Is this one of the best stocks to buy now after crashing 25%+ in 6 months?

This FTSE stock has dropped over 25% since March… Fool UK contributor Joseph Wilkins believes it’s one of the best stocks to buy now.

| 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.

The FTSE 250, as I write, is trading strongly at near all-time highs of 23,568.19, showing a strong recovery since lows of 13,592.64 in March 2020. Within the index, its constituents are constantly moving around. Among today’s risers are easyjet and Wizz Air, which are currently up 6.89% and 4.60% respectively. Indeed, these shares were trading at discounts last week and our commentators were quick to spot that in recent posts. As ever, I am always on the hunt for new value picks. And I believe I’ve found one of the best stocks for me to buy now: J D Wetherspoon (LSE: JDW).

Why do I see value in Wetherspoons at the moment?

Wetherspoons, the famous haunt of students in search of the UK’s cheapest pints, is enduring a tough year on the market. With strict lockdown measures causing pub closures and limited venue capacities, supply chain issues preventing access to certain beer brands, and the planned return to 20% VAT cutting into profits, it is understandable that the pub and restaurant chain has struggled massively. Its share price is down over 25% since March, and as I write, trading at 1,022p – far below its five-year average. While its price remains depressed, I see for myself a fantastic opportunity to buy this share before it recovers.

I see one key factor to suggest an impending rise of Wetherspoons stock: the return of students to universities. Never before have they been so influential; after 18 months out, the kids are ready to party. Universities are holding bumper freshers’ weeks for both first and second years (who missed out in 2020), so it’s likely that the ‘Spoons in your nearest city will be teeming with young people throughout September and October. That’s good news for owner Tim Martin, who, despite his outspoken nature, does supply the most affordable drinks in the country. For cash-shy students this is a godsend, as Wetherspoons is often the only pub where undergraduates can revel without breaking the bank. The affordability of bars has also not been aided by the rise in menu costs that has become increasingly noticeable since inflation worries started to take shape.

Wetherspoons has another attractive quality that I believe makes it one of the best shares to buy today. The company pays its staff a bonus each year, and has often given away free shares to its employees too. In the last five years it has paid a greater percentage of profits to employees than John Lewis, which is famously employee-owned. This is reassuring news to those sceptical of Martin’s employee treatment. If performance recovers to its 52-week high of 1,452p, then best believe that the lion’s share of profits will be paid to hardworking staff.

For these reasons, I believe Wetherspoons shares are one of the best for me to buy now.

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.

Joseph Wilkins does not own shares in J D Wetherspoons. 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.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

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

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

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

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »