Forget Barclays! I’d invest in this share, up 10% today

Demand for this company’s offering is strong, and growth is on the agenda. I also like the 4.3% dividend yield!

| 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.

Shares in Barclays don’t tempt me even after the recent plunge. The share price has been moving broadly sideways for around 11 years. I fear an even bigger move down at some point in the future, perhaps caused by a plunge in earnings and a shrinking dividend.

Indeed, banking businesses are cyclical to their cores, and several years of high earnings in the sector are making me nervous. Instead, I’m keen on H&T (LSE: HAT), which earns its living in the wider financial sector from pawnbroking and other services.

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!

Great figures

The share price is perky this morning, up around 10% as I write, on the release of the full-year results report. And the figures are good. Revenue rose by 12% compared to the prior year and diluted earnings per share shot up by 48%. The directors pushed up the total dividend for the year by 6.4%.

Since 2014, the company has a fine record of dividend growth, which has been backed by generally rising revenue and earnings. Meanwhile, two acquisitions during 2019 have helped push the store count from 182 up to 252.

Chief executive John Nichols explains in the report the new assets have combined with a “strong” core operating performance and a “beneficial” gold price to produce an “exceptional” trading performance during the year.

The price of gold is important to the firm because of its purchasing activities. H&T buys jewellery directly from customers through its stores and sells some of the gold for scrap. And it refurbishes some of the items it buys along with some that customers have forfeited from the pawnbroking pledge book. The company then sells these in its stores, along with a small amount of new or second-hand jewellery it purchases from third parties.

The firm’s pawnbroking activities involve securing loans to customers against collateral, known as the pledge. And more than 99% of the collateral offered by customers tends to be mainly gold, along with other precious metals, diamonds and watches. Like a bank, a pawnbroker such as H&T earns income on the interest charged on the loan secured by a pledged item.

Expansion going well

The company’s acquisitive and organic expansion is going well. The almost 39% increase in the pledge book over the period demonstrates that. Nichols reckons H&T’s growing momentum” demonstrates the success of the firm’s strategy as well as ongoing strong demand for pawnbroking and related products. The outlook is positive, although he’s “mindful” of current macro uncertainties.

And in today’s world, it’s difficult for me to imagine the need for pawnbroking services ever receding. I like the way H&T appears to be aiming to consolidate the sector and see it as a survivor in these tough economic times.

Meanwhile, with the share price close to 336p, the forward-looking earnings multiple for 2020 sits just below seven. And the anticipated dividend yield is a smidgeon above 4.3%. I reckon the valuation is attractive.

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

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Barclays. 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

Woman looking at a jar of pennies
Investing Articles

I think the JD Sports share price is a bargain. Here’s why

Our writer explains why the JD Sports share price has led him to buy more for his portfolio.

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

Is this tech stock one of the best shares to buy now?

Jabran Khan is on the hunt for the best shares to buy now for his holdings and takes a closer…

Read more »

Business development to success and FTSE 100 250 350 growth concept.
Investing Articles

3 top FTSE 250 shares to buy right now

I think the FTSE 250 is offering some great dividend and growth shares at the moment. And there are plenty…

Read more »

Happy retired couple on a yacht
Investing Articles

This growth stock has seen its shares pull back! Should I buy now?

When a growth stock sees its share price drop, I look carefully to see if I could pick up a…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

How to identify the best income shares like this one

Income shares vary in quality but this approach keeps me from making some of the worst howlers with dividend investing.

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

If I’d invested £1k in Tesla shares a year ago, here’s how much I’d have now

If Jon Smith had bought Tesla shares a year ago, he'd be in profit. But he has some concerns for…

Read more »

Twenty pound notes in back pocket of jeans
Investing Articles

Should I buy tobacco shares now for big dividends?

After a possible setback for electronic cigarettes, our writer explains why he would still buy tobacco shares for his income…

Read more »

a couple embrace in front of their new home
Investing Articles

3 FTSE shares I’m buying with the Help to Build scheme!

Last week, the government launched a new, Help to Build scheme. So, here are three FTSE shares that could benefit…

Read more »