Why I Think Marks And Spencer Group Plc Is A Screaming Buy

I’m keen to add to my holding in Marks and Spencer Group plc (LON: MKS) and here’s why…

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M&S (LSE: MKS) (NASDAQOTH: MAKSY.US) is a company in which I have been an investor for a long time, but I think now is a great time to add to my holding.

For starters, shares in M&S have had a great year and are now the highest they have been in the post-credit crunch era. Indeed, they have risen by 25% in 2013 to their current price of 475p, which shows just how strong sentiment has been over the course of the year when the FTSE 100 has made gains of 14% over the same period.

However, I think the shares have further to go and that the stock market is buying into the strategy employed by the company — as evidenced by the strong sentiment. Therefore, I believe that the heady heights of £7+ which were last achieved in 2007, while some way off at the moment, are not beyond the realm of possibility.

Should you invest £1,000 in Compass Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Compass Group Plc made the list?

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In addition, shares have fallen slightly after reaching over £5 and, I feel, this could be a good entry point.

Of course, a bullish share price chart is not the only reason why I’m thinking of adding to my holding in M&S.

I also feel that shares offer good value for money at current price levels, as shown by a favourable price-to-earnings (P/E) ratio.

For instance, shares currently trade on a P/E of 12.8, which on an absolute basis is attractive when the quality of the company is taken into account. Indeed, I think that shares offer good value on a relative basis too, with the FTSE 100 trading on a P/E of 15 and the wider general retail sector (to which M&S belongs) trading on a P/E of 16.2.

Clearly, M&S is not perfect but I question whether such a wide discount to its sector and to the index is warranted. Therefore, I am optimistic that this discount will narrow over the medium to long term.

So, I’m bullish on M&S and am thinking of adding to my shareholding because the share price chart indicates that sentiment is strong, with shares reaching their highest level in over 6 years. Furthermore, a hefty discount to the sector and index P/Es is, in my view, unlikely to last over the medium to long term, so I think that now could be a good time to increase my stake.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Compass Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Compass Group Plc made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Peter owns shares in M&S.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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