With November almost upon us, now is a time when many investors will be considering what moves to make in their ISA or Self-Invested Personal Pension (SIPP). Here are a couple of shares I think investors should consider in the coming month.
Greggs
High street baker Greggs (LSE: GRG) has thousands of shops, a loyal customer following and compelling value proposition for customers. Still, that has not been enough to help bolster the share price lately. Greggs shares are now 41% below where they started the year.
That means Greggs now trades on a price-to-earnings ratio of 12. To me that looks like a possible bargain from a long-term perspective (and one of the things I like about a SIPP is that it lends itself well to a long-term perspective).
The market for convenient and affordable food is large, resilient and likely to grow over time. Greggs has a well-proven model. I like the way it sticks to a fairly simply approach, although it has been trying to achieve more with its existing assets, for example by extending some shop opening hours into the evening.
The share price fell in the summer because of a profit warning, pinning weaker-than-expected sales growth on the weather. Since then, the news has been fairly reassuring, in my view: the company said this month that total sales in its most recent quarter were up 6.1% year-on-year.
I do see a risk that rising employment and tax costs could eat into profit margins. But looking to the years ahead, I see Greggs as an impressive business currently selling at an attractive price.
JD Wetherspoon
Another high street stalwart I think investors should consider is JD Wetherspoon (LSE: JDW). The pub chain is due to report its latest quarterly numbers next week. That should give a good opportunity to see how it is dealing with the sort of upward wage costs I mentioned above.
It will also be interesting for investors to hear how the company’s sales are doing.
On one hand, weak consumer confidence is leading many people to keep an eye on what they spend. On the other hand though, Spoons’ budget-focused offer could mean that a weak economy actually helps rather than hinders it.
I recently added Spoons back into my SIPP. I like its large national presence, simple business model and proven ability to keep punters pouring through the doors, thanks to its competitive prices.
Like Greggs, it is also aiming to be considered by consumers for more than just one part of the day. Its hot drinks and wide food offer mean that Spoons is now a destination for breakfast, lunch and dinner for some patrons, not just for an evening pint.
