Purplebricks isn’t the only Neil Woodford share I’d sell today

Royston Wild explains why Purplebricks Group plc (LON: PURP) isn’t the sole Woodford-held share that he’d sell immediately.

| 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.

Neil Woodford favourite Purplebricks Group (LSE: PURP) was back in the headlines this week with fresh news on its global expansion programme.

Expanding its existing footprint in North America, the AIM-quoted business announced that it was about to launch in Florida and more specifically the Tampa and Orlando designated market areas. Purplebricks, which provides an online platform for property sellers to advertise their homes, already operates in DMAs spanning from Los Angeles to New York, San Diego, Las Vegas, Sacramento, Fresno and Phoenix.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

Announcing details of the launch group chief executive Michael Bruce commented that “we are encouraged by our progress in the US and excited about the potential in Florida, and we continue to identify new markets in the US where our value proposition can greatly benefit both consumers and agents.”

The investment community is becoming more and more sceptical over Purplebricks’ ability to continue disrupting the traditional estate agency market in the UK and further afield, however, with sentiment worsening as its expansion programme is eating significantly into its bottom line.

The City is expecting the property play to finally move into profit in the year to April 2020, but as geographic expansion lifts costs and conditions in its UK marketplace worsen, I reckon this prediction is looking a little optimistic right now.

Profits poised to reverse?

I would be very tempted to sell Purplebricks today given the possibility of more scary details emerging when it releases its six-month trading update on November 6.

And another share in the Woodford Income Focus Fund that I’d be happy to cut adrift today is BCA Marketplace (LSE: BCA).

The car auctions specialist advised earlier this month that “the year has started strongly,” and City brokers are expecting earnings at the FTSE 250 company to continue rising too — a 5% advance is currently forecast for the 12 months to March 2019.

But I’m concerned that analyst estimates could be subject to swingeing downgrades in the months ahead as the Brexit saga hobbles economic growth and thus consumer and business confidence in the UK. And worryingly, the market does not seem to be factoring in the high probability of such forecast reductions, as reflected by BCA’s slightly-high forward P/E ratio of 16.2 times.

Latest car sales data from the Society of Motor Manufacturers and Traders (SMMT) outlined the precarious outlook for the used vehicle segment, August’s recent report showing that 2.09m units were sold during the April-June quarter, down 0.4% year-on-year.

This annual drop may not have been shocking but, as the deadline to Britain’s planned exit from the European Union draws ever closer, I for one am expecting the decline to become much more pronounced. The SMMT itself is also expecting the used car market to remain in trouble, the body advising last month that “with used sales so closely reflecting the new car market, some cooling is expected over the coming months.” In my opinion holding BCA shares is a high-risk business today.

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

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.

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 considered, so you should consider taking independent financial advice.

More on Investing Articles

Female florist with Down's syndrome working in small business
Investing Articles

2 promising penny stocks to buy on the dip

As stock markets continue to correct, I am hunting for oversold penny stocks that I think could help turbocharge my…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

I wouldn’t buy Bitcoin today. FTSE value stocks look much better value to me

Now looks like a promising time to buy UK value stocks, while Bitcoin still looks far too risky for me.

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The Rolls-Royce share price is below 85p. Here’s what I’m doing!

The Rolls-Royce share price has suffered this year. Trading for below 85p, this Fool decides whether this is an opportunity…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

4 dividend stocks to buy as inflation soars!

I'm hunting for the best dividend stock to invest in as global inflation soars. Here are several high-dividend-yield shares that…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

UK shares to buy now: 3 big fallers I’d snap up

Our writer thinks this trio of strong business performers could be attractive UK shares to buy now for his portfolio.

Read more »

Lady researching stocks
Investing Articles

Could a falling stock market help me get rich?

When the stock market falls, what does it mean for our writer's portfolio? Here's why it could be an opportunity.

Read more »

Hand holding pound notes
Investing Articles

Should I buy these two 12%-yielding dividend shares for my Stocks and Shares ISA?

Do these double-digit dividend yielders offer our author the right balance of risk and reward for his Stocks and Shares…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 reasons to buy Lloyds shares at 43p

Our writer outlines three factors that make him bullish on Lloyds shares, as well as one noteworthy risk facing the…

Read more »