Making the best of a bad situation

It’s no surprise that the pandemic simultaneously decimated some sectors of the economy and rewarded others. JD Sports, belonging to the retail sector, could and perhaps should have suffered a similar fate to its high-street counterparts, most of whom were decimated by lockdown-enforced store closures. But the company was well placed to deal with such a setback; consumers used their accumulated disposable income to purchase stylish, comfortable loungewear when confined to their homes. Coupled with JD’s efficient website system for its brand and subsidiaries (recall Primark’s complete lack of one), it managed to supply the vast demand for dressed-down styles. It comes as no surprise, then, to see JD’s pre-tax profits soar from £61.9 million in 2020, to £439.5 million in the first six months of 2021.

Crossing the pond

One area where I see exceptional long-term growth potential for JD, even despite current all-time share price highs, is its 2018 expansion into America. This has worked a treat so far; it has acquired Shoe Palace and DTLR, and has also taken full advantage of consumer stimulus checks, or ‘stimmies’, as they are more commonly known. This jump across the Atlantic is still in its nascent stages, and I believe the recent UK-USA TikTok rivalry among young people has exposed many Americans to British fashion and culture. The chunky trainers and puffer jackets that are famous among British rappers, models, and teenagers, have been embraced widely by Americans, and JD is one of the best supplier of these styles. That’s another reason why I believe it’s one of the best shares to buy now for my own portfolio.

A bumper dividend ahead?

After its well received news on Tuesday, JD preferred not to announce an interim dividend. But with expected end-year profits hoped to top £750 million, it is rumoured that its final dividend will be larger, if not the largest, in recent history. Its share price has risen 38% and as I write, is trading at 1,147p – near-enough a record-high. As a result, JD is a relatively expensive buy in the FTSE 100, holding a strong price-to-earnings ratio of 35. This won’t deter me, though, as I believe there is further growth to be had, especially to a growing American audience.

For these reasons I see JD as one of the best dividend stocks to buy and hold for my portfolio in the long term.

The post The best UK dividend stock to buy now appeared first on The Motley Fool UK.

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Joseph Wilkins 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.

Why do I see value in Wetherspoons at the moment?

Wetherspoons, the famous haunt of students in search of the UK’s cheapest pints, is enduring a tough year on the market. With strict lockdown measures causing pub closures and limited venue capacities, supply chain issues preventing access to certain beer brands, and the planned return to 20% VAT cutting into profits, it is understandable that the pub and restaurant chain has struggled massively. Its share price is down over 25% since March, and as I write, trading at 1,022p – far below its five-year average. While its price remains depressed, I see for myself a fantastic opportunity to buy this share before it recovers.

I see one key factor to suggest an impending rise of Wetherspoons stock: the return of students to universities. Never before have they been so influential; after 18 months out, the kids are ready to party. Universities are holding bumper freshers’ weeks for both first and second years (who missed out in 2020), so it’s likely that the ‘Spoons in your nearest city will be teeming with young people throughout September and October. That’s good news for owner Tim Martin, who, despite his outspoken nature, does supply the most affordable drinks in the country. For cash-shy students this is a godsend, as Wetherspoons is often the only pub where undergraduates can revel without breaking the bank. The affordability of bars has also not been aided by the rise in menu costs that has become increasingly noticeable since inflation worries started to take shape.

Wetherspoons has another attractive quality that I believe makes it one of the best shares to buy today. The company pays its staff a bonus each year, and has often given away free shares to its employees too. In the last five years it has paid a greater percentage of profits to employees than John Lewis, which is famously employee-owned. This is reassuring news to those sceptical of Martin’s employee treatment. If performance recovers to its 52-week high of 1,452p, then best believe that the lion’s share of profits will be paid to hardworking staff.

For these reasons, I believe Wetherspoons shares are one of the best for me to buy now.

The post Is this one of the best stocks to buy now after crashing 25%+ in 6 months? appeared first on The Motley Fool UK.

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Joseph Wilkins does not own shares in J D Wetherspoons. 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.

What is Hipgnosis?

Hipgnosis Songs Fund (LSE: SONG) is a fund listed on the FTSE 250 that owns song copyright, collecting royalties when these songs are played. Its portfolio consists of tracks, past and present, that have proven records of consistent royalty income. So far, its illustrious collection includes artists such as Fleetwood Mac/Lindsay Buckingham, Dua Lipa, Mark Ronson, 50 Cent, and many more. It also owns the rights to 36 of the 156 songs in Spotify’s tracks with over one billion streams.

The merits of investing in music royalties

There are several reasons why I believe this is one of the best shares to buy at the moment. Music royalties often provide a consistent level of income over the long term, especially if the songs cement their place in popular culture. How often do we hear the timeless classics of Go Your Own Way, Don’t Stop Believin’, and All I Want For Christmas Is You, decades after their release? Hipgnosis is also latching onto modern successes that will project revenue streams into the future; for instance, Ed Sheeran’s catalogue makes up a significant proportion of its portfolio. With the rise of streaming services, music has become accessible to a worldwide audience, and CEO Merck Mercuriadis aims to expand into South American markets by collaborating with artists from Hispanic and Latino backgrounds. (Some say we’ll never get the catchy chorus of Despacito out of our heads…)

Modern music services also tend not to be tied to the overall economic environment; that is to say this sector has a low economic beta. Artists’ content is played over many types of media (phones, TV, radio, and concerts) so investors are well diversified in case of a downturn. For instance, though the pandemic put the brakes on live performing for 18 months, masses of people turned to streaming services when confined to their homes. This diversification element is important for those who fear any further curbs on artists’ performance revenues.

You wouldn’t steal a song

One drawback worth considering is the threat of piracy that forever looms over digital artistic expression, stealing content and profits from official content providers. But the rise of streaming services has cut down on this illegal, virus-spreading activity as consumers are happy to pay small monthly amounts for the world’s music, rather than limiting one-off purchases like CD and vinyl.  

For these reasons, I believe that Hipgnosis shares are some of the best for me to buy right now.

The post The best FTSE 250 shares to buy today appeared first on The Motley Fool UK.

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Joseph Wilkins does not own shares in Hipgnosis Songs Fund. 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.

But we knew all of this already. In the last few days, though, it has wobbled for a different reason, and this could be signalling the dreaded correction that has loomed in the background behind 2021’s remarkable bull run. The reason? Experts are worried. It is often said that the market runs on emotion, and rumours are beginning to circle around Wall Street that a crash may occur before the end of the year – here, fear spreads like fire.

While it’s generally advised to ignore the daily hubbub of the market in favour of long-term gains, here at The Motley Fool we aim to avoid crises before they happen (and of course, make the most of fire sales). With that in mind, here’s my strategy that I’m organising before the market corrects.

Like many others, each month I buy a portion of the S&P 500 tracker fund. I’m planning to cut my payment right down to the bare minimum, opting instead to purchase the relatively fairer-valued FTSE All-Share Index. Why? I believe the US tech stocks are at the greatest risk of correction in a market crash, while the UK (for better or worse) lacks any of these giants. The FTSE All-Share, unlike the S&P, has not experienced the same scale of rapid growth since 2020 and so should be shielded from the worst effects of a downturn – in effect, there’s less to lose. This is only a temporary measure, but at present I don’t want to continue overpaying for American stocks if their value is going to wipe out soon.

Somewhat counterintuitively, it is also helpful to think of stock market crashes as flash sales. Warren Buffett has always styled himself as a ‘net buyer’ of stocks with a ‘holding period of forever’. Like any other product, then, paying at a discount is always encouraged. Stock market crashes provide brief periods of remarkable purchasing opportunity amidst a wider climate of pessimism, and for this reason I am keeping holding back some cash in order to pounce on the next dip and seize my desired companies from the bargain bucket.

Going against the grain of popular opinion can be a great way to make money in the market, and when the world is telling me to sell, I will turn my headphones up louder and purchase more stocks. Bring it on!

The post Here’s how I’m preparing for the next stock market crash appeared first on The Motley Fool UK.

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Joseph Wilkins owns shares in a S&P 500 tracker fund. 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.

Wizz Air is strongest in Eastern Europe, offering flights to, and within, the old Communist bloc. It also has a market stronghold in Germany, where its migrant population can inexpensively fly back and forth to their home countries. Otherwise, its presence in Western Europe is relatively scarce, and thus the recent failed easyJet takeover is consistent with the Hungarian airline’s aim to penetrate more mainstream routes. In this industry, consumers need one of two things: total cheapness or total comfort. easyJet, which neither competes with rock-bottom fares nor offers unbridled luxury, and which has refused to rule out being acquired in the future, may be merely holding out for a better offer.

Wizz Air shares, however, are currently trading at 4,816p as I write, down 1.97% from the previous close. While it may be too soon to suggest another bid is in the pipeline, Wizz’s long-term strategy is to eliminate competition and acquiring rivals is often thought the best way to do so – after all, you can always repaint orange planes purple. The shares’ one-year high is 5,595p; worth a pop if there is to be one more travel boom when the UK announces an end to the traffic light system in October. Wizz is also more lockdown-resistant than its competitors: in the chaotic summer of 2020, it pledged to fly at pre-Covid capacities, despite widespread uncertainty at the time. This is reassuring to those who are wary of further curbs on travel.

Wizz is on the offensive in the UK; Gatwick airport is seen as a key territory to pinch from its rivals. A base has also been confirmed in Cardiff airport, though note that its release has been pushed back until 2022. The management are up for it: Varadi has been promised a share bonus of £100m if he can achieved a compounded 20% enhancement of the share price within five years. For investors concerned about airlines’ climate implications, it is somewhat reassuring to know that Wizz’s fleet has introduced the Airbus A321neo aircraft – reportedly the greenest plane in its class.

At present, nothing is stopping Wizz but the symbolic Iron Curtain; bring it down and Western Europe will fall to the Purple Army. I’m planning to get in before it does!

The post Time to back Wizz Air shares? appeared first on The Motley Fool UK.

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Joseph Wilkins has no position in any of the shares mentioned. The Motley Fool UK has recommended Wizz Air 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.