The Motley Fool

2 turnaround stocks I’d buy before 2018

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

2017 has been a rough year for UK retail champion Marks & Spencer (LSE: MKS). The well known high street champion has struggled to compete with the likes Boohoo.Com in the fashion department, while competition in the food market has caused the company to slow its planned Simply Food store opening programme. These problems have weighed on investor sentiment, and the shares have struggled to tread water for much of the year. 

However, as we head into 2018, I believe that it could be time to snap up shares in this struggling retailer as its recovery plan starts to gain traction. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Making headway 

Next year will be the first full year Archie Norman holds the chairman’s position. Mr Norman took over the chairmanship at the end of the summer and has been getting to know the business ever since. 

He is best known for rescuing supermarket group Asda from bankruptcy, and the City has high hopes for his time at the UK’s largest clothing retailer. The big question investors will be asking, is if he has what it takes to return M&S to growth, after more than a decade of disappointments? 

I believe that this will become clear next year. There are already some signs that the business is improving (clothing revenue stopped falling in the six months to September 30, and full-price sales increased 5.3%), giving him a tailwind to help turn the business in the right direction. Considering his record, I think he will make some substantial positive changes to M&S in the months ahead, which should benefit shareholders. 

Investors will be paid to wait for this turnaround as shares in M&S currently support a dividend yield of just under 6%. The payout is covered 1.5 times by earnings per share so, despite the group’s problems, it looks as if there’s headroom to keep the distribution in place. 

Never made a loss 

European banks have a bad reputation, but Banco Santander (LSE: BNC) does not deserve to be tarred with the same brush. Unlike its European peers, Santander has not made a loss in over 100 years. The conservatively run bank is well diversified across many different markets, and despite being headquartered in Spain, that country only accounts for 12% (based on 2016 figures) of group profit. 

To help boost growth, in June, it acquired Banco Popular for the symbolic price of €1 after EU authorities declared the Madrid-based lender “failing or likely to fail.” To help fund the deal, Santander raised an additional €7.1bn of capital.

City analysts expect this deal to help boost earnings by 13% for 2018, giving earnings per share of 45.8p. Based on these estimates, shares in the bank are currently trading at a P/E of around 11. To me, this valuation seems cheap especially when you consider the fact that Santander is probably the best run bank in Europe.

If the company hits City growth targets in 2018, a re-rating could be on the cards. The shares offer a dividend yield of 3.7% while you wait. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.