’s assets.

Furthermore, investing in this stock provides geographical diversity. Although many of the big holdings are from the US, like Tesla Motors and Nvidia Corp, shareholders enjoy exposure to other companies from around the world.

These include Tencent and Alibaba, video gaming and e-commerce stocks, respectively, that both hail from China. What this all means is that investors are therefore gaining access to the biggest and best stocks from the two global economic powerhouses of out time. It also provides exposure to unlisted companies, like SpaceX.

But one issue that concerns me is the upcoming Federal Reserve rate hike. This could have a negative impact on tech as investors retreat from growth stocks. I will be watching closely to see how the leadership navigates this threat.  

Strong leadership

The stock is run by three managers, James Anderson, Tom Slater and Lawrence Burns. Anderson, who has run the fund since 2000 and has been the architect of its long-term success, will retire in April 2022. 

These managers have been responsible for exceptional growth over many years and have found a number of great companies. Bolstering SMT’s holding in Moderna in December 2020 was a stroke of genius given its impact during the pandemic. 

With Anderson’s imminent departure, I expect the trust to maintain its global reach. This is chiefly because Tom Slater is experienced in both US and Chinese equities.

The managers have presided over long-term growth and found high-performance companies early on. Although the upcoming rate hike next month could negatively impact this stock, I will be buying now for long-term gains that outweigh short-term fluctuations.  

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And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

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Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. 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.

What’s going on with the Ocado share price?

The Ocado (LSE: OCDO) share price is down heavily today. That’s despite the company reporting what appears to be a fairly robust set of full-year numbers. What’s going on?

Revenue up

Let’s focus on the good stuff first.

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

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At £2.5bn, revenue for the 12 months to 28 November was 7.2% higher than the previous year. As one might expect, the vast majority of this came from retail sales via its joint venture with Marks & Spencer. One thing that’s particularly worth highlighting here is that sales were also 41.5% higher compared to pre-pandemic levels. This, if anything, goes some way to endorsing CEO Tim Steiner’s belief that online grocery demand is “here to stay”.

Away from its retail arm, Ocado opened five of its high-tech Customer Fulfilment Centres (CFCs) over the period. Seen by many investors as the reason to own the stock, two of these were located in the US. This, in turn, helped revenue from its international solutions arm soar over 300% to £66.6m. A total of 13 sites are now up and running around the world.

What’s got investors so frustrated?

Unfortunately, the company hasn’t been immune to worker shortages. A lack of HGV drivers served as a growth headwind in the second half of the year. A fire at its Kent distribution centre last July also reduced capacity. 

Collectively, these factors — combined with the ongoing costs of developing its tech — may go some way to explaining why the Ocado is out of favour again today.

Ocado share price: opportunity or warning?

Taking into account today’s significant fall, the Ocado share price has now tumbled 23% in 2022 alone. The performance over the last 12 months is even more depressing for loyal holders. No less than 56% has been wiped off the company’s value.

As someone focused on growing wealth over the long term, should I see this as an opportunity to build a position?

Looking at the positives, it’s clear that Ocado’s tech is in demand with a total of nine CFCs due to open in 2022. Assuming the company really can help partners “go-live quicker, at lower cost and achieve higher margins and returns on capital“, I can only see this annual number rising in future years.

The company is also proving increasingly popular with shoppers. Customer numbers rose 22% over the last financial year and orders rose nearly 12% to 357,000. 

On the flip side, a £9bn valuation remains lofty considering this company made a loss of £177m in 2021 due to increased investment. And even if Ocado made all the right moves from here, there’s a possibility that shareholders could see the value of their holdings fall further in 2022 as the market grows increasingly averse to ‘jam tomorrow’ companies.

A safer bet?

The awful performance of the Ocado share price in the last year is further evidence that no investment is risk-free. It also highlights that sentiment towards even the biggest UK companies can quickly reverse.

Personally, I’m in no hurry to buy this beaten-down stock today. In fact, I’d be more inclined to buy a slice of market-leader Tesco.

While lacking Ocado’s technical know-how and growth prospects, its forecast £60bn revenue is 24 times that of its FTSE 100 peer. It has its own risks, but may also be regarded as a better option for coping with inflationary times due to its pricing clout and 3.7% dividend. 

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

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

Those hit hardest by new energy price cap could see bills soar to £4,729!

Those hit hardest by new energy price cap could see bills soar to £4,729!
Image source: Getty Images


Brits across the country are preparing for a sharp rise in living expenses. These fears come after Ofgem recently announced a significant energy price cap increase that will take effect in April this year.

However, a recent report from Hargreaves Lansdown has revealed that some homeowners should be more worried than others. Those who will be hit the hardest by the price cap increase could see their bills soar to more than £4,000. So, who are these unlucky homeowners?

Who will be hit the hardest by the price cap increase?

The energy price cap is the maximum limit that a supplier can charge for their tariffs. Although energy suppliers could technically charge under the price cap, most providers charge the highest possible prices in order to keep up with the rising costs of fuel.

In April, the energy price cap will rise by 54% to £1,971! As a result, homeowners across the UK will be hit with exceedingly high energy bills. While the increased price cap will affect all energy customers, some Brits will be hit harder than others.

According to Hargreaves Lansdown, those living in inefficient homes will see their bills increase the most. Markedly, those living in the most inefficient homes could see their bills rise to as much as £4,729 per year!

In the UK, inefficiency is rated by the energy rating system. As a result, houses are given an EPC (energy performance certificate) which can be used to prove the energy efficiency of their home. The system rates houses from A to G, with A indicating high efficiency and G indicating high inefficiency.

If your home currently has a G rating, you may be one of the unlucky few whose energy bills will increase to the level suggested by Hargreaves Lansdown once the new price cap is in place. 

How to beat the rising costs of energy

For many, the proposed annual increase is more than an entire month’s wage. Therefore, those living in the hardest-hit homes should look into any help that may be available.

As Sarah Coles explains: “It’s worth investigating whether there is any help available. Check whether your supplier’s warm home discount is still open for applications and whether you qualify, because this can provide £140 off your energy bills.

“You should also check whether you qualify for a grant from your provider or your local council – both of which have specific support schemes for people who are struggling.”

Government energy bill support

Rishi Sunak has announced a package of support that could cut your energy bills by up to £350. All UK domestic energy users will receive £200 off of their bills in October and a further 80% of households will receive a £150 tax rebate from April. While this may not completely cover the price hike, any reductions are sure to help! 

The £200 energy bill rebate will be automatically deducted from your bills your energy supplier. However, the monetary support will need to be paid back from 2023, when energy prices are expected to decrease. Homeowners will be expected to pay back the rebate in five £40 instalments. These instalments will be applied automatically to your energy bills from 2023, which means that you don’t have to actively pay back the loan.

Furthermore, those living in houses that have an energy rating of A to D will receive an additional £150 rebate that should be applied automatically. 

Warm home discount scheme 

As well as the energy rebates, some households may be eligible for the warm home discount scheme. This is a government scheme that offers deductions of £140 from your energy bill between October and March. The scheme is provided to those on lower incomes or those who receive the Guaranteed Credit element of Pension Credit. If you think that you may be eligible for the discount, you should contact your energy supplier. 

Switch your energy supplier

Every UK household will receive a £200 rebate. However, if you are unable to qualify for any additonal help, simply switching to a different energy provider could cut down your bills. Different providers offer varying packages with unique benefits that could end up being cheaper than your current energy supplier.

Use direct debit

If you’re not already, it is worth switching to direct debit payments to pay your energy bills. This is because those who pay via cash or check are charged an extra £130 per year! To switch your payment method, simply contact your energy supplier and ask to make the change. Some suppliers may also offer the option to do this online.  

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. 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 Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.


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