Share prices across the FTSE 350 have been hit hard by coronavirus, creating opportunities for long-term investors. Here are three shares I think look particularly promising and that beat the low and uncertain returns from Premium Bonds.
The growth share opportunity
Shares in property tech group Rightmove (LSE: RMV) had a strong 2019, especially in the later months. Given the huge impact of coronavirus on the property market, it’s little wonder this year has been different with the share price now down over 25%.
Before the crash though, the company had been a great investment. Since listing in 2006, Rightmove generated more than a whopping 1,500% return for investors. Has everything fundamentally changed? I’d argue not. People will, once the housing market returns back to some kind of normality, use websites to search for houses. Therefore, estate agents will pay to advertise on these platforms.
Unusually for a technology company, Rightmove is hugely profitable. Pre-tax profit for 2019 increased to £213.7m from £198.6m the year before.
The next few months will be tough for the property market. And likely, Rightmove investors who bought the shares in the boom years will have been hit hard. However, the shares are starting to look increasingly attractive now and I’d be tempted to buy if the market dips again.
Another one that was charging up
Shares in Rank Group (LSE: RNK), the owner of Grosvenor Casinos and Mecca Bingo, have also been hit hard recently. So far in 2020, they’re are down 40%. However, over 12 months, the shares are up, just. That shows us just how strongly the share price was rising pre-coronavirus.
It had been doing well as the group continued to raise expectations on the back of strong results and a £116m acquisition of Stride Gaming. On 30 January, it announced its interim results for the six months ended 31 December, reporting group underlying net gaming revenue grew 10% in the period to £377.5m. Underlying operating profit also rose 70% to £55.1m
Like other leisure businesses, Rank has had to close many venues. However, it does produce significant digital revenues in the UK and Spain. So I think the shares could now be in bargain territory, especially given digital accounts for £20.7m of operating profit, and this could grow.
A diversified holding with potential
For those concerned about volatile markets, opting for investment trusts may help to ease nerves. Ones like Temple Bar Investment Trust (LSE: TMPL) will be able to keep paying dividends as they can hold reserves to see them through times like these.
They also hold shares in a wide range of companies, giving them more diversification. That’s ideal when many shares are falling heavily and others are cutting dividends.
Temple’s holdings include about 20% cash, 5% gold and silver, and 75% shares. The top shares it owns are Travis Perkins, BP, Royal Dutch Shell, Grafton Group and Barclays. Quite a few of these positions have been added to since February, indicating management thinks they might be undervalued.
The shares have a dividend yield of 7% and trade at a small discount to net asset value. I believe this trust could be a profitable investment.
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Andy Ross owns no share mentioned. The Motley Fool UK has recommended Barclays and Rightmove. 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.