Over the last six months, no other FTSE 100 company’s share price has fallen further than Just Eat Takeaway’s (LSE:JET). Just Eat Takeaway shares are currently valued at around 6,400p, after a six-month drop of 19% and a one-year drop of 26%.

Strangely enough, this is what got me interested in taking a deeper look at the company. I was curious whether this fall in the Just Eat Takeaway share price had created an opportunity to buy.

The reasons for the drop

The pandemic lockdowns hit some businesses hard while others thrived. For Just Eat Takeaway, it was the latter. In its 2021 first-quarter results, the company reported 96% year-on-year growth in the numbers of orders in the UK. It also reported a 695% increase in orders for delivery, which can be substantially attributed to the lockdown in the UK.

However, towards the end of last year, this explosion in orders had been accounted for when investors drove the Just Eat Takeaway’s share price to its highest point of 9,980p. Since that point, the share price has steadily fallen.

Just Eat Takeaway was then further hit, as investors began to shift capital away from tech and growth stocks earlier this year. One of Just Eat Takeaway’s major rivals, Deliveroo, launched an IPO earlier this year only to see its share price plummet.

I can see why short-term investors would consider future growth for such companies to be limited, as lockdowns ease across Europe. It’s unlikely that Just Eat Takeaway will again see the dramatic increase in orders as in its first-quarter results.

Adding to these concerns are the broader issues with the food delivery sector. Just Eat Takeaway has a number of competitors in the market and all are struggling to achieve profitability. Deliveroo, Uber Eats, and Postmates, all rivals to the company, posted losses in full-year 2020 results. Just Eat Takeaway was no different here, as the company stated a £129.5m loss in 2020.

Just Eat Takeaway shares: to buy or not to buy?

However, I think that the sell-off of Just Eat Takeaway shares has been too dramatic. After its upcoming merger with Grubhub, the company will be the largest online food delivery company outside China.

Just Eat Takeaway’s US expansion will add to its existing developed positions in the UK, Germany, Canada, and the Netherlands. In first-quarter results, total orders grew in all of these countries by more than 50%. Beyond this, the company is active in 23 countries. This provides Just Eat Takeaway shareholders with a position in a company with broad exposure to the global market.

Despite these factors, I don’t believe Just Eat Takeaway shares deserve the sell-off seen over the last six months. At the company’s current share price, I will be looking to buy to develop a long-term position.

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Ben Hargreaves holds no position in any of the shares mentioned. The Motley Fool UK has recommended Just Eat Takeaway.com N.V. 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.

With Diageo shares up by 17.8% year-to-date, investor confidence in the company has quickly recovered from the initial stages of the pandemic. In fact, at approximately 3,300p per share, the company is trading above where it was prior to the pandemic, at around 3,200p.

Resilience during pandemic

In its first half of 2021 results, Diageo managed to increase net sales of its alcohol beverage products by 0.9%. The company noted that the increase in sales was a result of people buying the products for consumption at home. The company’s sales grew by 12% in North America and by 10% in the UK.

This meant that net profit was only down by 15.3% year-on-year, and was still healthy at £1.58bn.

Shortly after the first half of 2021 results, Diageo announced it would return capital to shareholders. The company announced that it had decided to increase its dividend by 2%. All of this resulted in Diageo shares rising by 9.95% in the last three months.

Looking to the future

As bars and restaurants open up across Europe, could demand for the company’s products positively impact share price further? Looking ahead to full-year 2021 results, Diageo announced that it expects organic operating profit growth to increase by at least 14%. The company stated the increase in profit will arrive from the economic re-opening in Europe and a recovery in its Africa, Asia Pacific, and Latin American markets.

This outlook was a driver behind the decision to repurchase shares. By the end of the fiscal year 2022, the company plans to repurchase £1bn shares and immediately cancel them. Another promising sign for investors was Diageo stating that e-commerce rose to 5% of group sales, up from 2% prior to the pandemic.

The risks

The principal risk to shareholders of Diageo is similar to that most businesses currently face – the course the pandemic will take. Further widespread lockdowns would again reduce profit, which could weigh on the share price.

Broader than this is the question of how much further growth can Diageo squeeze from its market. The overall beverage industry has experienced consolidation through acquisitions. At present, half of the world’s top-selling spirit brands are owned by Pernod Ricard, Baijiu, and Diageo itself. This makes further growth through acquisition tricky.

To answer my original question, I can’t see Diageo shares rising significantly as pandemic restrictions ease further. The company’s share price recovered from the pandemic hit quickly. This was followed by Diageo broadcasting its positive outlook through the share buyback. I believe this has already been accounted for in its current share price, which is fairly valued, in my opinion.

The fact that Diageo shares did so well during the pandemic is a sign of an overall strong business. Rather than a reopening play, I would look to Diageo when adding a steady, low-growth acquisition to my portfolio.

The post Diageo shares rise but could this reopening play make further gains? appeared first on The Motley Fool UK.

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Ben Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo. 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.

Whitbread (LSE:WTB) might seem like the perfect FTSE 100 stock for me to pick up as the UK’s economy continues to reopen. The company owns Premier Inn and a range of branded restaurants and bars. This should allow Whitbread to benefit from people taking UK holidays and going out to eat and drink.

Or should it? A lot of investors had this idea back in February as the UK emerged from winter and bought into ‘reopening’ stocks. One of these was Whitbread and this resulted in its share price flying to around the 3,500 mark.

Since that time, shares in the FTSE 100 company have fallen to 3,046. Full-year 2021 financials released at the end of last month showed a loss of £1bn for the year and a 71.5% drop in revenue. A tough year but not unexpected because of the pandemic.

The big reopening

The problem for Whitbread is that it won’t benefit drastically from the reopening compared with other FTSE 100 companies. Premier Inn is a major driver of revenue for the company, with locations across the UK, Germany, and the Middle East. However, customers are split evenly between business and leisure. With business travel not recovering to pre-pandemic levels, there won’t be an immediate uplift in numbers here. The company stated that it doesn’t expect this to change until offices reopen in earnest.

For leisure, only 15% of Whitbread’s hotel estate is in coastal and other tourist locations. As a result, its revenues won’t receive a major boost from the ‘staycation’ boom expected in the UK.

On top of this, the food and drink segment of the business is closely aligned with its hotel business. The restaurants are generally located within or next to a Premier Inn. This means that the boom in food and drinks sales expected this summer may not arrive for Whitbread without higher numbers of hotel stays.

FTSE 100 long-term play?

For these reasons, I don’t see Whitbread as a short- or medium-term investment to benefit from the UK economy reopening. On the other hand, I could see it as a potential option for a long-term investment.

The FTSE 100 company does benefit from being well placed as the largest hotel operator in the UK. It is aiming to expand internationally, focusing on Germany where it plans to more than double its footprint from 30 to 72 hotels. Its balance sheet is also particularly strong, with only £46.5m in net debt and cash reserves of £1.25bn.

Whitbread’s share price also hasn’t fully recovered from where it was pre-pandemic at around 4,000p. This means that if the numbers of people staying at its hotels return to pre-pandemic levels and profitability improves, there could be a pop in the share price.

But I don’t see this playing out in 2021. As a result, I will be staying away from Whitbread for now. But I’ll potentially return for another look once the sector is on a stronger path to recovery.

The post One FTSE 100 reopening stock I’m avoiding appeared first on The Motley Fool UK.

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Ben Hargreaves has no position in any of the shares mentioned. 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.

So far this year, the price of copper has risen by 30% and it’s now at a 10-year high. This is being fuelled by shortages due to growing demand and under-investment in developing the supply.

That isn’t all, there are expectations that demand for the metal is set to continue rising in the short term as economies open up post-pandemic. With copper being a key component in electric motors and batteries, there’s potential for this to be a long-term trend as the adoption of electric cars expands. This has some analysts predicting the price could double in the next three years.

All of these factors mean that I’m looking to potentially piggyback on the coat-tails of copper’s rise over the coming years. And I think Anglo American shares could be a strategic long-term way to achieve this.

Anglo American’s copper position

The good news here is that Anglo American just revealed in its Q1 financials that its copper production jumped 9% year-on-year. The company has also been investing in its Quellaveco mine in Peru. This is a large-scale copper mining project that’s expected to begin production next year.

It’s not all positive for the company’s mines, however, with a severe drought in Chile impacting production at its Los Bronces site. This could be a longer-term challenge for Anglo American, not least because it has resulted in clashes between the local community and the company over the use of water.

Commodities boom

Wider than copper, Anglo American is also well-positioned in platinum, iron ore, and diamonds, among other commodities.

I think this is positive for potential holders of Anglo American shares. That’s because the prices of such commodities are broadly rising. From the commodities noted, platinum also experiencing a huge increase in price in recent years. That said, on the diamond front, the company saw production fall by 7% year-on-year.

Yet with commodities, there are risks to bear in mind linked to their cyclicality. This means prices can rise higher for periods of time, over a period of years. But this can be followed by a subsequent drop with prices remaining low for years at a time. It makes ownership of shares in related companies potentially riskier than in some other industries.

Coal demerger

On the plus side, today the company announced at a shareholder meeting that its coal demerger had been passed. This should allow it to move away from this heavily polluting commodity and focus more on copper demand. The development could see Anglo American shares rise more closely in relation to potential copper price increases. However, this also means that the business loses some of its diversity.

And a cause of uncertainty is that CEO Mark Cutifani will step down once the Quellaveco mine is completed.

So to repeat my original question: should I buy? At present, I’ll wait to see how the market reacts to the demerger news over the coming weeks and look to buy Anglo American shares should the price dip from its current high mark.

The post Anglo American shares: should I buy as copper prices rise? appeared first on The Motley Fool UK.

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Ben Hargreaves has no position in any of the shares mentioned. 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.

Warren Buffett

“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

This one quote effectively distils Buffett’s attitude to investing into one sentence – though his advice is worth looking at it in more detail. The principle behind this sentiment is to buy quality companies that you’re prepared to hold for the long term.

Right now, we’re experiencing a particularly long bull market, which means that there’s more and more chatter of a potential downturn. This can be worrying to someone invested in the market, but one protection from that kind of concern is to own shares in companies that it’s easy to have faith in. Even if the market suffers, a quality company can ride out of it and potentially emerge stronger as a result.

Peter Lynch

“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.”

A complement to the investment tip expressed by Buffett is Lynch’s simple advice: do your homework. How do you know if a company is a good long-term investment? Research.

If you’re not carrying out research then you’re effectively gambling on the stock market. As Lynch points out, you would be better off going to a casino and losing your money whilst getting a free drink at the same time.

Benjamin Graham

“The best values today are often found in the stocks that were once hot and have since gone cold.”

Buffett’s mentor and the author of several canonical investment books, the quote itself comes from The Intelligent Investor and the ‘today’ referred to was in 1949. Is the investment tip any less valid? Not at all.

A good example is the current year-to-date’s top performing FTSE 100 stock, Evraz. It’s up 163% but how was it doing in the full year prior? It was down 4.7%. This isn’t to say that I go out and look for the worst performing stocks and buy in, but it’s always worth keeping a lookout for a company that might be ready for a big turnaround.

Joel Greenblatt

“Look down, not up, when making your initial investment decision. If you don’t lose money, most of the remaining alternatives are good ones.”

There are a few things to consider in this investment tip but the most important one is to determine risk when buying a stock. Is there a big potential downside to investing? I ask myself this before purchasing shares in any company, no matter the scale of investment, and then determine whether I’m prepared to take that risk. If I can’t see a stock suffering a big loss in value and it still retains a strong potential upside then, as Greenblatt notes, I’m onto a good investment.

The post Top investors give investment tips anyone can use appeared first on The Motley Fool UK.

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Ben Hargreaves has no position in any of the shares mentioned. 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.

I’ve pulled out two Footsie companies that have had a difficult time of late but, as a result, may represent an opportunity for me to buy. I will personally be following their progress closely to make the most of their lower cost before a potential rise.

AstraZeneca

The chances are that you’ve read quite a bit about AstraZeneca (LSE: AZN) in the news lately. The FTSE 100 company has had a bit of a rollercoaster ride of late, soaring as its Covid-19 vaccine began its rollout across Europe and now hitting a tricky spot as reports over potential blood clot risks of this vaccine arose.

It’s my view that the market has overreacted to the news because the vaccine represents only a relatively small part of its overall business. In fact, the crown jewel for AstraZeneca is its portfolio of oncology treatments that achieved sales of $11.4bn in 2020, with the three major treatments in that portfolio growing sales by over 35% year-on-year.

Currently, the company won’t take any profits from its vaccine until July of this year, after which there are estimates it will bring in $2bn in sales in 2022. Not a small sum but when its top selling oncology product, Tagrisso, is already bringing in $4.3bn and growing, it does put this in perspective.

With the negative PR likely to rumble on, shares in the company could continue their downward trend from highs of last year. This is definitely one I’ll be watching and potentially buying into should they drop even further.

HSBC

Covid-19 has hit many businesses on the FTSE 100 hard, though many are recovering as the UK begins to open up. Some are recovering quicker than others, and one that still has some way to go before getting back to pre-pandemic levels is HSBC (LSE: HSBA). Prior to the pandemic, shares in the company were selling at just under 600p but have now fallen to around the 430p level.

This isn’t unusual in the banking sector, other companies are also fighting their way back to previous levels, but for HSBC the situation is a little different. Not only is it down on early 2020 figures, it’s also been on a decline since reaching highs of almost 800p in 2018.

Like other UK banks, there has been significant amount of restructuring taking place since the financial crisis of 2008, and current CEO, Noel Quinn, has previously announced plans to reduce the cost base of the business to increase earnings, as it deals with the current low interest rate environment.

One factor that could significantly boost earnings is the company’s performance in Asia, particularly China. HSBC has a strong presence in China and signalled back in February that it would pivot its focus towards Asia where it generates 90% of the company’s profit.

With some Asian countries, specifically China, faring much better during the pandemic and likewise seeing a rapid rate of recovery, this could see HSBC’s strategic position there pay off. This is why I’ll keep an eye on the company to see whether it can begin to outperform its FTSE 100 peers in the future, with a view to buying for the long term.

The post 2 unloved FTSE 100 stocks I’d buy before it’s too late appeared first on The Motley Fool UK.

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Ben Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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.

Smurfit Kappa is a leading provider of paper packaging services globally, which utilises recycled paper as a key part of its production process. With online sales booming since the onset of the Covid-19 pandemic, the demand for packaging products have also grown.

As you’d expect, in its full year 2020 results, Smurfit Kappa was able to post increased profit levels and free cash flow, each rising by 10% and 23% on 2019, respectively. The company’s share price has also tracked upwards steadily to reach £34 – though the price is currently slightly down from highs in February, after underperforming against the FTSE 100 during March.

Riding the sustainability wave

One of the keys to how well this company could do in the future is in how it has positioned itself in terms of sustainability. Last month it became the first FTSE 100 company to be given a five-star rating by Support the Goals, because of the company’s support of the United Nation’s Sustainable Development Goals. As such, Smurfit Kappa is able to boast that 75% of the fibres used in packaging are from a recycled source.

Why is this important? Well, you can take a trip to your local supermarket and see that many brands are now pivoting away from the use of plastic and towards paper packaging. This has enabled Smurfit Kappa to establish packaging partnerships with the likes of Kellogg’s, eBay and Heineken, among others. With the increase in online sales expected to be retained with countries opening back up, it’s likely that demand for such packaging will continue to grow.

Strong FTSE 100 dividend

Beyond the opportunity for steady growth into the future, another reason for me to take interest in the stock is the dividend on offer. Smurfit Kappa has consistently paid out a dividend thanks to its strong balance sheet, with the company increasing the dividend by 8% to £0.74 per share this year.

However, there are negative factors that may hold the FTSE 100 company back in the future, such as its debt of £2bn, though this has been reduced from the previous year’s levels of close to £3bn. I would also keep in mind that the stock isn’t likely to see a surge in share price any time soon. There is also the danger that as lockdowns are lifted, and people return to shopping on the high street, some of the increased sales from e-commerce could be impacted.

Overall, I believe Smurfit Kappa is a good addition to my portfolio for its regular dividend, and I’d look to hold my shares in this company that is likely to achieve steady growth in the years to come.

The post A FTSE 100 income stock to buy for the long term appeared first on The Motley Fool UK.

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• 5 years ago, £10,000 bought 9,827 Rolls-Royce shares. But how many would it buy now?
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Ben Hargreaves owns shares in Smurfit Kappa. 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.

The last few months has seen positive news emerge for NatWest that could indicate potential for the business moving forward. The most recent news was the UK government selling part of its stake back to NatWest, which reduced the government’s ownership stake down to 59.8%. Back in February, the company also reinstated its dividend, another reason to be positive on the stock.

On an upward trend

There’s no getting around the fact that NatWest has struggled since the financial crisis of 2008 and it’s on a long, and ongoing, road to recovery. This is shown by the fact that NatWest’s £1.1bn purchase of shares from the UK government represented only the third time that such a transaction had taken place.

By comparison, Lloyds Banking Group was once 43% owned by the UK government, but bought itself entirely out of this position in 2017. Meanwhile, the UK government is likely to retain a position in NatWest until the end of the 2025-26 financial year.

For myself, I see the potential for NatWest to continue its recovery in the years to come, and its turnaround could represent an opportunity to buy at a discount for a long-term hold. Not least because the company cancelled 390m of the shares purchased back from the UK government, which should improve earnings per share. As the company continues to buy shares over the coming years, it will have the option to cancel further shares, again raising earnings per share, and also reducing the number of shares in circulation, potentially raising the price per share.

The restoration of dividend could also encourage investors looking for a steady income to eye NatWest as a potential option, which could drive the share price higher, especially if the dividend returns to previous levels in the coming years.

Further than this, the share price still hasn’t fully recovered from the shock of Covid-19, with shares reaching 250p by the end of 2019, suggesting there’s further room for a quick recovery in the short term. It’s also clear across the UK banking sector that there are broader signs of strength, with both Barclays and Lloyds seeing share prices rise significantly during the last year.

Risk factors

The investment isn’t without risk – the benefit that could be gained as NatWest buys itself out of government ownership will also see it needing to make significant investments moving forward. There is also the double-edged sword of its rising share price, making such purchases more expensive, potentially weighing on its balance sheet.

There are also continuing risks over Covid-19, with the UK government having eased the blow with wage and business subsidy schemes… the full effect on businesses and consumer loans, and potential defaults on these, may not be fully felt until the situation stabilises further.

However, these factors do not stop me from expecting shares in NatWest to continue to rise, and from looking to add the stock to my portfolio for the long term.

The post Will NatWest shares continue their rapid recovery? appeared first on The Motley Fool UK.

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Ben Hargreaves has no position in any of the shares mentioned. 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.