The Bitcoin performance has clearly been disappointing over the last 15 months. It’s declined from nearly $20,000 to less than $4,000. Since it lacks fundamentals, it’s challenging to know whether it now offers good value for money.
One stock which has also disappointed of late is Sainsbury’s (LSE: SBRY). The retailer’s shares have fallen heavily following news that its planned merger with Asda may not go ahead. Now, though, could be a good time to buy the stock for the long term, appearing to offer a margin of safety alongside another falling stock which released news on Monday.
The company in question is specialist information business Ascential (LSE: ASCL). It released results for the 2018 financial year which showed a rise in revenue of 19% to £348.5m. It was boosted by organic growth of 6.3%, with key drivers being its Sales and Product design segments.
Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 7.5% to £101.8m on a reported basis. Although margins fell by 3.1 percentage points to 29.2%, this was largely due to the impact of higher growth-acquired businesses in the investment phase.
Looking ahead, Ascential is forecast to post a rise in earnings of 18% in the current year. After a share price fall of 12% in the last six months, it now has a price-to-earnings growth (PEG) ratio of 1.4. This suggests it now offers good value for money and may be able to deliver a successful turnaround over the long run.
As mentioned, Sainsbury’s has seen its share price decline heavily in recent trading sessions. It has slumped by over 18% in less than a week after it was announced that its planned merger with Asda is unlikely to go ahead. Competition concerns are the reason, which has clearly caused investors to doubt the overall strategy employed by the business.
Clearly, the merger with Asda could have created a stronger business which may have benefitted from increased buying power and synergies. However, the prospects for Sainsbury’s may still be positive. It’s expected to post positive net profit growth in the next two years, while it now trades on a lower valuation. In fact, it has a price-to-earnings (P/E) ratio of 11, which suggests that there’s a wide margin of safety on offer.
Although it’s unclear exactly what the company’s long-term plans could be, it maintains a strong position within the wider retail sector. A 4.6% dividend yield from a payout that’s covered 1.9 times by profit indicates it offers dividend investing potential. Although there may be risks ahead from intensifying competition in the retail sector, as well as an uncertain outlook for the UK economy, Sainsbury’s could now offer appeal for value investors.
Due to a lack of fundamentals, the same may not be true of Bitcoin, which could still prove to be overvalued even after an 80% decline in 15 months.
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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.