Ted Baker or Premier Oil: which shares would I buy?

Both Ted Baker plc (LON: TED) and Premier Oil plc (LON: PMO) make for potentially good long-term investments given their future outlook, but I am more optimistic about the latter.

| 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.

Fashion brand and retailer Ted Baker’s (LSE: TED) tale of woes refuses to end. It all started in December last year, when the founder and CEO, Ray Kelvin, was charged with questionable conduct. Very recently, the company’s trading update disappointed. It opened with the heading “Difficult trading period with ongoing external challenges impacting performance”, setting the tone for the rest of the update. The company’s revenue declined by 1.1%  during the 19 weeks ending June 8, 2019 and it also spoke of lower margins.

Challenged by present market conditions

I still think that it’s a good share to consider for the long haul, however. At present it’s essential to look at it in the context of the wider environment. Other fashion retailers are struggling too. Burberry’s latest results underwhelmed investors, especially on account of weakening demand in China. And most recently, the Marks and Spencer share price fell to multi-year lows as it continues to come under the wheels of shifting demand patterns.  

So far, Ted Baker has performed well in a changing consumer environment with broadly rising revenues as well as profits year after year.  For this reason, despite the speed bumps it has been hitting recently, I am inclined to consider it favourably. Moreover, we at The Motley Fool are interested in long-term investing opportunities. And going by CEO Lindsay Page’s statement at the time of the trading update release, the company’s “long-term growth prospects” appear sound. It remains to be seen, of course, if the FTSE 250 retailer is able to sustain its performance over time but I would definitely keep it on my radar.

Positive trends drive Premier Oil

Premier Oil (LSE: PMO) is another FTSE 250 company whose shares hit a low recently, a level not seen since February this year. I can’t see any specific reason for the decline in share price; in fact, I think there are some positives worth considering here. For one, on May 16, it said that its year to date production was 14% higher compared to the same period of the previous year. It also increased its production guidance for the year.

The company’s debt levels have been high, but the latest update is optimistic on that count as well. As per CEO Tony Durrant’s statement at the time of the release, the company’s reducing its debt “faster than anticipated”. In fact, this would be the third consecutive year in which it will reduce its net debt, if we go by the outlook.  It’s also worth noting that the company returned to making profits in 2018, after reporting losses in the previous year.

At the present point in time, given the subdued price levels and positive future outlook, I would be inclined to consider this as an investment worth further research. Of the two FTSE 250 companies covered here, I am more optimistic about Premier Oil as an investment, but am by no stretch pessimistic about Ted Baker, either.

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.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry and Ted Baker. 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

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

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »