This FTSE 250 takeover target is up 17% in a month but still has a P/E below 10 and 6.83% yield!

The ITV share price has been a turn-off for years, but the FTSE 250 stock has woken out of its slumber as potential bidders circle. Should Harvey Jones buy it?

| 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.

Image source: Getty Images

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.

An incredible 19 FTSE 250 stocks have been takeover targets this year, according to research from AJ Bell.

Of these, nine deals completed, including Centamin, Redrow and Virgin Money, while another six are in progress, notably Britvic and Direct Line. Across the FTSE 350, takeover activity tripled compared to 2023. 

AJ Bell investment analyst Dan Coatsworth said many targets were previously “unloved or underappreciated”, and buyers couldn’t resist their low share prices. Love Island and Downton Abbey maker ITV (LSE: ITV) may be next.

Should you invest £1,000 in Aston Martin right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aston Martin made the list?

See the 6 stocks

The share price makes compulsive viewing

Takeover rumours have swirled around the TV broadcaster for years, but Coatsworth thinks recent speculation could be credible: “Private equity, a rival broadcaster or even a streaming platform could show interest.”

That’s certainly the way investors are betting. The ITV share price surged on 25 November, following reports that potential suitors are in early discussions with the board. We don’t know how serious this interest is, or whether the ITV board welcomes it.

ITV has laboured as Hollywood strikes disrupted TV and film productions, while advertising income has been bumpy.

Coatsworth describes ITV’s Studios content arm as a hidden gem, potentially worth more than the market value of the entire group: “Someone like Netflix could gobble up ITV for a fraction of its annual content spend and access its rich library of programmes.”

He says the ITVX streaming platform has beaten expectations and provides valuable insights into user viewing habits, which allows big brands to target customers. ITV could even be broken up and sold separately, Studios going to one bidder, it’s broadcasting arm and ITVX to another.

2025 could see a string of UK stock acquisitions

As a rule, I don’t buy on takeover talk, which so often comes to nothing. Yet many investors do, with the ITV share price jumping almost 18% in the last month. This flatters recent performance figures, as the shares are now up nearly 16% over one year. They’re down a brutal 53% over five years, which gives a clearer picture of its troubles.

Created with Highcharts 11.4.3ITV PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

As a result ITV look dirt cheap trading at 9.53 times trailing earnings, while the trailing yield is a bumper 6.8%.

Despite my sniffy resistance to buying shares on market rumours, there are arguments for doing so. Many UK stocks look undervalued right now, which means bidders are willing to pay a premium price and drive up valuations.

Recent bid activity has acted as a wake-up call for investors, persuading them to re-appraise the company in question. This is especially true if the board rejects bids, or even multiple bids. It makes investors wonder if they’re missing something. Coatsworth notes that shares in Anglo American, Rightmove and Currys have all revived after the boards fought off buyers rather than taking the money.

ITV shares have idled in recent days as takeover news dries up. I don’t need the short-term uncertainty, so I won’t buy them myself. Those who do continue to consider it may find the stock hard to resist. ITV certainly looks cheap and has a huge yield.

Should you invest £1,000 in Aston Martin right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aston Martin made the list?

See the 6 stocks

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.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Aj Bell Plc, Britvic Plc, and ITV. 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.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

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

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »