Jet2 (LSE:JET2) is one of the standout value opportunities on the UK stock market — at least, that’s my take.

To be fair, my opinion’s based in data. So let’s allow the data to do the talking.

The valuation today

On the surface, Jet2 looks decent value. It trades at 6.5 times forward earnings and many data sites will report it having a massive £2bn net cash position — that would be a lot for a company worth £2.2bn.

Delve a little deeper, subtract the deferred revenue, and it’s clear that net cash is actually closer to £800m. But that’s still substantial.

What it means is we’re looking at a company trading at around 3.5 times net income. Even by airline standards, that’s super-cheap. In fact, my calculations suggest that the industry average is around double that.

The difference is even more stark compared to Ryanair — I’m sitting on one of its planes as I write. The Irish firm is almost three times more expensive.

Looking ahead

Of course, there’s a danger of looking at near-term valuations and thinking something is cheap. That’s how investors find value traps.

Instead, we need to consider where the company’s going and make assumptions or forecasts. In the near term, earnings are actually forecast to stand still as Jet2 invests in new facilities at Gatwick as well as a continuing fleet renewal.

So where will the business be in five years? Well, we can’t know where jet fuel prices are going to be — that’s up to 35% of operating costs — and we don’t know what’s going to happen to travel demand.

The first thing to consider is that the company should have many more seats on sale by FY30 — as much as 25% more with the fleet reaching 150 aircraft and the seat gauge increasing around 7%.

The business also expects the fleet overhaul to deliver a 20% fuel saving per seat — equal to £10 per seat. However, not all of those savings will be realised by the end of the decade.

One scenario

I put all the data I had into AI chatbot Claude and asked it to produce a forecast through to FY30. It took a mightily long time, and it became evident that it took it very seriously.

Now, this forecast turned out to be quite optimistic, mainly around costs. It has fuel, marketing, and landing costs remaining consistent across the period. It’s possible. Fuel could be materially lower if the Iran and Ukraine conflicts conclude for good. Marketing costs could fall with AI. But I wouldn’t bank on it.

So what did the headline numbers say? Well, it’s got revenue moving from £7.2bn last year to £10.5bn in FY30. And after two years of stagnation, it sees earnings per share move from around 206p to 355p as EBITDA almost doubles.

The bottom line

Of course, there are risks. If oil stays elevated, the thesis is blown apart. And that’s why it pays to stay diversified. However, it’s clear that there’s huge potential at Jet2. So much so, I believe it could be one of the biggest winners when UK investors regain their confidence.

Personally, I believe it’s well worth considering.

The post Trading at 3.5x net income, I think Jet2 could lead the next stock market recovery appeared first on The Motley Fool UK.

More reading

• Consider these 2 dirt-cheap stocks to buy if the Straits of Hormuz permanently reopen
• Is this the beginning of a stock market recovery?
• 2 shares that could surge in a stock market recovery…
• Prediction: this FTSE AIM stock could soon be one of the top-rated according to these models
• 5 April is almost here: is now the perfect time to start investing?

James Fox has positions in Jet2 Plc. The Motley Fool UK has recommended Jet2 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.

My Stocks and Shares ISA has one speculative slot, and I recently filled it with a name most people haven’t heard of yet.

But first, let me give you some context.

I’ve largely missed the surge in optical networking (the fibre and laser components that carry data between servers inside data centres). Applied Optoelectronics had a monster run — I saw it, shortlisted it, missed a 500% run up in six months.

Lumentum surged after Nvidia put $2bn into it — I owned it but sold too soon. It’s up 800% over six months.

Don’t get me wrong… I’ve done well, but these misses hurt more than losses for me.

I have caught some of the surge indirectly. I own Marvell, which sits at the intersection of custom silicon and optical connectivity. I also have copper cable exposure (typically short-reach within server racks) through Credo.

The really sharp gains have been in the pure-play photonics names.

The great thing about this AI revolution is that the next opportunity is just around the corner. And this got me interested in POET Technologies (NASDAQ:POET).

What is it?

POET isn’t trying to be the new Lumentum. It’s doing something that could be more interesting — rethinking how optical components are assembled in the first place.

Traditional transceivers (modules that send and receive data across fibre networks) stack components with wire bonds, which creates heat, signal loss, and manufacturing complexity.

POET’s optical interposer platform integrates everything onto a single panel. The result is that its Teralight engine reaches 1.6 terabit speeds using just four laser chips, versus the eight or sixteen required by conventional approaches.

There are lots of reasons why this matter.

For one, indium phosphide — the material high-speed lasers depend on — is facing a real global supply crunch. Demand runs at roughly 2m substrates a year; production capacity is around 600,000. Nvidia has already moved to lock up future laser supply from Coherent and Lumentum.

POET’s lower chip count could make it the natural supplier for the tier 2 manufacturers who need to keep building without access to that locked-up supply.

Eyes on commercial signs

The issue is, it’s essentially a pre-revenue company. Revenue projections are for $10m this year and then $80m next year. But it needs to scale even faster to justify the valuation. Investors need to keep their eyes on commercial developments and partnerships.

Currently, the valuation isn’t comfortable. Forward price-to-sales sits around 107 times, against a sector median closer to three times. Market cap is $1.08bn. There’s a cash pile of over $300m and annual burn of around $40m-$50m, which means the company can keep operating for several years without needing to raise more money.

The risk is execution. This story relies on a small number of partnerships hitting their milestones. A slip into 2028 wouldn’t sink the company, but it would hurt the share price badly at these multiples.

The bottom line

POET is genuinely novel technology, in exactly the right place at exactly the right moment in the photonics supply chain. It’s not cheap and it’s not certain. That’s why it’s speculative. It’s worth considering, but the risks are sizeable.

The post A millionaire maker? Introducing the 1 speculative pick in my Stocks & Shares ISA appeared first on The Motley Fool UK.

More reading

• Starting with nothing? Here’s why now is the perfect time to start building a passive income
• Decided not to bother with a Stocks and Shares ISA? You might be missing these 3 things!
• Why is everyone buying GSK shares?
• £10,000 invested in easyJet shares at the start of 2026 is now worth…
• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?

James Fox has positions in Credo Technology Group Holding Ltd, POET Technologies, Nvidia, and Marvell Technology Group Ltd. The Motley Fool UK has recommended Marvell Technology 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.

A penny stock trading at 58.5p with deep exposure to the global defence boom isn’t the kind of thing that stays hidden for long. It’s has, unsurprisingly given the recent context, been performing rather well. The stock’s up around 40% over the past six months.

But could it go further? Let’s explore.

Who is it?

MTI Wireless Edge (LSE:MWE) has the hallmarks of a quality stock. It’s an Israel-based specialist in military antennas, 5G backhaul, and water solutions — and a confluence of catalysts may be aligning in its favour.

The company just posted record full-year results for 2025. Revenue rose 13% to $51.5m with profit from operations up 29% and earnings per share climbing 18% to 5.83 cents.

All three divisions — antennas, distribution and consulting, and water solutions — delivered double-digit revenue growth, with the antenna division leading at 23%, driven by surging demand for military-grade hardware and 5G infrastructure.

It also appears well diversified and benefits from long-term contract lock-ins.

What’s more, the balance sheet’s clean. MTI sits on $9.55m in cash with no meaningful debt, giving it a net cash position. Return on capital is 17.1%, return on equity 17%, and the stock trades on a forward price-to-earnings of just 13.3 with a forecast dividend yield of 4.66%.

More wins

This week, the company announced multiple new defence contract wins worth around $6m. That’s more more than 10% of its entire 2025 revenue. The deal includes a $2.2m communications infrastructure contract for the Israeli Ministry of Defence (MoD) and $1.9m in military antenna orders from an international defence contractor.

All orders are scheduled for delivery across 2026 and 2027.

2 bullish analysts and positive signs

When it comes to penny stocks, there isn’t much institutional coverage. In other words, there aren’t many analysts covering the stock. However, the two that do cover MTI are very bullish. Collectively, their price target’s 62% above the current share price.

Moreover, consensus forecasts point to net profit of $5m in 2026 and $5.21m in 2027. Notably, the Beer family — substantial shareholders — bought 600,000 shares at 53.5p as recently as 26 March, a vote of confidence from insiders.

Then there’s the geopolitical backdrop. The Iran-US ceasefire agreement reached on 7 April could materially re-rate Israeli equities. Throughout the conflict, Israeli-listed and Israel-based stocks traded at a persistent-risk discount.

A sustained ceasefire — and the permanent reopening of the Strait of Hormuz — may unlock institutional capital that has been sitting on the sidelines.

The bottom line

That said, there are risks to bear in mind. MTI’s a tiny company and the free float (51%) is limited. What’s more, liquidity may be limited and the the bid-ask spread sits at 513 basis points.

And while the business is diversified across segments, the company’s reliance on Israeli MoD contracts introduces concentration risk.

However, for investors willing to accept that risk, it may be worth considering.

The post This penny stock could be one of the best defence plays on the AIM appeared first on The Motley Fool UK.

More reading

• This 67p growth stock’s smashing the FTSE 100 in 2026
• MTI Wireless Edge: the 61p defence penny stock that’s delivered 10x the return of Rolls-Royce shares in 2026

James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended M.t.i Wireless Edge. 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.

Cast your mind back four years and Rolls-Royce, today one of the FTSE 100‘s most celebrated turnaround stories, was a company in serious trouble. It was burning cash, drowning in debt — largely because of the pandemic — and its shares were slumping. Today, it carries a market-cap approaching £100bn and an operating margin close to 25%.

The thing is, everyone knows Rolls-Royce. And that’s probably down to the car brand they don’t own.

But not everyone knows Melrose Industries (LSE:MRO). It’s a different company, same script.

Pure-play aerospace

Melrose has spent recent years shedding automotive and other non-core divisions to emerge as a focused aerospace supplier, making advanced components and systems for all major original equipment manufacturers. These include Boeing, Airbus, GE, and Safran. That’s a great list of customers.

The business spans civil and defence markets. Crucially, it holds sole source positions across much of its business — around 70%.

What’s more, these are long-term, often exclusive supply agreements for specific parts on specific aircraft. Once embedded on a programme, Melrose is typically there for the life of that aircraft — often 25-30 years.

The revenue is recurring — the switching costs are enormous, and the barriers to entry are high. It’s exactly the kind of quality business with an embedded structural competitive advantage that made Rolls-Royce so rewarding for patient investors.

The turnaround in numbers

In 2022, Melrose reported an operating loss of £246m on a margin of -8.33%. Full-year 2025 results showed operating profit of £600m and an operating margin of 16.72%. Normalised EPS hit 33.1p last year — up 70% — pointing to the company trading at 16 times earnings.

The dividend’s growing at 20% a year. And the 16 analysts covering the stock have a consensus price target of 693p — more than 30% above today’s price of around 515p.

On an earnings basis, there’s cause to argue it’s still undervalued. Rolls trades at more than double Melrose’s forward price-to-earnings (P/E) of just 13.2 times. The price-to-eanrings-to-growth (PEG) ratio of 0.9 is vastly discounted versus many other aerospace/industrial stocks.

The bottom line

Of course, there are risks and concerns. Net debt’s risen to £1.74bn and free cashflow’s only just turning positive. The balance sheet leaves limited room for error if civil aviation demand softens or defence programme timing slips. This is a genuine risk and worth watching closely.

However, the shares are down 22% from their 52-week high, caught in the broader turbulence of the year. For long-term investors, the combination of sole source positions, a transformed margin profile, and the prospect of strong earnings growth from this valuation makes it well worth considering.

And honestly, I wouldn’t be surprised to see it push towards all-time highs later this year, especially if the conflict in the Gulf comes to an end and interest rates continue to push downward.

The post The next Rolls-Royce? This FTSE 100 turnaround story appears overlooked appeared first on The Motley Fool UK.

More reading

• Down 23% to around £5! Here’s why this overlooked FTSE 100 defence gem ‘should’ be trading over £11
• I like Rolls-Royce shares but not the price tag. Here are 2 cheaper alternatives
• These 2 UK stocks look cheap ahead of the ISA deadline
• Want a £1m Stocks and Shares ISA? Step 1 starts before 5 April
• Correction territory: the FTSE 100’s best bargain right now could be…

James Fox has positions in Melrose Industries Plc and Rolls-Royce Plc. The Motley Fool UK has recommended Melrose Industries Plc and Rolls-Royce 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.

Good investors should always be on the lookout for stocks to buy. And sometimes, opportunity comes when the market is down, and simply, when bad things happen.

As most readers will know, the conflict in the Gulf has weighed on the stock market. Some stocks are down more than others. And that depends on their exposure.

Personally, my strategy is to buy stocks when the market is taking a hammering. It might sound painful, but it’s how some of the best investors operate.

However, I appreciate some investors may wish for tensions to die down before investing further.

Geography matters

Around 20% of the world’s oil passes through the Straits of Hormuz every single day. When that shipping lane is disrupted or threatened, oil prices stay elevated — and elevated oil doesn’t just mean expensive petrol at the forecourt. It ripples through the entire economy.

Jet fuel, which is essentially refined crude oil, is one of the largest single cost lines for any airline or package holiday operator (as much as 35% of operating costs). And food inflation is partly an oil story too, because energy costs sit inside fertilisers, packaging, cold storage, and logistics.

This is why both Jet2 (LSE:JET2) and Marks & Spencer (LSE:MKS) have been hit by the conflict despite having almost no operational exposure there.

Jet2: priced for disaster

Jet2’s share price has fallen 42% from its 52-week high to 1,121p.

It now trades at just 6.3 times forward earnings (P/E). That alone looks good value relative to peers, but the company also boasts an incredibly strong balance sheet. Remember, P/E ratios are only really relevant when they’re contextual.

Jet2’s balance sheet is fortress-like, and that makes it well positioned to navigate uncertainty like this. It’s a little confusing because of the presentation in the earnings documents, but the company appears to have a net cash position of £800. That’s substantial for a company generating about £400m in net earnings per year.

Of course, a prolonged conflict here is a risk. Jet2 is phenomenally well hedged — over 75% of jet fuel purchased for the year — but the longer the conflict goes on, the greater the exposure becomes to sky-high spot prices.

It’s worth considering. Definitely my favourite in the sector.

Marks & Spencer: just needs a clean break

M&S has had its own difficult year — remember the ransomware attack.

Right now, however, UK grocery inflation is still running at 4.3%, squeezing food margins and dampening consumer sentiment. The irony is that M&S’s underlying business is performing well — revenues rose 23% in its last half-year to £7.94bn, and analysts expect earnings per share to grow 46% this year to 22.7p. In turn, this implies a forward PE of just 10.7 times.

The war, of course, threatens more inflationary pressure, starting with fertiliser costs. The shorter the conflict, the quicker the recovery.

Nonetheless, this is an excellent business, with genuine operational momentum. It’s absolutely worth considering, and the risk profile will decrease if the conflict ceases.

The post Consider these 2 dirt-cheap stocks to buy if the Straits of Hormuz permanently reopen appeared first on The Motley Fool UK.

More reading

• Trading at 3.5x net income, I think Jet2 could lead the next stock market recovery
• 5 years ago, £5,000 bought 3,185 Marks & Spencer shares. But how many would it buy now?
• What are the best UK shares to buy now to try and make a million?
• Is this the beginning of a stock market recovery?
• Marks and Spencer’s share price is down 16% to below £4! Is now the time for me to buy the dip with an eye to £8+?

James Fox has positions in Jet2 Plc and Marks and Spencer Group Plc. The Motley Fool UK has recommended Jet2 Plc and Marks And Spencer 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.

Parents can pay just £2,880 a year into a child’s SIPP (Self-Invested Personal Pension) — the government tops it up to £3,600. Given enough time, the results are extraordinary.

The mechanics are simple but powerful. Parents and grandparents can pay up to £2,880 per year into a child’s SIPP — and even though the child pays no tax, the government adds 20% relief, bringing the total annual contribution to £3,600. That’s it. That’s the whole strategy.

Let’s assume that the parents, and then the child, maintain those contribution for the next 55 years. Admittedly, by the end of the period — 50-odd years from now — the contributions would actually be quite small relative to the value of money.

Time does the heavy lifting

Assuming the money is invested in global stocks returning 11% annually — broadly in line with the S&P 500‘s performance over the past 55 years — those modest contributions compound into something remarkable. After 20 years the pot sits at around £230,000. After 35 years, £1.2m. By year 55, just over £10m.

The really striking thing is how much of that growth happens at the end. The final decade alone adds more than £6m — more than the preceding 45 years combined. This is what compounding actually means in practice: the longer it runs, the faster it accelerates. The total amount paid in over 55 years is just £198,000. The rest — more than £9.9m — is pure growth.

There are caveats, of course. The money is locked away until at least age 57 under rules coming into force in 2028. Returns of 11% are not guaranteed — markets can disappoint for years at a time.

And many families simply cannot commit £2,880 per year from birth. But it’s worth playing around with the numbers. Even tiny contributions — say £20 per month — can make a huge difference over time.

Where to invest?

For long-term SIPP investors, few investment trusts make a stronger case than Scottish Mortgage Investment Trust (LSE:SMT).

Run by Baillie Gifford, the investment trust does something most retail investors cannot: access exceptional private companies before they list.

This is clear from its larger holding — SpaceX. The company is valued at £800bn on Scottish Mortgage’s balance sheet, but that figure could double if SpaceX moves forward with its listing this year — it already represents around 16% of the portfolio.

The company also provides investors with instant diversification, owing a host of household names and companies you’ve never heard of.

The philosophy is patient — positions held for years, sometimes decades, ignoring short-term noise. That comes with real risk: the trust fell more than 50% in 2022 as growth stocks re-rated sharply. What’s more, concentrated private holdings can be illiquid and hard to value accurately.

However, it’s certainly an interesting proposition, and well worth considering.

The post A SIPP opened at birth could be worth £10m in 55 years appeared first on The Motley Fool UK.

More reading

• How UK investors can get access to the $2trn SpaceX stock IPO TODAY
• Is Elon Musk about to send this FTSE 100 stock into orbit?
• Want to know what UK investors have been buying in their ISAs?
• How long might it take to become an ISA millionaire?
• 5 steps towards a Stocks & Shares ISA worth £1m

James Fox has positions in Scottish Mortgage Investment Trust Plc. 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.

Rolls-Royce (LSE:RR) shares are down 1.3% since the beginning of 2026. That means £10,000 invested on 1 January is now worth approximately Â£9,870.

That’s not a disaster by any means, but it’s actually lagged the FTSE 100 over the period.

To put it in context, the shares touched 1,420p last year and are now trading around 1,180p — still 16% below that peak.

What’s happened and are we looking at an opportunity?

The turnaround changed everything

It is worth pausing occasionally to remember how unlikely all of this is.

Four years ago, Rolls-Royce was a company in genuine distress — burning through cash, drowning in debt, hammered by a pandemic that had grounded the widebody aircraft its engines power. The shares fell toward 50p. Today, the market cap stands at nearly £100bn.

The transformation under CEO Tufan Erginbilgic has been remarkable by almost any measure. Revenue hit £21.2bn in 2025, up 12% on the prior year. Operating profit came in at £5.3bn, delivering an operating margin of 24.9%.

Free cash flow per share reached 42.4p. Net debt has not just been eliminated; Rolls-Royce is now sitting on net cash of £1.76bn. The dividend, reinstated in 2024, is expected to grow from 9.5p last year to 12p in 2026.

What’s weighing on the shares now?

So why only flat-to-down in 2026? A few things.

Firstly, let’s remember that stocks just can’t keep going on the same fast-paced trajectory forever — especially not at this scale.

Rolls shares had a very strong 2024 and 2025 — up 17.5% over the past twelve months even after recent weakness. A lot of good news is already in the price.

At 31.8 times forward earnings, Rolls-Royce is trading at a significant premium to the UK average. This means any wobble in the outlook gets punished.

In the short term, there has likely been pressure on the stock because of the war in the Gulf. Rolls earns more when its engines are being used more — that’s just the way the contracts work.

There has been a huge amount of disruption to air traffic in the Middle East, and higher fuel prices can lead to flight cancellations. It’s not just what’s happened already, it’s about what could happen if the conflict isn’t ironed out.

A permanent ceasefire would drive optimism.

A quality opportunity?

The quality of the business is not really in question. Return on capital of 28%, an operating margin approaching 25%, and a cash balance approaching £6bn tell a story of genuine operational excellence.

Analyst consensus from 18 brokers puts a target of 1,389p on the stock — about 17% above today’s price. Part of that will be benchmarking against GE Aerospace (and GE Vernova to a lesser extent) — the US listed companies that are essentially Rolls’s closest peer.

Whether investors agree is another thing as analysts can be wrong. Personally, I think Rolls is worth considering but investors must realise it’s might not be too far off its fair value. A lot of the value lies in the moat, the margins, and the prospect of small nuclear reactors.

The post £10,000 invested in Rolls-Royce shares at the start of the year is now worth… appeared first on The Motley Fool UK.

More reading

• Up 1,119% in 65 months, is there anything left to say about Rolls-Royce shares?
• Could this cheap FTSE 100 stock be the next Rolls-Royce?
• Should investors snap up Rolls-Royce shares on the dips?
• Are Rolls-Royce shares’ best days behind them?
• Here’s what £5,000 invested in Rolls-Royce shares at the start of 2023 is worth today

James Fox has positions in Rolls-Royce Plc. The Motley Fool UK has recommended GE Vernova and Rolls-Royce 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.

Millions of us invest for a second income. We might not need a second income today, and we haven’t quite figured out our timeline for the future.

But here’s something most income investors get wrong: the best dividend stocks of tomorrow may be paying nothing at all right now.

Remember this

Cast your mind back to 2000. Microsoft paid zero dividend. Apple paid zero. Both were growth machines — cash being reinvested, shareholders rewarded through price appreciation alone. Income investors wouldn’t have touched them.

Fast-forward 25 years, and the picture looks very different.

Microsoft began paying dividends in 2003 and has grown them every single year since. Investors who bought near the post-crash lows around $20 (split-adjusted) are now collecting roughly 15% yield on their original cost price — before counting a share price that’s up around 2,000%.

Apple followed a similar path: Jobs refused dividends for years, calling them a sign of weakness. Today, Apple returns over $90bn annually to shareholders through dividends and buybacks.

Not every story ends that way. Cisco also paid nothing in 2000 and now yields around 3%. But the share price has literally just regained its dot com era highs.

There’s our prophetic story — the risks are clear. Identifying which of today’s zero-dividend growth stocks will become tomorrow’s Microsoft is genuinely hard. Many won’t.

A future dividend champion?

Nvidia‘s forward dividend yield is 0.02%. That’s obviously tiny. However, there are some good signs.

The payout ratio — the percentage of net income paid out to shareholders in the form of dividends — is just 0.84%. That means dividend payments are covered more than 119 times by net income. In turn, this tells us that’s there’s plenty of room for growth even if earnings flatline — which I hope they won’t.

Will Nvidia stand the test of time? Honestly, I can’t say for certain. My prediction is that Nvidia and SpaceX will be the largest companies in the world in a decade from now. But I know as little as anyone else.

For now, it’s worth recognising that Nvidia is part of the infrastructure backbone of the AI revolution — and its financials reflect that dominance in extraordinary fashion.

Revenue hit $215.9bn in its last fiscal year, up 65% in a single year. Operating margins stand at 60.4% — a figure most companies could only dream of. Return on equity is 107.6%.

These are the numbers of a business that owns the picks and shovels of the most important technological shift in a generation.

There are obviously risks. One that’s often highlighted by bears is the circular nature of funding in the sector — with some pointing to examples of Nvidia investing into companies so they can use that money to by Nvidia’s chips.

But that’s only part of the demand story. And, for what it’s worth, I absolutely believe Nvidia is still worth considering. Seventy-odd institutional analysts agree, with the share price target 48% ahead of the current share price.

The post Your best second income stock may not pay a dividend yet! appeared first on The Motley Fool UK.

More reading

• Is the Nvidia share price heading for trouble as AI datacentres face delays and cancellations?
• 2 world-class S&P 500 stocks down 11% and 32% to consider buying
• Get ready for Nvidia stock’s next move higher
• A once-in-a-decade chance to buy Nvidia shares at a discount?
• £5,000 invested in Nvidia stock 6 months ago is now worth…

James Fox has positions in Nvidia. The Motley Fool UK has recommended Apple, Microsoft, 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.

Greggs‘ (LSE:GRG) share price has had a miserable 12 months. Down around 32% over the past year and sitting 30% below its 52-week high, the sausage roll king of the British high street has gone from stock market darling to something investors are quietly trying to forget.

So what’s going on and is this a diamond in the rough?

The numbers aren’t particularly positive

For a long time, Greggs was one of those rare consumer companies that made the financials look almost effortless. Revenues grew from £811m in 2020 to £2.15bn by 2025 — admittedly 2020 was the initial pandemic year.

However, the profit story has quietly deteriorated. Operating margins have compressed from a peak of 12.5% in 2021 to just 8.5% now. Normalised earnings per share fell 17% in 2025 to 119p.

Looking forward, analyst recovery forecasts don’t impress — around 125p in 2026 and 131p in 2027. That’s still shy of 5% annually.

What’s more, capital expenditure has been rising significantly. Capex has soared from 53p per share in 2021 to 278p last year — this is the cost of Greggs’ aggressive expansion and its drive into evening trading and delivery.

The consequence is that free cashflow has collapsed from a healthy 225p per share to just 50p. And the cash on the balance sheet has gone from nearly £200m down to £71m, while net debt has surged from £85m to £404m. That’s a fivefold increase in four years.

Cheap enough to consider?

The stock’s now trading at 12.4 times forward earnings. That might sound reasonable valued, but with earnings per share growth in the low single digits, the price-to-earnings-to-growth (PEG) ratio comes out at 2.8. This figure, if taken on its own, suggests an overvaluation.

Price-to-free cashflow sits at 31 times, which is hard to justify for a mature retail bakery chain facing margin earnings growth challenges.

And finally, the dividend yield may look attractive on first sight, but the coverage ratio now sits under two times (a benchmark for stability). Coupled with falling free cash flow, it’s not a pretty picture.

The bottom line

Above, I’ve run through all the concerns I have from a data perspective. But there are operational concerns behind all of this — some of them aren’t clear in the data.

Greggs built its cult following on cheap, cheerful, calorie-dense food — the 99p sausage roll is practically a national institution. But the direction of travel in British eating habits, however slowly and unevenly, is toward healthier options.

When that starts to impact the business in the near term or the long term, I don’t know. But Greggs, which is a great brand and a strong public image, is in an unenviable position of having to navigate a slow-motion identity crisis.

Given all of this, I don’t think it’s worth considering.

The post What’s going on with the Greggs share price now? appeared first on The Motley Fool UK.

More reading

• 5 years ago, £5,000 bought 218 Greggs shares. How many would it buy now?
• Buying £20k of Greggs shares could give me an £860 income this year!
• 3 risks to Greggs shares that could hamper a recovery
• Here’s what £5,000 invested in Greggs shares at the start of 2026 is worth today
• Why isn’t the Greggs share price going up?

James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended Greggs 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.

Wednesday 8 April could mark the beginning of a stock market recovery. Whether it is or not depends entirely on two words: ceasefire sticks.

A big day for markets

The market surged today. The FTSE 100 added 2.7%. Germany’s DAX surged 4.9%. And US market jumped at the open. What’s more, oil plunged 15% to below $100 a barrel, marking the steepest single-day fall in nearly six years. Risk assets rallied across the board, from stocks to emerging markets to Bitcoin.

However, context matters.

This wasn’t a rally from a position of strength. Before today’s session, markets had been badly bruised by the conflict in the Gulf. The Nasdaq had already fallen more than 10% from its October 2026 high — the definition of a correction.

The S&P 500 was sitting roughly 9% below its peak, within touching distance of correction territory itself. The FTSE, though more resilient thanks to its energy and commodity weighting, had spent months grinding lower as inflation fears and recession risk weighed on sentiment.

While there had been Trump’s intervention in Venezuela and AI-related worries, the correction was caused by rising oil prices on the back of the war in the Gulf. Brent crude had surged more than 40% since the conflict began, rising from around $72 to over $106 a barrel after Iran closed the Strait of Hormuz.

That shock reignited inflation fears globally, froze central bank easing cycles, and raised the prospect of a stagflationary recession — the worst combination for equities.

The ceasefire helps to unwind all of that. Oil retreating below $100 gives the US Federal Reserve and the Bank of England room to cut rates. Lower energy costs reduce input inflation. Consumer confidence can begin to rebuild.

But the critical word is if. This is a two-week agreement, not a peace deal. The last time markets staged a major relief rally on a geopolitical development, the optimism lasted eleven days. If talks collapse, today’s gains will be reversed.

So, today could be a turning point…

Investing in the volatility

Broadly, I invest when the stock market pulls back and sit tight when it rises like today.

That said, there are still plenty of stocks that are trading well below their fair value. One of these is Jet2 (LSE:JET2).

Jet2 was punished by the conflict. As an airline and package holiday operator, it faced surging jet fuel costs as oil prices rose more than 40% from pre-war levels.

The stock now trades at 6.6 times forward earnings despite sitting on a tidy net cash position — about £800m, equivalent to two years net income.

Jet2 hedges fuel — roughly 75% of fuel for the year was already hedged. This meant it wasn’t too exposed to near-term surges in jet fuel prices.

However a prolonged conflict would have eventually unraveled that safety blanket. Therefore, the risk is that this ceasefire doesn’t stick and jet fuel prices remain elevated.

Still, at current levels, I think Jet2 looks worth considering for patient investors. I believe it’s one of the most under-appreciated stocks in the UK, with long-term growth supported by efficient fleet transition and new operations at Gatwick.

The post Is this the beginning of a stock market recovery? appeared first on The Motley Fool UK.

More reading

• Trading at 3.5x net income, I think Jet2 could lead the next stock market recovery
• Consider these 2 dirt-cheap stocks to buy if the Straits of Hormuz permanently reopen
• 2 shares that could surge in a stock market recovery…
• Prediction: this FTSE AIM stock could soon be one of the top-rated according to these models
• 5 April is almost here: is now the perfect time to start investing?

James Fox has positions in Jet2 Plc. The Motley Fool UK has recommended Jet2 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.