The Argo Blockchain (LSE: ARB) share price has endured a torrid time over the past year. It’s fallen around 30% in value since this point in 2021 and was recently sitting at less than 83p. Its descent inside penny stock territory leaves it trading at a whopping 71% discount to last February’s record closing high of 284p.

Low-cost stocks like Argo Blockchain (and especially penny stocks) are well known for their volatility. So it’s possible that more choppiness could be around the corner. But as a long-term investor and a bargain lover, should I be paying the cryptocurrency miner close attention following its heavy fall?

On the plus side

Any decision on investing in Argo Blockchain is linked closely to the outlook for Bitcoin prices. Fans of these new-age assets will argue that they will have an important role to play in an increasingly-digitalised world. It’s possible that widespread adoption could be just around the corner.

Over the past year, Argo’s made huge strides to capitalise on this opportunity. It started construction on a 200MW crypto mining facility in Texas which will allow it to turbocharge capacity at low cost. It also agreed to acquire 20,000 Bitcoin mining machines for delivery between the second and third quarters of 2022.

Latest news released last week showed that building remains on course for completion during the first half of the year. Yet Argo Blockchain’s ever-sinking share price shows that the firm’s steady progress isn’t cutting it with investors. Why?

Reasons for worry

Well, first off, the sinking Bitcoin price hasn’t done Argo Blockchain’s share price any favours. Late last week, it slipped to its cheapest since September, to around $41,000 a coin, on fears over Federal Reserve monetary tightening and political unrest in the key mining territory of Kazakhstan.

However, the scale of Argo’s slump is chiefly down to other factors. The business has issued shares and taken on debt over the past year to fund its ambitious growth plans. And market makers worry about the prospect of additional share placings that could dilute shareholders’ interest even further.

Concerns over the way Argo is run have also shaken investor confidence big time. A slew of reports from short-seller Boatman Capital have done little to improve the mood either.

It’s identified a number of causes for alarm, including the firm taking on expensive debt obligations and tapping shareholders while it has cash on the balance sheet. Meanwhile, the business paying £17.5m to secure land for its Texas facility, more than 100 times what Boatman alleges it is actually worth. And finally, Argo is enduring a constant outflow of key decision makers (four of its five directors passed through the exit door in 2021).

I’d buy other growth shares today

It’s possible that Argo could prove to be an exceptional long-term investment. But I’m afraid there is too much noise surrounding the crypto company to encourage me to buy in.

The unpredictable outlook for Bitcoin prices is another reason why I’m happy to sit on the sidelines. I’d much rather buy other UK shares. After all, there’s no shortage of bright growth shares for me to choose from today.

The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

If I had a lump sum of £1,000 to invest for 2022 and beyond, I would have to take a long-term approach.

Rather than trying to pick stocks and shares I think would do well over the next year or so, I would focus on buying high-quality companies that have a track record of operating successfully over the long term.

I would also include investment trusts in my portfolio, as these have been shown to produce superior returns over periods of five to 10 years. 

Invest for the future

The first part of my portfolio I would devote to high-quality operating companies. What I mean by this is that I would search out organisations with a solid competitive advantage and substantial profit margins. In theory, these qualities should help them prosper in the long run. 

An example of the sort of organisation I invest in for my portfolio is the distribution group Bunzl.

This company’s main competitive advantage is its size. Distribution businesses tend to have small profit margins, but its substantial economies of scale mean Bunzl’s margins are bigger than average. This gives the firm a significant advantage over its peers. It has been able to use this advantage to consolidate the market and offer clients a better level of service. 

Of course, there is no guarantee this advantage will remain in place forever. The company could come under attack from a larger competitor. This is a risk I will be keeping an eye on as we advance. 

However, I would be happy to include the company in my £1k portfolio for the next decade, despite this risk. 

Another example is the property portal Rightmove. As one of the most visited websites in the country, the business has a substantial competitive advantage. I think it is unlikely it will be unseated from this position, although nothing is impossible when it comes to the stock market. 

Funds for growth

As well as the stocks outlined above, I would also buy some investment trusts for my portfolio. 

Investment trusts are a great way to invest in the market because they are run by professional managers. Further, unlike traditional funds, they are what is known as closed-ended. This means they do not have to buy and sell investments to meet investor withdrawals and deposits. As such, they can invest with a much longer-term view and do not have to worry about investor sentiment. 

BlackRock Throgmorton Trust is a great example. The trust focuses on finding the UK’s strongest emerging companies, which I would not be comfortable with buying personally, but I am happy to outsource this to a manager. The one downside of this approach is the trust’s hefty management fee of 1.6%. Still, I am happy to pay a fee for the experience on offer.

A risk of using this approach is the trust could end up underperforming the market if it picks the wrong investments. This means I could be paying a hefty fee for underperformance. 

Despite this risk, I would be more than happy to buy the trust for my £1,000 portfolio and hold it for the next decade. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Bunzl and Rightmove. 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 built a vast fortune investing in stocks and shares over the past seven decades.

Investors can learn a lot from this billionaire and his approach to the stock market. Indeed, I believe it is possible for me to build a £1m fortune by following Buffett’s principles over the next couple of decades. 

Investing in stocks and shares

It will not be easy for me to build a £1m fortune. It will take time and effort. I am well aware that successful investing is a marathon, not a sprint. It is highly unlikely I will build this nest egg over months. It could take decades for me to reach the target. 

Still, I believe that by following Buffett’s advice, I can increase my chance of success. Some of his most important advice revolves around picking stocks and managing a portfolio. 

When it comes to picking stocks, I intend to follow his advice closely. In particular, I will be sticking to his advice about finding high-quality companies and ignoring any businesses I do not understand. 

One of the easiest ways to lose money as an investor is to buy into corporations that are difficult to understand. Therefore, if I struggle to understand how a business makes money, I will avoid the opportunity. I will also be avoiding a company if it is losing a lot of money. In my opinion, this is the opposite of a high-quality business. 

Further, there are some sections of the market that I will also be avoiding, no matter how attractive the opportunities are. These are the early-stage pharmaceutical and mining companies. Buffett has never invested in these sectors, and neither will I. 

Warren Buffett’s advice for investing

The billionaire investor has plenty of tips when it comes to portfolio management. 

He recommends only investing in a stock that can be held it for at least five years. This is the approach I will be using to manage my portfolio. He also recommends that investors focus on their favourite companies and not spend too much time trying to diversify into different stocks for the sake of it. Once again, I intend to follow this advice. 

To hit my target, I believe I will have to put away at least £500 a month and achieve a compound annual return on my money at 10% for at least three decades.

Of course, there is no guarantee I will be able to hit this target. Picking stocks and shares is challenging, and just because a company has performed well in the past does not mean it will continue to do so. Neither does following Buffett’s advice guarantee I will become wealthy. 

However, by following the ‘Oracle of Omaha’s’ principles, I believe I can increase my odds of building a £1m nest egg with stocks and shares. 

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.

I am always looking for cheap UK shares to add to my portfolio. And right now, there are plenty of options on the market. 

Even though the UK economy has bounced back from the pandemic, this is not yet reflected in many company valuations. This is something I want to take advantage of over the next year. 

As such, here are five cheap UK shares I would buy for my portfolio right now. 

UK shares to buy

Although they are traded on the London market, the first couple of companies are not technically UK businesses. 

Bank of Georgia and Ferrexpo have their primary operations in Georgia and Ukraine. Usually, I would stay away from emerging market companies. These businesses can face additional risks, such as corporate governance challenges and political uncertainty.

However, the pair have proven themselves over the past five years. Their low valuations also discount some of the risks, in my opinion. 

Bank of Georgia has been able to capitalise on the expanding Georgian economy. It is a far more profitable bank than its UK peers and has a strong balance sheet. 

Meanwhile, Ferrexpo is a high-quality iron ore miner which supplies businesses worldwide. It is well managed, with large profit margins, a strong balance sheet, and a history of returning excess profits to investors.

Bank of Georgia and Ferrexpo trade at forward price-to-earnings (P/E) ratios of 4.7 and 5.1 respectively. 

Cheap growth stocks

Back in the UK, I would acquire Morgan Sindall and Royal Mail for my basket of cheap UK shares. Both of these companies currently look undervalued, and they also have plenty of scope for growth over the next few years. Shares in Royal Mail trade at a forward P/E of 8.4, while Morgan Sindall is selling at a P/E of 11. 

As the construction industry returns to growth, I think Morgan Sindall can capitalise on the industry’s expansion.

At the same time, the booming e-commerce industry has helped Royal Mail surpass expectations over the past couple of years. It has used this windfall to invest in operations and improve efficiency. These efficiency gains may help the company outperform in the years ahead. 

Challenges the two corporations could encounter as we advance include inflationary pressures, such as rising costs and competition from sector peers. 

Explosive potential

The final stock I would acquire for my portfolio of cheap UK shares is the car dealer Vertu Motors. As the demand for second-hand vehicles has exploded over the past year, this company’s profits have followed suit.

Analysts expect the trend to last for at least the next two years, but the market seems to be ignoring this potential. The stock is currently trading at a P/E of 4.6. I think that is far too cheap. With growth expected to continue, I think it is only a matter of time before the stock sees a re-rating. 

Of course, this growth is far from guaranteed. The most considerable risk is a slowdown in the used-car market, which could happen at any point in the next few years. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Vertu Motors. 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 have been looking for dividend shares to buy for my portfolio to help increase my income in the low-interest-rate environment.

I think there are plenty of opportunities on the market at the moment for me to capitalise on. Here are five companies yielding 5% I would buy for my portfolio today. 

Dividend shares to buy

The first two companies I would buy are in entirely different sectors. The Hipgnosis Songs Fund Limited acquires and manages music rights. Target Healthcare Reit acquires and manages healthcare properties.

Both stocks offered dividend yields of 5.5%, with the distributions backed by income from song royalties and rental property. These are both relatively defensive income streams. Contracts tend to be guaranteed for multi-year periods, ensuring a set income level. 

Of course, there are some risks of owning these two investments. The most obvious one is debt. Both companies borrow a lot of money to invest. And if interest rates increase substantially, this could increase their interest costs. They may have to reduce distributions to investors as a result. 

Renewable income

Moving away from these sectors, I would also acquire SSE and Greencoat UK Wind for my portfolio of dividend shares. These companies support dividend yields of 5% and are both active in the rapidly growing renewable energy sector.

SSE is planning to reduce its dividend in the near future to increase the amount of money available to invest in its operations. Therefore, I expect the dividend yield to drop below 5% in the near term. However, I am willing to accept this trade-off for the growth prospects.

As the renewable energy sector expands, I think both organisations have tremendous potential, which could lead to dividend growth further down the line. 

Some challenges these companies could face in the near term include higher interest rates, which would lead to higher debt interest costs. They could also face challenges from competitors, who may be willing to outbid them for assets. 

Transformation in progress

The final company I would buy for my portfolio of dividend shares is the insurance group Aviva. This corporation is currently in the middle of a transition. It has been selling non-core overseas businesses and reinvesting the proceeds in its UK operations. Management has also laid out plans to return more than £5bn to shareholders.

I think the group’s decision to concentrate on its core business is sensible. It should also help support the dividend. The stock currently supports a yield of 6.6%. That is excluding any special dividends or cash rewards that may come from asset sales. 

The one red flag that appears with this company is regulation. As a financial services business, the corporation is closely regulated. Regulators could ask it to reduce its dividend if they believe it is paying out too much. This is probably the most considerable risk to the group’s payout at present. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. 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.

As more and more money flows into the renewable energy industry, I have been looking for green energy stocks to buy for my portfolio this year. 

I think the industry has reached an inflection point. In many regions around the world, green energy is taking over. Costs have dropped, and consumers are becoming more aware of where their power comes from.

These changes, coupled with the flood of money heading into the sector, suggests to me that the outlook for renewable energy investments is brighter than ever. 

As such, here are my top three renewable energy investments I would buy for my portfolio for the year ahead. 

Renewable energy stocks

One central theme I want to build exposure to this year is energy storage. There are two companies in particular I believe present the best way to gain exposure to this theme.

Gore Street Energy Storage is a pureplay energy storage company. The group owns a portfolio of related assets across the UK, and its portfolio is continuing to expand. These assets are designed to help balance the electricity grid.

As renewable energy generation can be unpredictable and volatile, the demand for energy storage assets, such as those provided by Gore Street, is expanding. The facilities help providers balance out supply and demand during periods when renewable capacity is low. 

Bluefield Solar Income is also trying to build its exposure to this market. Towards the end of last year, the company raised just over £100m to expand away from its traditional solar market into wind and battery storage investments.

This will help the company diversify away from solar energy, although this is a predictable and growing market. The additional funding will provide the corporation with headroom to expand into new markets, potentially providing a multi-year growth catalyst. 

Hydrogen energy

As well as the companies outlined above, I would also buy AFC Energy. This group develops technology to produce green hydrogen, which could become a massive market over the next few years. It has just started to roll out its technology, and I am looking forward to further progress in the year ahead. 

Of course, AFC is not the only organisation exploring hydrogen technology. This is good news for the world, but it challenges investors. Competition in the sector could rob the group of its first-mover advantage. This is probably the most considerable threat to its growth potential right now. 

Competition is also the major challenge facing Bluefield and Gore Street. Investors are clamouring for exposure to renewable energy assets, pushing up prices. Ultimately, the fight for assets could depress potential returns on investment, which would be bad news for investors like myself. 

Despite these risks, I would be happy to buy all three companies for my portfolio of renewable energy investments today.

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.

Investors are increasingly interested in thematic investing. All the more so at this time of year when portfolios are often being appraised and evaluated and many investors plan for this year. I’m interested in some thematic funds and basing some of my individual share purchases on themes as well. Before doing so the big question to ask is: could thematic investing outperform passive investing? Put another way, will it help me potentially make more money?

What is thematic investing?

Let’s start with the basics first. What is it? Asset management giant Blackrock describes it as: “Thematic investing is an approach which focuses on predicted long-term trends rather than specific companies or sectors, enabling investors to access structural, one-off shifts that can change an entire industry.” This definition works perfectly for me.

It’s worth noting early that they’re often narratives about the ‘next big thing’ in 5, 10, or even 20 years’ time. This is the polar opposite of day trading.

Could thematic investing outperform passive investing?

Investors who bought into hydrogen shares in 2020 did very well, although less so last year. Those investors will have to see what the future brings to learn if backing the theme is worthwhile or not. Likewise, renewable energy shares more generally can be a) hard to define and b) have a mixed record.

Thematic investing isn’t easy or a guaranteed shortcut to big gains. It still requires research, patience, and perhaps some luck. But I would expect thematic investing to help me beat the market overall, especially if I invest for the long term. 

I think thematic investing could be better than passive investing because it requires trying to pick the best stocks possible and is more likely to help investors pick shares tied to long-term growth trends. The downside is probably less diversification and arguably therefore more risk.

What themes could do well in 2021?

There are many themes an investor could choose from. The ones that excite me the most, and from which I think I could pick winners, are clean energy, artificial intelligence, and e-commerce. All three will experience some disruption and ups and downs. However, the long-term multi-decade potential growth is there for all three themes. They are already established and also have a long runway of growth ahead.

The challenge with thematic investing is to still pick the best companies involved. Stock picking is still very important. Also, most innovations and themes experience ups and downs and setbacks, so the ride can be bumpy. To lessen the risk of picking theme-based stocks that don’t deliver as expected I might also invest in thematic funds. Then I’ll have a wider pool of investments and less exposure to any one technology or company. 

Getting into a winning theme as early as possible can deliver both short- and long-term results. Investing thematically is not the only way to invest and I’ll use it cautiously as a structure for choosing my investments. That said, I want at least part of my portfolio to be directly exposed to the growth of clean energy, artificial intelligence, and e-commerce.

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.

The performance of the Vodafone (LSE: VOD) share price over the past five years has been pretty rotten. Over this period, the stock has declined in value by 47%.

Over the past year, the performance is not much better. The stock has lost around 15% over the past 12 months, excluding dividends paid to investors. Including dividends, the stock has produced a total return of -6%.

By comparison, the FTSE All-Share Index has returned around 13%, including dividends. As such, over the past 12 months, the stock has underperformed the broader market by 20%. 

Two headwinds 

It looks as if there are a couple of reasons why the market has been avoiding the Vodafone share price over the past 12 months. The two primary reasons seem to be its high level of debt and its declining sales. 

The second factor is primarily due to the pandemic. When the pandemic started, Vodafone reported a slump in roaming revenues, a key component of its overall sales. This headwind persisted in 2021, although recent figures suggest it is beginning to ease as the world opens up again.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased 6.5% year-on-year during the first half. 

If this trend continues in the year ahead, it seems likely that the market will start to re-evaluate the company’s prospects. However, without progress on the second major challenge the group faces, it looks likely investors will continue to give the business the cold shoulder. 

This second major concern is its high debt load. It has made some progress on this front over the past two years. After acquiring Liberty Global’s European assets two years ago, Vodafone has made a dent in its debt pile by selling off its mobile towers business.

Synergies from the deal have also helped increase profitability, cash flow and reduce costs. With costs falling, the group’s profit margin at its German ops eclipsed 50% of service revenue for the first time last year. 

Vodafone share price outlook 

All in all, it looks to me as if the company is making significant progress on both of the major challenges it faces. If it continues on this track in 2022, I think it is likely that the Vodafone share price will see a re-rating. 

However, I should clarify that there are a couple of risks the group will have to overcome in the year ahead as well. These include rising interest rates, which could increase the cost of its debt. A cost of living squeeze may also reduce consumers’ demand for its products. Both of these challenges could destabilise its recovery plan. 

Still, even after taking these potential risks into account, I think the Vodafone share price looks attractive at current levels, considering its growth potential. With a dividend yield of more than 6% on offer as well, I would be happy to buy the shares for my portfolio today. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended 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.

I’m on a quest to find the best cheap shares to buy for my portfolio this year. Here are three penny stocks I’d buy to hold for years to come.

Petropavlovsk

Penny stock Petropavolvsk (LSE: POG) is one UK share on my watchlist. I think that gold prices will rise as inflationary pressures increase and doubts over the economic recovery persist. Of course there’s no guarantee that yellow metal values will increase. A mix of central bank rate hikes to curb exaggerated price rises and a resurgent US dollar could even push bullion values much lower.

But I still think having exposure to gold could be a good idea as an insurance policy for when trouble comes along. Gold’s surge to record highs during 2020’s coronavirus crisis proves this point perfectly.

I’d do this by buying shares in gold producing companies like Petropavolvsk rather than investing in the metal itself. This gives me a chance to potentially grab dividends now and further down the line. And I think a P/E ratio of just 6 times for 2022 could make it too cheap for me to miss. I also like this mining company’s highly-efficient and low-cost POX Hub gold production process where output is steadily ramping up.

Coats Group

Coats Group (LSE: COA) is trading strongly as clothing sales bounce back following strict Covid-19 lockdowns. As a major supplier of threads, zips and trims, demand for its product is rising solidly. Revenues here rocketed 22% at constant currencies in the four months to October, its latest financials showed. Sales were also up 6% versus the same 2019 period.

Sales growth is poised to slow, naturally, though I like the steps Coats Group is making to drive long-term sales. An increased focus on sustainability for example could deliver big rewards (sales of its 100% recycled EvoVerde thread range are expected to have doubled year-on-year in 2021). I’d buy this penny stock even though the issue of sustainability is growing in importance for consumers. This has the potential to hit so-called fast fashion volumes hard.

N Brown Group

Buying retail stocks can be risky business. A case can be made that this sector is particularly dangerous today as supply chain issues persist and the British economy stalls. But I think the potential rewards at some retailers outweigh the risks and this is where N Brown (LSE: BWNG) comes in. This particular company owns popular clothing brands like SimplyBe and JD Williams.

I like this particular stock for a number of reasons. It sells its product at affordable price points. This could make it a winner when consumer confidence is slipping and inflation is rising as is the case today. I also like its focus on the fast-growing ‘plus size’ segment which looks set to continue growing strongly. Analysts at Allied Market Research think the market for larger garments will be worth $696.7m by 2026, up from $481m in 2019. I also like its successful entry into the homewares market, a segment that has boomed in the past few years.

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

At the start of September, I said I was “increasingly excited” about the outlook for Marks & Spencer Group (LSE: MKS). The M&S share price has since risen by 35% and is now up by 77% over the last year. I think it’s time to take a fresh look.

Do I still think Marks & Spencer shares look cheap — and would I buy them today?

Why did the stock soar?

Let’s start with a quick look at what’s happened. In August, Marks & Spencer said that food sales over the previous five months had risen by 10.8%. Even clothing sales were less than 3% below 2019/20 levels. Not bad, I thought, given the impact of Covid-19 restrictions.

I decided to make M&S my top stock for September. The shares still looked cheap to me, and I expected a strong set of results in November.

Chief executive Steve Rowe delivered. Adjusted pre-tax profit for the six months to October was 53% higher than during the same period in 2019. Investors piled in and the Marks & Spencer share price rose by 25% in one week. That’s pretty unusual for a FTSE 250 stock.

What’s the situation now?

Over Christmas, I asked (mostly) female family members about M&S. I was surprised how many had become frequent M&S Food shoppers. I’m pretty sure that five years ago, none of them were regular customers.

However, I also was told by the more fashionable members of my family that M&S clothing is still a no-go zone.

While the food business is clearly doing well, Rowe still has some work to do in the fashion department.

Fortunately, the company’s latest numbers suggest to me that he may gradually be winning. Although total clothing and home sales fell by 1% during the half year, full price sales rose by 17%. This suggests to me that M&S buyers are ordering more accurately and are not needing to discount as much to clear old stock.

Where next for the M&S share price?

Marks & Spencer has had a strong run since September and the shares now trade on 12 times 2021/22 forecast earnings. Can the shares continue to rise?

I can see some risks. Food growth has been helped by online ordering through the group’s joint venture with Ocado. I wonder if online grocery demand will slow after the pandemic.

Rising wage costs could put pressure on profit margins. The clothing business could also continue to drag on profits.

Brokers covering the stock seem to be taking a cautious view on the year ahead. Consensus forecasts for the 2022/23 financial year show profits dipping this year before returning to growth the next year.

If this view is right, then I’d argue that the shares could be fully priced at current levels.

However, I’m encouraged by Marks & Spencer’s recent momentum. In my experience, when companies start beating forecasts — as M&S did in the autumn — they often continue to do well.

I don’t think the Marks & Spencer share price is as cheap as it was in September. But I still think the stock looks reasonably valued. I’d still consider buying M&S stock for my portfolio today.

Roland Head has no position in any of the shares 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.