Are BT Group plc, Boohoo.Com PLC And Bellway plc On The Cusp Of Stunning Returns?

Should you pile into these 3 stocks right now? BT Group plc (LON: BT.A), Boohoo.Com PLC (LON: BOO) and Bellway plc (LON: BWY)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in online fashion retailer Boohoo.Com (LSE: BOO) have risen by as much as 8% today after it released an upbeat trading update. In fact, following a strong four months of trading, Boohoo.Com now expects sales for the full year to beat previous guidance and this has clearly boosted investor sentiment in the company.

With sales rising by 45% in the four months to the end of December, the company’s offering appears to be increasingly popular. Encouragingly for its investors, Boohoo.Com’s regional performance was relatively consistent and while gross margins dropped by 290 basis points, this was due to planned investments in pricing as well as in the customer proposition.

With Boohoo.Com trading on a price-to-earnings growth (PEG) ratio of just 0.9, its shares appear to offer good value for money at the present time. With growth potential in the UK market as well as in Europe and the rest of the world, Boohoo.Com seems to be on the cusp of improved financial performance, which should lead to strong share price gains for its investors.

Strong demand for housing

Similarly, housebuilder Bellway (LSE: BWY) also appears to be a strong buy. The UK housebuilding sector continues to benefit from low interest rates, which are set to remain in place over the medium term. That outlook is being reinforced by the current uncertainty in stock markets across the globe, which is likely to make policymakers raise rates at a relatively pedestrian pace.

As such, demand for housing in the UK is likely to remain buoyant over the medium term. This view is reflected in Bellway’s outlook, with the company being forecast to increase its earnings by 17% in the current year. That’s over twice the wider market’s growth rate and with Bellway trading on a price-to-earnings (P/E) ratio of just 10.4, there’s vast upward rerating potential.

Furthermore, with Bellway having a yield of 3.1% from a dividend that’s covered three times by profit, it has a bright future as an income stock too.

Big and getting bigger

Meanwhile, BT (LSE: BT-A) continues to follow an ambitious strategy as it seeks to become the dominant quad play provider in the UK. Its £12.5bn acquisition of EE will make it the largest mobile provider in the UK, while major investment in its pay-TV package (specifically in sports rights), plus deep discounting on its superfast broadband offering, are rapidly increasing customer numbers.

Although this will provide significant cross-selling opportunities, there’s a risk that BT is moving too quickly – especially with a substantially leveraged balance sheet and large pension liability. Still, the market is backing the company’s plan, as evidenced by a share price rise of 19% in the last year.

However, its shares now trade on a P/E ratio of 14.5 which, given its in-line forecast growth rate (with the wider market) over the next year, appears to be rather expensive on a relative basis. Therefore while BT could be a strong long-term performer, it may be best to await a lower share price before piling in.

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 Stephens owns shares of Bellway. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Would Warren Buffett buy BP shares, as oil excitement grows?

Warren Buffett is a big investor in the oil business, and BP's performance has been attracting investor attention in results…

Read more »

Cropped shot of an affectionate young couple posing with a bunch of flowers in their kitchen on their anniversary
Investing Articles

Here’s how long-term loyalty to UK shares can lead to dazzling returns!

The most successful UK and US share investors buy shares to hold for the long term, as this report shows.

Read more »

Investing Articles

NatWest has just smashed brokers’ dividend forecasts!

After NatWest delivered a Valentine’s Day surprise to investors, our writer thinks the experts may have to raise their dividend…

Read more »

Investing Articles

The NatWest share price slips in early trading despite positive FY 2024 results. What’s the deal?

The NatWest share price is down slightly this morning after the bank released its final results for 2024. Our writer…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

My Legal & General shares have climbed just 7% — so how come I’m sitting on a 20% gain?

Harvey Jones' trading account is showing only a modest return on his Legal & General Shares, but on drilling down…

Read more »

Investing Articles

Prediction: the BP share price could rise in 2025 (or it might fall!)

Following this week’s release of the energy giant’s 2024 results, our writer reviews the prospects for the BP (LSE:BP.) share…

Read more »

many happy international football fans watching tv
Investing Articles

What’s gone wrong with the FTSE 100’s ‘King of Trainers’?

Feeling the pain of a 28% drop in the JD Sports share price over the past three months, our writer…

Read more »

Investing Articles

Is it too late for investors to consider buying these outstanding FTSE 100 shares?

Stephen Wright wonders whether now's the time to consider buying shares in the FTSE 100’s outstanding companies, despite some high…

Read more »