Bitcoin and BT (LSE: BT.A) have something in common. Both assets have recorded exceptionally poor performance in the last couple of years. The Bitcoin price has moved over 80% lower since towards the end of 2017, while BT is down by over 50% since the latter part of 2015.
While investors may be of the view that both assets could offer recovery potential, the telecoms company may have superior turnaround potential. It could therefore be worth buying alongside another struggling stock which reported a positive trading update on Tuesday, in my opinion.
The stock in question is self-storage specialist Big Yellow Group (LSE: BYG). Its third quarter update showed a robust reporting period, with revenue rising by 7.1% versus the same quarter of the previous year. On a like-for-like (LFL) basis, revenue increased by 6.4%, with the company recording growth in both occupancy and rate. It expects this situation to continue over the course of 2019, with it forecast to return to occupancy growth in the fourth quarter.
Clearly, the prospects for the UK economy remain relatively uncertain. The company appears to have an improving financial outlook, though, with earnings expected to increase by 8% in the next financial year.
With the Big Yellow Group share price having fallen by 8% in the last six months, it now has a dividend yield of around 3.7%. This suggests it could offer good value for money, and that its valuation includes a margin of safety. With the potential for further growth, the stock could be a sound turnaround prospect over the medium term.
While a recovery for the BT share price has often been predicted by various investors and commentators, it has thus far failed to materialise. Certainly, the seemingly unstoppable fall in its market valuation appears to have come to an end, providing a more stable share price performance in recent months. However, the company appears to be in a constant state of change, which ultimately causes investors to become cautious about its future prospects.
With the company now having a price-to-earnings (P/E) ratio of 9, it appears to offer value investing appeal. A dividend yield of 6.7%, which is covered 1.7 times by profit, indicates that its total return could be impressive. If it’s able to offer improving financial prospects then there may be scope for a much higher share price over the long run.
As with many FTSE 100 stocks, BT faces an uncertain macroeconomic outlook. This could hold back its shares in the near term, with investors likely to focus on companies with solid track records of improving financial performance. But with the potential for a new strategy under a changed management team, the chances of a recovery could improve.
While Bitcoin may appear to be more exciting, its lack of fundamentals and falling demand among investors could mean that the telecoms stock offers a superior risk/reward investment opportunity.
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Peter Stephens 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.