Barratt Developments is another large-cap housebuilder reporting that things are improving after a nasty patch triggered by global factors (higher interest rates and inflation) and worsened by the UK mini-budget. The housing sector is clearly now recovering from a sharp downturn: this value stock’s shares have had a very strong rebound since last autumn, with the current share price standing at 503p.

Providing house prices don’t fall sharply — which looks to be receding as a risk, especially with government schemes in place to prevent this from happening — if Barratt continues to deliver and macros don’t change significantly (which is possible), I don’t see why this stock can’t continue its bullish momentum.

Do beverage stocks offer a fair value price?

Beverage producer stocks have long been favourites with investors such as the likes of Warren Buffett.

Coca-Cola HBC AG (LSE: CCH) is one of these beverage companies Warren Buffet holds close to his heart. I’m not surprised as to why he does.

Coca-Cola HBC AG has the rights to manufacture and sell Coca-Cola product, which stretches from Ireland to Russia and from the Arctic Circle to Nigeria. Its territory spans nearly 30 countries across Europe, Asia, and Africa.

It’s not a very exciting company, but what Coca-Cola HBC AG does do is offer a safe and reliable stock during times of uncertainty such as our current macro-economic climate. These numbers say it all really:

• Dividends to rise by 4.62% in 2023 and 11.2% in 2024;
• Estimated net profit of €637m in 2023 and €717m in 2024.

With the share price currently sitting at 2,554p — though some price pullbacks may take place — I think with more momentum, this quality stock will continue to soar higher over the long run.

Should I buy this fashion stock in 2023? 

One year ago, fashion group Burberry was trading at 52-week lows of around 1,600p. The shares have risen by 60% since then and are now nudging 2,600p.

Burberry is a high-quality FTSE 100 company that was never really in any danger of even reporting a loss. Let’s look at the numbers:

• Estimated EPS share grown in 2023 +30.9% and +8.72% in 2024;
• Estimated dividend growth of +19.3% in 2023 and +11.5% in 2024.

With net profits beating prior years annually, this company continues to outperform other peers in its sector.

Now, while I do agree with these companies being good potential investments and at good value, there are plenty of macros in place to suggest further downside in the stock market. I’ve done my due diligence to find stocks that I believe will be less affected by macro and geopolitical events, and would buy these in June with spare cash.

The post 3 phenomenal value stocks I’d buy in June! appeared first on The Motley Fool UK.

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Benjamin Brinsden has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry Group Plc. 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.

Michael Burry (The Big Short hedge fund manager) deleted his Twitter profile after tweeting “Sell”, implying a stock market crash. Do I agree with him?

The short answer is yes, I do agree with him. I’ll elaborate.

I’m expecting an inflation resurgence, a stock market crash, and a multi-year recession.

Since the US market bottomed last October, the S&P 500 index has risen more than 14%. In my eyes, this is only a short-term bounce.

There are obvious reasons Americans have had this short-term market rally and why these conditions might not last.

One of the reasons is the ‘buy the dip mentality’. Data over the last 20 years shows that investors tend to be more optimistic following a bearish day in the market. The S&P 500’s average return, following down days, was 0.30% last year. This means there’s a lot of money flowing into the market after it falls.

However, inflows in 2023 have been diminishing rapidly and are back at levels from 2019. Americans have had one of the weakest starts to the year ever.

With interest rates continuing to rise, people have less cash lying around. Debt becomes more expensive, and with inflation in double figures in the UK, this leaves a diminutive amount of money left over for anything else.

Bank lending standards are expected to tighten further, too, as banks adjust to higher interest rates and a weaker macro-outlook.

As a result, I do believe these cash inflows will start turning into cash outflows.

It’s not all doom and gloom!

There are all sorts of investing styles, one being dollar-cost averaging, where investors just send it for 30 years straight without batting an eyelid at a recession, because over the long run the S&P 500 averages a return of just under 12% a year.

Frankly, as an investor I stick to my roots. I look at individual companies that offer a fair price and are an in demand product/service, such as Apple, Netflix, Alphabet, Amazon and Nvidia, to name a few. I’m currently spending time looking into AI technology and seeking fair value companies in that sector to invest in, because I don’t think these companies will be affected as much by the broader market crash.

And if to my surprise they’re strongly affected by the US recession, you bet I’ll be buying the dip.

I plan to stick to looking at individual businesses that fall into my circle of competence and buy them at fair prices. That strategy doesn’t need broader market analysis. Is it helpful to be in touch with macro and geopolitical situations? Of course, but it’s not a necessity in my opinion. I might get analysis paralysis, which is something I don’t want if I’d like to make sound investments.

The economy is going to go up and down; interest rates and inflation will go up and down; recessions and bubbles are inevitable. So, yes, I do believe the broader market will crash further. However, I will still be actively investing in companies.

The post Is a stock market crash imminent? appeared first on The Motley Fool UK.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Benjamin Brinsden has positions in Alphabet. The Motley Fool UK has recommended Alphabet, Amazon.com, Apple, and Nvidia. 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.

Let’s see why I’m looking to buy FTSE 100’s largest energy company.

Oil and natural gas prices have come down from the highs seen earlier last year. But with average prices for 2022 still significantly higher than those seen in recent years, Shell (LSE:SHEL) has still been able to post record profits.

Oil prices

Manufacturing activity in China grew last month at the fastest pace in more than a decade, reinforcing expectations of a fuel demand recovery. Seaborne imports of Russian oil are set to hit a record high, data shows, adding to evidence of a rebound in the world’s second-largest economy (China) after removal of strict Covid-19 curbs.

Global oil demand is now pegged to grow more quickly — by 1.9m barrels per day instead of 1.4m barrels per day — on the back of China’s reopening, as well as increased demand from aviation and improved forecasts for GDP growth in 2023.

In the US, comments by Raphael Bostic (president of the Federal Reserve Bank of Atlanta) that the Fed should stick with “steady” quarter-point rate increases eased concerns in the US and helped support oil prices, even after strong unemployment data.

With no sign of the Ukraine invasion ending soon, all it will take is one piece of bullish data to drive these prices higher.

Ben van Beurden, Shell’s chief executive officer, said: “The war in Ukraine is first and foremost a human tragedy, but it has also caused significant disruption to global energy markets and has shown that secure, reliable and affordable energy simply cannot be taken for granted.”

Banks such as Goldman Sachs and Morgan Stanley have forecasted Crude Oil will end up around $100-$110 a barrel by the end of 2023. Though this is in no way a guarantee as we all know banks can be wrong, it put an emphasis on oil prices. It is oil bidding season after all.

Financials

Shell saw 2022 revenues leap 46% to $381bn. Pre-tax profit more than doubled from $29.8bn to $64.8bn, reflecting higher refining margins and strong trading and optimisation results, which more than offset lower volumes.

Shell has declared a fourth quarter dividend of $0.2875, up 15% on that declared in the third quarter. $18.4bn was spent on share buybacks over 2022, with a further $4bn announced for the first quarter of 2023.

In 2022 Blackrock added $416.7m to its Shell position, which now totals $522.3m — 7.54% of the company — and so far, hasn’t scaled out from its giant position. BlackRock will sit in these positions for years, so it almost certainly expects Shell to have bull and bear runs. BlackRock sees longevity in Shell, which is the key takeaway from this.

Shell has excellent financials, strong price momentum and is supported by macro-economic events that will continue to drive up revenues and margins over the coming year.

One might argue it’s unethical to buy during a time of geopolitical tension. Well, when I buy Shell shares it will be for the long term, and will look to hold them for half a decade or more.

The post Should I buy the FTSE 100’s largest energy stock? appeared first on The Motley Fool UK.

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Benjamin Brinsden 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.

The FTSE 100 is packed full of bargain stocks. And today I’m looking at two companies on the index that I see great potential in.

Why am I buying Hargreaves Lansdown?

Firstly, what does Hargreaves Lansdown (LSE:HL) do? Well, it is a digital wealth management service administering company, which provides a range of services including stocks and shares individual savings accounts (ISAs), Self-Invested Personal Pensions (SIPPs), share dealing, fund dealing, drawdown, cash savings, lifetime ISAs and junior ISAs.

While the broader market lost around 0.8% in 12 months, Hargreaves Lansdown shareholders did worse, being down 18%. Having said that, it’s inevitable that stocks will be over sold during a bearish market, so I will need to keep my eyes on the fundamental developments in the coming future.

The stock is down by 65% from its pandemic peak and is trading at 10-year lows. European stocks have rallied in recent weeks as banking worries faded, but financial stocks are still trading at discounts. Research suggests that I may be able to use this situation to our advantage. Put simply, investors tend to overreact to bad news.

Hargreaves makes its money through platform fees, transaction fees and interest on customer deposits. Going forward, I think this business may be forced to cut its prices somewhat to become more competitive. But it looks affordable to me, given Hargreaves Lansdown’s near-50% margins.

In my view, this business should continue to benefit from macro-economic trends towards self-managed investment and remains in a strong position to deliver attractive long-term returns.

Total revenue for this year is estimated at £698m, up from £583m in 2022. Net profit is estimated at £300m, up from 2022 net profit of £216m.

The shares also currently offer an attractive 5%+ dividend yield. Historic yields are strong too, with 2022 coming in at 5%. Analysts are forecasting a 2023 yield at 5.05% and 2024 at 5.17%.

Hargreaves Lansdown has a strong team, good customer service, bargain prices, promising financials and supplies a product I can’t live without!

Why Barclays?

The Silicon Valley Bank failure appears to have resulted from the bank’s decision not to hedge its interest rate risk. Are other banks at risk?

Well, not Barclays (LSE:BARC). I don’t think the management is that ignorant. Quite frankly, it’s ‘banking 101’ to hedge interest rates!

Last year’s results showed a substantial increase in interest income, improved lending margins, and strong capital positions. Increases in expected bad debt look relatively modest and manageable. Shareholders are being rewarded with increased dividends and substantial share buybacks.

Moreover, profitability has improved. In other words, it is generating stronger returns on its assets.

Barclays is undoubtedly cheap, trading at five times earnings, and could be a fantastic value play for me. The company’s investment banking division could theoretically also support stronger growth.

The main concern I have is that the UK market is structurally mature and low growth. However, I think that retail banks like Barclays look in good shape, trade at attractive valuations, and offer high dividend yields.

The post Two fantastic FTSE 100 companies I’m buying in May! appeared first on The Motley Fool UK.

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Benjamin Brinsden has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays Plc and Hargreaves Lansdown Plc. 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.