Dixons Carphone (LSE: DC) has had a rough couple of years. The former market darling has suffered as the demand for its core product, the traditional monthly phone contract, has dwindled.
Earlier this year, the stock plunged to a 10-year low after management warned that the group was on track for a significant loss in 2019.
Dixons’ most significant problem is the historic sales contracts it has with mobile operators. Under the terms of these contracts, the company faces “eye-watering” penalties if it misses sales targets.
The good news is that management seems to have these issues under control. In its unaudited results for the half-year ended 26 October, Dixons revealed a substantial loss from its mobile business, which was expected, but management also issued an upbeat statement on the group’s turnaround.
“We’re on track to deliver what we promised this year, and with our longer-term transformation,” CEO Alex Baldock declared. He went on to add that “Mobile is challenging as expected. As promised, this will be the trough year for Mobile losses, and it will be break even by 2022.“
Based on these statements, it looks as if Dixons is now past the worst and the company could be on track for a recovery in 2020.
With this being the case, the stock appears to offer good value at current levels as it is trading at a forward P/E of 9.4, based on adjusted earnings per share.
What’s more, management has today confirmed that the group’s dividend is here to stay. At the time of writing, the stock supports a dividend yield of 5.1%. So investors will be paid to wait for Dixons’ recovery.
Another interesting FTSE 250 stock, one that looks to be a suitable replacement for a Cash ISA, is HICL Infrastructure (LSE: HICL).
HICL’s goal is to generate stable, long-term returns for investors by investing in infrastructure around the world. The three pillars of the company’s business model are Value Preservation, Value Enhancement and Accretive Investment, goals designed to produce the best returns for all stakeholders.
The great thing about infrastructure assets is that they tend to have very long lifespans meaning HICL has a great deal of clarity over future cash flows.
This clarity has translated into dividend growth in the past, and I see no reason why the trend cannot continue.
The stock has delivered 12 consecutive years of dividend growth and analysts are expecting the distribution to grow at least in line with inflation over the next two years.
At the time of writing, the stock supports a dividend yield of 5.2% and also trades as a forward P/E of 11, which suggests that the shares offer a margin of safety at current levels with the potential for income and capital growth over the long term.
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Rupert Hargreaves owns no share 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.