While Bitcoin’s 80% fall since reaching a record high in late 2017 has been hugely disappointing, other assets have also experienced tough periods of late. Premier Oil (LSE: PMO), for example, has recorded a decline of 50% since early October, with a falling oil price the key catalyst behind its slump.
Although Bitcoin may continue to post declines as a result of weak investor sentiment and its lack of fundamentals, Premier Oil appears to have recovery potential. As such, it may be worth buying alongside another struggling FTSE 250 share which released a positive trading update on Wednesday.
The company in question is real estate investment trust (REIT) Great Portland Estates (LSE: GPOR). Its performance in the quarter to 31 December 2018 was relatively positive, reporting upbeat operational activity, as well as the successful rollout of its flexible space offering. Its three committed development schemes have continued to make progress, while 16 new lettings were signed during the period. They will generate an annual rent of £4.3m, while five rent reviews were settled that together secured a figure that’s 18.3% above the previous passing rent.
Looking ahead, the prospects for London and the wider UK economy continue to be uncertain. Brexit could dampen enthusiasm for the stock among investors in the near term, with a challenging consumer outlook set to contribute to slower GDP growth.
Despite this, Great Portland Estates remains optimistic about its future prospects. The company has a track record of outperformaning its UK-wide peers, since central London has historically been able to deliver growth even during the most challenging periods for the wider economy. With the stock now trading on a price-to-book (P/B) ratio of 0.8 following a decline of 6.6% in its share price in the last year, it appears to offer a margin of safety.
As mentioned, the Premier Oil share price has experienced a difficult period. It has, though, seen a partial recovery in recent weeks. The oil price has gained ground as investors have become less bearish about its prospects. This has helped to push the company’s shares higher, although they are still down by over half since early October.
Of course, the oil and gas sector is volatile, and wild swings in share prices are nothing new. Investing in any related stock therefore comes with a high degree of risk, since their profitability is highly dependent on the price of oil. And with geopolitical situations within a number of OPEC countries best described as ‘fluid’ at the present time, it would be unsurprising for major price movements in oil to continue throughout 2019.
Against this backdrop, Premier Oil may appear to be an unappealing investment. The company, though, has a price-to-earnings (P/E) ratio of around 3, which suggests it currently offers a wide margin of safety. With further debt reduction set to be delivered, the stock could offer an enticing risk/reward opportunity that makes it more appealing than Bitcoin over the long run.
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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.