I like to keep a list of shares to buy in a stock market crash. Investing when the market is falling can be challenging, and I believe one of the best ways to get around these issues is to prepare in advance. That means I am ready to act if prices fall substantially. By using this approach, I will be ready for all eventualities. 

As such, here are a selection of companies I would buy for my portfolio in a stock market crash based on their income and growth credentials. 

Shares to buy for growth

There are two companies I would buy for my portfolio as growth investments in a stock market crash.  Both are located in the financial sector and are different ways to own unique growth themes. 

The first is PayPoint. This company helps bridge the gap between the world of cash and cashless transitions. It provides payment terminals for shop owners and the software to help customers pay online bills with cash. It has also recently been rolling out a service to replace the need for ATMs. PayPoint allows consumers to withdraw cash from convenience stores without buying other items. 

As the world becomes increasingly focused on cashless transactions, I think the demand for the group’s services will grow. That is why the stock is on my investment wishlist. 

I would also buy IG Group. The financial services enterprise has grown rapidly over the past 10 years through a combination of organic growth and acquisitions. The corporation takes a tiny percentage of every trade customers make on its platforms, which can be highly lucrative in volatile markets.

In a stock market crash, I think the company will outperform other equities for these reasons. Additional cash generation will also provide more firepower for acquisitions to drive growth in the years ahead. 

Challenges these companies could face include additional regulatory constraints and competition from international peers. These headwinds may restrict growth and impact profit margins. 

Stock market crash buys

I would also use any stock market crash to snap up some shares in technology companies. Tech stocks have been some of the most sought-after investments over the past two years. This rush to buy has sent equity valuations to record levels. If there is a stock market crash, these valuations should return to more appropriate levels. 

Two stocks on my wishlist are Team17 and Computacenter. I have chosen these because they have a long track record of developing gaming software and helping clients with IT needs. Their track records should help them stand out in the increasingly competitive tech sector.

Competition is the biggest challenge they will face, especially as these are relatively small businesses compared to their giant US-based peers.

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

These FTSE 100 shares seem to offer exceptional value at first glance. Should I buy them for my shares portfolio?

Barclays in bother?

Today, Barclays (LSE: BARC) seems to offer brilliant all-round value for money. It trades on a price-to-earnings (P/E) ratio of 6.7 times for 2022 and boasts a meaty 4.6% dividend yield.

But I’m not prepared to take a gamble on the FTSE 100 firm as the British economy slows sharply. That’s even though the Bank of England (BoE) could boost the bank’s profits with several more interest rate rises next year.

It’s also important to remember that the BoE may lack the motivation to raise rates again soon. Even if inflation remains at elevated levels, the potentially-crushing effect of Omicron on British GDP may force the bank to stay its hand.

Earlier this month, the British Chambers of Commerce slashed its growth forecasts for the UK to 4.2%. That’s down a full percentage point from its prior forecasts, and was announced before fresh Covid-19 restrictions came into force. With infection rates rising again, it seems as if profits estimates for Barclays and its peers are in increasing danger.

The property powerhouse

Would I be better off buying Land Securities Group (LSE: LAND) shares instead? This UK share also offers plenty of bang for your buck, carrying a forward price-to-earnings growth (PEG) ratio of 0.5 and a 4.7% dividend yield. Fans of the predominantly commercial property owner would argue that its recent solid recovery should continue as it embarks on asset sales and acquisitions to rebalance its portfolio from at-risk sectors.

However, I’m not so convinced. Landsec’s only saving grace is its exposure to some residential property assets. I believe it stands to lose out as the growth of e-commerce batters physical retail, and the rise of homeworking reduces demand for office space. The FTSE 100 firm stands to fare particularly badly next year if the Omicron variant continues to spread and people stay at home in large numbers again.

6.9% dividend yields!

Truth be told, I’d much rather invest my hard-earned cash in Vodafone Group (LSE: VOD). I’m not going to suggest that this telecoms business doesn’t face risks of its own. The industry in which it operates is highly competitive and massively regulated, factors that pose enormous threats to future profits.

However, I think the benefits of me owning Vodafone outweigh the potential dangers. I like the huge amounts the FTSE 100 firm is investing in fast-growing 5G. I’m also encouraged by Vodafone’s African emerging markets, regions where demand for its telecoms and its mobile money services are booming as personal income levels there increase.

Today, Vodafone trades on what I consider an undemanding forward P/E ratio of 12.1 times. Though what really grabs my attention is the company’s juicy 6.9% dividend yield. I think this FTSE 100 share could make me buckets of cash in the years ahead.

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

There are times when my stock investing portfolio looks just awful. Like today. A lot of it is in the red as the stock market continues to remain uncertain. The FTSE 100 index is trading at sub-7,200 levels as I write. This raises the following question for me. What should my stock picking strategy be now? 

I would be careful not to risk losing more of my capital in stocks that could take a really long time to recover. Instead, I would invest in safer stocks that could hold me in good stead if the pandemic were to continue.

Where not to invest

First, let me talk about where I’d not invest. Many of my investments are in FTSE 100 and FTSE 250 stocks. Typically, these offer me a margin of safety since they tend to be large, well-established companies. However, these are not typical times. Even high-performing companies have been brought to their knees if they happen to be part of affected sectors like travel.

As examples, consider aviation stocks like International Consolidated Airlines Group (IAG) and easyJet, which are both part of my portfolio. I bought them at low levels, keeping a long-term recovery in mind. And so far, there has been intermittent recovery only. Their share prices keep falling routinely whenever there is bad news around on the pandemic. Even today, IAG is one of the biggest losers among FTSE 100 stocks.  

I would avoid making any further investments in these stocks for now until the situation stabilises a bit. Right now there is just too much uncertainty in buying them in my view.

Where to invest in the current stock markets

Instead, I could consider increasing my exposure to safer stocks that also offer sustained growth during more normal times. One example from my portfolio is Rentokil Initial, the FTSE 100 hygienist and pest control services provider. The stock’s demand rises during such times because its hygiene services could benefit from another lockdown and the stress on cleaning that follows.  

Another example is a utility stock like SSE, the power producer. Its stock price is weak right now, which would have made a great buying opportunity for me if I had not bought the stock already. It recently reported healthy earnings, it pays good dividends, and as a green energy producer, I reckon its future is bright. Also, as a utility, there is only so much decline that its demand will have during an economic slowdown. 

A point to note

It goes without saying that all investments carry risk. We never really know what might be around the corner that could disturb the best laid plans. But, we can use the past to guide us. And we can still make careful decisions that minimise the loss of capital and maximise gains. That is what I am aiming for right now in these uncertain stock markets. 

Manika Premsingh owns shares of Rentokil Initial, International Consolidated Airlines Group, SSE and easyJet. 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 year 2021 was generally about recovery for stocks after a turbulent 2020. The FTSE 100, 250, and 350 indexes are up 12%, 14%, and 13%, respectively this year. Unfortunately for investors, Asos (LSE: ASC) did not follow the general trend. In what has been another rough year, the Asos share price is down 52%. In this article, I’m going to examine why that may have been the case and what the outlook for Asos might be in 2022. 

Share price v reality

While the Asos share price has taken a dive this year, the company, on balance, seems to have done a lot of good things in 2021. You would think this would correlate with positive movement in the share price but apparently not. The purchase of the brands Topman, Topshop, Miss Selfridge, and HIIT was a good acquisition for Asos in my opinion. The £265m purchase of these established brands, which generated a combined £1bn in revenue in 2019, was definitely a market share boost. The opening of a state-of-the-art warehouse in Lichfield, Staffordshire during August of 2021, will, according to Asos, allow it to push £6bn in sales by 2023. Revenues grew by 22% year-on-year and 3m new customers were added to an active customer base of 26.4m people. So where did it all go wrong?

Supply chain woes

2021 was the year that exposed just how fragile global supply chains can be. The six-day blockage of the Suez canal threatened to bring entire industries to their knees and that was just one example. Asos, like many other British businesses, finally has to reckon with the disruption that Brexit always threatened. The company announced in October that it expected profit margins to be squeezed for the upcoming fiscal year. The reasons given included Brexit related duty costs, inflation, and post-covid blockages at international ports of entry. The expected squeeze will mean that profits before tax in the year 2022 are projected to be between  £110m and £140m. This is no small squeeze considering its adjusted profits before tax for 2021 were £193m. Oh and if that wasn’t bad enough news, Nick Beighton stepped down as CEO during the same month. This was a shock to investors and the Asos share price adjusted itself accordingly. 

Looking forward into 2022

Now for the crucial question. It is a virtual certainty that Asos will slow down from a growth perspective in 2022. With this knowledge in mind, is Asos still a good purchase? As we have established earlier, the Asos share price doesn’t always reflect company performance. This means that prospects on the business side may not reflect the performance of its stock. For one, this stock is trading at 17 times earnings – a real bargain for a very good business. As I outlined earlier, Asos is growing in its online reach and capacity to meet demand. They employ a relatively low amount of debt in their operations, which I like and consistently have gross profits in excess of 45%. For these reasons, this company is one I would buy at its current price.

Stephen Bhasera has no position in any of the shares mentioned. The Motley Fool UK has recommended ASOS. 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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On Friday, the Boohoo (LSE: BOO) share price jumped over 13%. This came after a sharp drop the day before due to the release of its Q3 results. The Friday rise was good news for investors in the short term. However, over the past year, the Boohoo share price has severely underperformed, dropping 60%. In addition to this, today the shares have sunk around 4%. With the shares falling so much over this period, is now a good time for me to buy? Let’s take a closer look.

Boohoo results

After the initial release of the results on 16 December, Boohoo shares plummeted over 25%. This was due to a reduction in the firm’s EBITDA and net sales outlook. However, the next day, the shares shot back up. I think this is because investors realised the results weren’t as bad as they seemed.

For the three months to 30 November 2021, gross sales rose by over a quarter. These sales also rose 58% and 102% compared to FY21 and FY20, respectively. These positive numbers have primarily been due to robust demand for products in the UK market. In addition to this, the business was able to largely increase its market share during the pandemic. Being an online-only retailer, customers flocked to buy Boohoo products as physical stores stayed closed.

I think this could play to Boohoo’s strength in the next few months too. With the recent news of the Omicron variant, the UK government is considering tightening restrictions. If this goes as far as another lockdown, it could help boost Boohoo’s sales yet again. I would also expect this to help the Boohoo share price keep climbing higher.

However, in the Q3 results, CEO John Lyttle highlighted the “disruption due to the pandemic” that was hindering growth in international markets. Although growth in the UK seems encouraging, Boohoo may struggle if it cannot boost its international demand. If growth does stall, I would expect the Boohoo share price to tumble further.

Share price concerns

The company still faces other challenges too. Boohoo has been in the spotlight continuously over the past year with multiple news stories denting its corporate reputation.

For example, a factory in Leicester that Boohoo was supplied by was reportedly paying workers as little as £3.50 an hour. In addition to this, the firm has been embroiled in a lengthy US lawsuit regarding fake advertising.

Both of these factors are also behind the disappointing Boohoo share price performance over the past year. Although the firm is making moves towards becoming more transparent and open, it can take substantial amounts of time to mend a damaged reputation. This could deter potential investors for years to come.

Another concern I have for the Boohoo share price is its value. Even after falling so heavily throughout the last few months, the price-to-earnings ratio is still very high at around 26. This seems expensive to me, even when considering the good results.

The verdict

For me, the Boohoo share price doesn’t look all that appealing. I think the results issued by the firm were solid, but many investors are worried about the ongoing effects the pandemic will have on the firm. In addition to this, trading at 23 times earnings, the share price isn’t exactly cheap. Therefore, I won’t be adding Boohoo shares to my portfolio any time soon.

Dylan Hood 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.

In 2007, just before the global financial crisis erupted, I had an instant-access savings account paying 5% a year before tax. To double my money in this account using compound interest would take under 14.5 years. Today, with global interest rates near zero, the top no-notice UK savings account pays 0.7% a year. To double my money in this account would take a century. Thus, to boost my passive income, I buy high-yielding dividend shares. Here are three of my best stocks to buy for income in 2022 (which I don’t own but would happily buy).

Best stocks to buy #1: Rio Tinto

The first of my best stocks to buy is Rio Tinto (LSE: RIO), a world-leading, Anglo-Australian mining company. Rio mines various metals, including iron ore, aluminium, copper, and lithium. It operates 60 mining projects across 35 countries — generating enormous cash flows. At the current share price of 4,791.5p, Rio Tinto is worth £78.9bn, making it a FTSE 100 Goliath. Yet Rio stock trades on a lowly price-to-earnings ratio of a mere 5.5 and offers a handsome earnings yield of 18.1%. What’s more, its bumper dividend yield of 10.3% a year is almost 2.6 times the FTSE 100‘s 4% yield. This sort of cash yield sounds mouth-watering to me. However, I know from experience that mining stocks can be very volatile, thanks to movements in metals prices and currencies. Also, dividends are not guaranteed. Indeed, Rio last cut its payout in 2016.

Income stock #2: British American Tobacco

The second of my best stocks to buy for income is British American Tobacco (LSE: BATS). BAT — as it’s known in the City — is a leading producer of tobacco, cigarettes, and smoking products. While it may not be an ethical investment, BAT generates massive sales, earnings, and cash flow. At its current share price of 2,767p, the group is valued at £63.5bn — another Footsie heavyweight. Yet this stock trades on a modest price-to-earnings ratio of 10.3 and an earnings yield of 9.7%. At 7.8% a year, BAT’s dividend yield is almost twice the FTSE 100’s cash yield. However, the BAT share price has been volatile in recent years and is down almost two-fifths (-39.3%) over the past five years. Also, BAT has around £40.5bn of net debt on its balance sheet, which could weigh on future profits if/when interest rates rise.

High-yield share #3: Legal & General

The third of my best stocks to buy for 2022 is Legal & General (LSE: LGEN). L&G is a leading provider of life assurance, savings, and investments. It manages more than £1trn of wealth for over 10m customers. What’s more, L&G has been around since 1836, so I regard it as a very well-run company with an exceptional brand. At the current share price of 284.6p, L&G has a market value of £17bn. Right now, shares in this ‘boring, safe, and reliable’ business trade on just 7.5 times earnings, for an earnings yield of 13.3%. Again, L&G offers a market-beating dividend yield of 6.3% a year. However, L&G faces stiff competition from heavyweight asset managers, including several US mega-caps. Also, if asset prices were to plunge in 2022-23, L&G’s management income would likely take a big hit. Even so, I still see this solid stock as a bargain today!

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

The stock market has been doing quite well in December to date. This is how I plan to invest in shares to benefit from any further stock market rally this December, which is often a good month for investing. This is due to the so-called Santa Rally phenomenon, when markets often go up at the very end of the calendar year — at least in more years than not.

How to invest in shares: my plan

I plan to keep investing in shares because for me it’s a good way to grow wealth, and tax-efficient if done inside a Stocks & Shares ISA. The impact of compounding, where dividends are reinvested to create more income that builds year after year, beats working well beyond retirement age. At least in my view and in my circumstances.

I already have a portfolio of UK shares with a smattering of funds and investment trusts. My plan is to keep adding high quality, usually dividend paying shares in 2022 and beyond, and to run my winners. This means not selling shares that do well too early. After a tough couple of months, I hope the Santa Rally will happen this year.

A top share to benefit from a Santa Rally

If the Santa Rally really does take off this week, I hope and expect my shares in Somero Enterprises (LSE: SOM) to do well. Somero is quite a niche company. It produces laser-guided equipment used in construction. In the US market, the group has done well and it is expanding globally, although the company has struggled to break into the Chinese market.

Construction is also a cyclical industry, which could in a downturn really hit Somero’s revenue and profits. So that’s the concerns out the way.

Why could Somero be a winner?

The Somero shares had a recent price blip, which I think is nothing more than some limpness in the overall market. That’s tempting me to buy more. Why? Because I back the shares to do well and the company provides both income and growth. That’s a great combination, in my opinion. The shares are also pretty well valued.

Take growth first. Between 2015 and 2020, revenue went from £70.2m to £88.6m. From an income perspective, the dividend yield is about 4.4%, which is high, especially for a smaller company. Then on top of that growth and income combination, the shares trade on a forward P/E of 11, so don’t seem expensive at all.

With e-commerce driving enormous demand for warehousing, which Somero machines are used to help build, and US president Joe Biden committing $2trn to America’s infrastructure, the group has significant factors that could help it grow further. That’s another reason I like the shares.

I hope this article has been useful in outlining how I intend to invest in shares and why Somero Enterprises particularly.

Andy Ross owns shares in Somero Enterprises, Inc. The Motley Fool UK has recommended Somero Enterprises, Inc. 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.

Penny stocks often experience more volatility than stocks of larger, established companies. This has been the case with McBride (LSE:MCB) in recent months. I believe it could be an excellent recovery play for my portfolio, however. Here’s why.

Cleaning giant

McBride is a leading European manufacturer and supplier of private label and contract manufactured products for the domestic and professional cleaning and hygiene markets. It operates across five divisions. These are liquids, unit dosing, aerosols, powders, and Asia Pacific. It sells over 1bn products a year and supplies its products to 49 out of Europe’s top 50 grocery stores.

Penny stocks are those that trade for less than £1. As I write, McBride shares are trading for 57p. At this time last year, shares were trading for 80p, which is 28% higher than current levels. In the past six month, the shares have fallen over 30%.

I believe the McBride share price dip can be attributed to the ongoing supply chain crisis as well as rising inflation and costs.

Long-term recovery opportunity

Firstly, the pandemic has shone a new light on the need for cleaning products and exemplary hygiene. The virus and the spread of it has encouraged more people to consider their hygiene and cleanliness habits. McBride should benefit from this boosted awareness and demand for its products.

Next, the economic uncertainty that came with the pandemic, such as the market crash, has seen consumers flock towards cheaper alternatives of products. Cheaper does not always necessarily mean inferior quality, particularly in the cleaning sector. McBride’s products are often own label cheaper options compared to premium branded products. 

In addition to demand and McBride’s place in the market, I can see it has a favourable track record of performance. Many investors avoid penny stocks due to lack of history or comparable performance. I must note that past performance is not a guarantee of future performance. For the past four years, between 2018 and 2021, revenue stayed consistently close to the £700m mark. Furthermore, gross profit increased between 2018 and 2020.

Looking at McBride’s most recent update reported last week, it mentions price increases that most of its customers are taking onboard. McBride expects to report a loss for its half-year period, ending December 31 but it reinforces that it has a £80m cash rich balance sheet to help navigate current headwinds.

Penny stocks have risks

The rise in cost of raw materials, especially those needed for cleaning products, is a worry for McBride. As last week’s trading update mentioned, these costs are being passed onto customers. Sometimes this is not well received and can result in a loss of customers or customer confidence. In addition to this, the supply chain crisis could affect operations and performance too.

Overall I expect McBride to recover in the longer term. I believe current macroeconomic issues are short to medium-term issues. McBride’s business model and demand for its products should see its profit rise nicely over time and its share price increase and provide me with a healthy return. I invest for the long term so expect some potential bumps in the road at the moment. At current levels I would add McBride shares to my holdings.

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 an astonishing fact that got me thinking last week. According to last Wednesday’s Financial Times, more than half of this year’s rise in the S&P 500 index is down to just five stocks. These five mega-cap tech stocks have exploded to dominate current market valuations. But prices of these super-stocks look stretched, while the S&P 500’s real earnings yield is at a record low. And one of the biggest contributors to this “too rich and too thin” market is Tesla (NASDAQ: TSLA).

Tesla stock soars in 12 months

Before discussing Tesla as a company, I’ll review its stock’s spectacular price action. Over the past five years, TSLA has enjoyed the most incredible run. Since 23 December 2016, the stock has risen more than 20-fold (+1,997.8%). This makes Tesla shareholders among the biggest winners of the past decade. No wonder so many worship Elon Musk as though he were the high priest of a high-tech cult.

Over the past 12 months, Tesla stock has leapt by 37.8%. It has also surged by 44.2% over the past six months and 22.6% over the past three months. But having peaked in early November, the shares have crashed since then. As I write, Tesla stock trades at $895.98, down $37.42 (-4%) today. What’s more, the share price is down 22.6% in one month. In addition, it has collapsed by 27.9% since hitting an all-time high of $1,243.49 on 4 November. In other words, TSLA is currently in a bear market, having fallen by more than 20% from its peak. Yikes.

Tesla is a great business, but TSLA is extremely volatile

At the current share price, Tesla’s market cap is around $900bn. Yet its earnings are miniscule, relatively speaking — which is why the stock trades on a price-to-earnings ratio of almost 292. This gives an earnings yield of 0.34% (pretty close to zero). In short, much of Tesla’s current valuation relies on its earnings massively multiplying in future. Given that Tesla has cutting-edge technology — including world-leading battery tech — this might actually happen. But for the stock to be reasonably valued, it would have to sell, say, 10m+ cars a year. This would put the group up there with global giants Toyota and Volkswagen. Meanwhile, in the real world, analysts expect Tesla to deliver around 900k cars this year and at least 1.3m in 2022.

However, what’s been driving Tesla stock in 2021 is massive volumes of options trading. Millions of retail investors have been buying TSLA call options, using leverage to bet that the price will keep rising inexorably. Given that the stock has dived by almost three-tenths since 4 November, many of these punters will have had their fingers burnt. This may discourage speculators from betting on Tesla stock to keep on rising.

I wouldn’t buy Tesla today

For the record, I don’t own Tesla stock and I wouldn’t buy at current price levels. As a veteran value investor, I much prefer to buy into companies on low ratings with high dividend yields. Of course, this means that I’ve missed the boat big-time with TSLA, but I’m fine with that. At least I can sleep easily. However, I’d never be so brave as to short Tesla, simply because too many hedge funds have been undone by this trade. And for the record, I absolutely don’t see TSLA leaping by close to another 38% in 2022!

Cliffdarcy 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.