The Motley Fool

Purplebricks Group plc isn’t the only Neil Woodford stock I’d sell today

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.

Clock pointing towards a 'sell' signal
Image source: Getty Images.

I confess I dislike the latest ads from Purplebricks Group (LSE: PURP) so much I mute the TV whenever I see them, but I try not to hold that against the company as an investment.

There’s no denying that the stock has rewarded early investors very well. The price has more than trebled over five years, but since a peak in July last year it’s lost more than 35%.

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!

I’m really not a follower of share price charts — but I do get a little twitchy when I see a certain growth share pattern emerging:

Everyone piles in, keen not to miss the next big thing. The share price soars, then reaches a peak and starts to fall back a bit. Next we have a second wave of buyers who push it back up, only to see a subsequent decline that typically continues for some time.

Risky stage?

Purplebricks is at the point when that second peak has faded, and the price is now lower than the intermediate dip. Anything could happen tomorrow, of course, but I’ve seen this same thing followed by steady decline so many times that it’s enough to keep me away.

Monday’s news of a “strategic investment from Axel Springer of approximately £125 million including a £100 million subscription for new shares” offered a boost to confidence, with the cash to be used partly for the firm’s rollout in the US. But the market didn’t really respond, and I can’t help wondering if we could be seeing an overstretched expansion plan a little too early.

I’ve previously offered other reasons for my bearishness on Purplebricks, and it remains a sell for me.

Blue sky

The other Neil Woodford stock I wouldn’t touch right now is IP Group (LSE: IPO), which released full-year 2017 results on Thursday.

The company, which invests in a portfolio of early stage businesses built on research from its partner universities, reported net portfolio gains of £94.2m, up from £6.5m in 2016. Reported net assets rose from £768.7m to £1,508.5m, which also seems impressive, and the firm even recorded a profit for the year of £53.4m (from a 2016 loss of £14.8m).

So what don’t I like about it? For one thing, I’m greatly disturbed by a very critical analysis of the company unearthed by my colleague G A Chester. If the opinion offered by J Capital Research is correct, that IP Group shares are worth no more than 75p, then buying at 116p (at the time of writing) could be a big mistake. 

Buy what you know

Two other things keep me away too. Firstly, the diversity and the innovative nature of the firm’s investments mean I really don’t understand enough to evaluate them properly — or properly understand IP Group’s accounts. In fact, very few investors will be able to, and that means I’d largely be investing blind — and that’s something I just don’t do.

The other thing is that I just don’t go for unquantifiable ‘jam tomorrow’ blue sky investments these days. I did occasionally in the past, but my reliance is increasingly on investments where I can see solid earnings and healthy dividends today, and future profits where reasonable estimation is possible.

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

Alan Oscroft 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.