The price of Bitcoin is still down by around 80% from its all-time high, despite an improved performance in the last few months. Although some investors may feel that it could deliver a strong recovery, there could be superior turnaround stocks in the FTSE 350.
One of them is Saga (LSE: SAGA), with the over-50s travel and insurance specialist still well down on its previous highs even though it has gained 10% so far in 2019. Alongside another recovering share that released a brief update on Friday, it could offer significant upside potential over the long run.
The company in question is international software product specialist Micro Focus (LSE: MCRO). Its AGM statement reiterated the guidance given in its results released last month. That is for a further moderation of its revenue decline, with constant currency revenue for the continuing business for the 2019 financial year set to between -4% and -6%. This compares to a decline of 7.1% for the 2018 financial year.
Looking ahead, the company is forecast to post a rise in earnings of 4% in the current year. While modest, this would represent a significant improvement on its performance over previous years. As such, investor sentiment is gradually improving, and the company’s shares have now risen by 101% over the last 12 months.
Since Micro Focus trades on a price-to-earnings (P/E) ratio of just 13 following its share price rise, it seems to offer good value for money. With the prospect of a continued improvement in its operational and financial performance, it could generate further outperformance of the wider index over the medium term.
Also offering scope for improving share price performance is Saga. As mentioned, it has delivered share price growth so far in 2019, although there is still a long way to go before it returns to its six-month high of 138p.
The company is, of course, experiencing a challenging trading environment at the present time. Heightened competition as well as weaker consumer confidence could weigh on its near-term financial performance to my mind, and this is expected to lead to modest earnings growth over the medium term. In fact, in the current year it is due to post a rise in net profit of just 2%.
In response to tougher trading conditions, the company is seeking to build a wider economic moat through improved customer loyalty. A refreshed loyalty programme could help it to achieve this, although it may take time to have its desired impact.
Trading on a P/E ratio of 8.5, Saga seems to offer a wide margin of safety. Its recovery may not prove to be especially fast, but it has a solid position in its key markets. Over time, its rating could return to a higher level, with its financial performance likely to improve over the long run. As such, it could prove to be a superior recovery prospect than Bitcoin, which lacks fundamentals in order to make a reasoned investment decision.
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...
It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…
But you need to get in before the crowd catches onto this ‘sleeping giant’.
Peter Stephens owns shares of Micro Focus and Saga. The Motley Fool UK has recommended Micro Focus. 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.