I’m going to come straight out and say it, though, I wouldn’t touch the eateries giant with a bargepole right now. The FTSE 250 firm’s strategy to turn around falling customer interest in the likes of Frankie & Benny’s, by rejigging the menu and making its dishes more cost-competitive, continues to fail and like-for-like revenues slipped a further 2% in 2018.

Sales are unlikely to get any better any time soon, either, as fading consumer spending power worsens and an ultra-competitive marketplace persists. Joining the list of mid-tier culinary casualties this week, and underlining the challenging trading environment, were Giraffe and Ed’s Easy Diner as they declared plans to close 27 restaurants between them.

It’s not a shock that City analysts are predicting that The Restaurant Group will endure another profits reversal in 2019, and will consequently be forced to cut the dividend again (the Square Mile is already tipping a payout reduction for 2018 when it announces full-year results on March 15).

Turn your nose up!

There’s plenty that the restaurant chain has to prove beyond its near-term pressures, particularly concerning the steady growth in online shopping that’s affecting footfall in its retail park-based restaurants and threatening to keep profits under pressure in the years ahead. It’s also facing a challenge to prove the doubters wrong over whether it can make its takeover of Asian food franchise Wagamama back in November work.

The task has been made all the more difficult following the bombshell resignation announcement of chief executive Andy McCue last month. He will step aside because of “extenuating personal circumstances” once a successor is found and the timing could hardly be worse for a company in desperate need of stability to help it pull through the current crisis.

For all of these reasons I’m not tempted to invest despite its monster dividend yield and its ultra-low forward P/E ratio of 9.9 times. The Restaurant Group is a share whose market value has shrunk by more than three-quarters over the past three years and I see plenty of reason to expect it to keep reversing.

Gorgeous Georgia

If you’re looking for a big-yielding dividend share to make you rich by retirement then Bank of Georgia Group (LSE: BGEO) would be a much better bet, in my opinion.

Last year the FTSE 250 financial colossus saw pre-tax profit (excluding one-off items) spring 23% higher from 2017 levels, to 492.6m Georgian Lari, with strong growth being reported across both its retail and corporate banking loan books as well as strong growth in assets under administration at its investment banking division.

The Georgian economy is going from strength to strength — last year it grew by an impressive 4.8% year-on-year — and so the City expects Bank of Georgia’s profits to keep growing at a healthy rate in the medium term at least. And this leads to predictions of more bulky dividends, an 89.6p per share forecast payout yielding a giant 5.3%. Throw its low valuation into the equation as well, a prospective P/E multiple of just 5.8 times, and I think the bank is a brilliant income share to load up on today.

The post Retirement saving: could these 5%-yielding dividend stocks turbocharge your retirement fund? appeared first on The Motley Fool UK.

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Royston Wild 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.

A bearish research note from ShadowFall Capital & Research didn’t instil confidence, but IQE was quick to assert that “the allegations contained within the report are without merit and provide a misleading analysis of the company’s financial position,” adding that the report presented “a fundamental misrepresentation of the profit and cash generation of IQE.“

ShadowFall apparently held a short position in IQE and was, therefore, not a disinterested observer. But there is a significant volume of declared short positions in IQE at the moment, of around 9%, which is of concern — though it has fallen back as the share price has receded from its peak.

Familiar story

The biggest negative feeling I get is when I look at the IQE share price chart. The shares climbed steadily until September, fell back a little, but then resumed their upward march to 181p by mid-November. After that, the price dropped all the way back to under 100p before putting in a mini-rally to reach 130p as I write.

Now I know that share price charts don’t determine anything at all, but they often do reflect popular emotional human responses. In this case, early growth enthusiasts frequently push prices up too far, they fall on profit taking, rally again briefly, and then enter a lengthy period of slow decline.

On a forward P/E of 43, IQE could well be in that position now. And though I think there’s healthy earnings growth to come, I see it as already in the share price. I think there’ll be better times to buy IQE to come.

Banking growth

My alternative growth candidate is BGEO Group (LSE: BGEO), big in banking in Georgia. On Wednesday, its subsidiary JSC Galt & Taggart was awarded the Best Investment Bank in Georgia 2018 title by Global Finance — and that’s the fourth consecutive year it’s won that accolade.

You might know little about Georgia, but if you shun BGEO Group because of that then you could be missing a bargain-priced opportunity. Rare in that region, the country seems to be making the transition from washed-out ex-Soviet state to emerging free market beacon with considerable success.

On purchasing power parity, 2016 GDP per capita was estimated at $9,891, which is strong. The country’s economy depends significantly on agriculture, but its services sector is a big contributor and manufacturing industry is growing.

Growth opportunities

BGEO group is serving an economy that grew by 4.8% in 2017, with increasing demand for banking services.

Despite forecasts of 20% EPS growth per year for this year and next, BGEO shares are priced on a forward P/E of only 8.6, dropping as low as 7.3 for 2019. That gives PEG ratios of 0.4 for each of the two years, where 0.7 or less is usually seen as an attractive growth indicator.

On top of that, dividends have been nicely progressive and stand to yield 3.4% this year, and 3.8% next.

Liquidity isn’t as healthy as the big Western banks (though until recently it was pretty poor at those too), but BGEO is working to build it up. I see a long-term bargain.

The post Why I’d sell IQE plc to buy this small-cap growth stock today appeared first on The Motley Fool UK.

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Alan Oscroft 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.

The group currently pays out a 2.59% annual yield and this figure should only grow in the coming quarters as BGEO hives off its investment business, which owns healthcare, energy and beverage assets, into a separate London-listed vehicle. This will allow investors interested in Bank of Georgia’s 23.5% return on average equity (RoE), double-digit revenue growth and commitment to paying out 25%-40% of earnings in dividends to invest directly in it.

Of course, investing in a foreign bank carries significant macroeconomic risks, but Bank of Georgia has plenty of characteristics that still make it worth considering. For one, the aforementioned RoE shows just how profitable the bank is, due to relatively low costs, higher interest rates than in the UK, impressive market share, and none of the legacy fines or bad assets that have weighed down returns for British banks.

Second, the bank is expanding rapidly, but in what appears to me to be a more sustainable way than, say, British and American banks did before the financial crisis. It is growing its revenue largely by rolling out new retail banking outlets and investing in digital platforms that saw its retail banking revenue rise 29.1% year-on-year (y/y) in H1.

Now, BGEO group is not cheap by traditional metrics with a price-to-book ratio of 1.9, which for now also includes the investment assets. However, with sales and margins growing, a relatively healthy capital buffer and high growth and income potential, I reckon income investors who have an elevated risk tolerance would do well to dig deeper into the company.

Back in the black 

Another option in the same vein is Ukrainian iron ore pellet producer Ferrexpo (LSE: FXPO). The recent commodity crisis was particularly harsh for the company as it was hit by both lower prices and the collapse of its major bank that wiped out significant cash reserves. However, its recovery is going well and dividends have been restored with analysts expecting a 7.06p payout and 2.4% yield this year.

Looking forward, there’s reason to expect this dividend to continue creeping up as demand for its relatively high-quality iron ore pellets is rising due to Chinese steelmakers shifting production towards higher quality and lower emission steel production. Higher prices are also improving the company’s financial position with net debt-to-EBITDA down to 0.96 times at the end of H1, which should provide more leeway for management to juice dividends.

Now, the risks involved in investing in a commodity producer should be clear to all investors. However, with Chinese steelmakers still producing unbelievable amounts of steel, the short-term outlook for Ferrexpo’s product looks fairly sound. If the company can continue to rapidly deleverage and begin re-directing a higher percentage of rising cash flow to shareholders, the company could be an interesting income option.

The post 2 mid-cap dividend kings in the making appeared first on The Motley Fool UK.

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Ian Pierce 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.

New kid on the block

Metro Bank (LSE: MTRO) is a newcomer to UK high street banking, and when it opened its doors in 2010, was the first high street bank to open in 100 years. The £3.1bn market cap is placing a strong emphasis on customer service, with its branches open seven days a week, and from 8am to 8pm on weekdays.

This sounds great in theory, however I’m not so convinced by the investment case. While Metro Bank has seen a strong increase in revenues over the last three years, it is yet to generate a full-year profit.

That could change this year, with City analysts anticipating earnings of 25p per share for the year. At the current share price, that consensus earnings figure places the bank on a forward P/E ratio of a sky-high 140. Add in the fact that Metro does not pay a dividend, and I’m not seeing many reasons to invest in the challenger bank right now.

Emerging market play

A more attractive banking play, in my view, could be BGEO Group (LSE: BGEO), the group formerly known as Bank of Georgia Holdings.

BGEO is the leading retail bank in Georgia, serving 2.1m customers through a network of 273 branches. The group operates through three well-established brands, Express, Bank of Georgia and Solo.

The firm has recorded five straight years of revenue growth, and earnings per share jumped from GEL7.93 to GEL10.41 last year, a rise of 31%. Half-year results released this morning show the momentum continuing, with profit before tax rising 68.3%, and basic earnings per share rising 25.6% to GEL5.74. 

Of course, Georgia is very much a developing country, and investing in smaller emerging markets comes with its own set of risks. Fluctuations in exchange rates can also affect profitability in GBP terms. On a forward P/E of just 8.6, the bank’s valuation does not look overly demanding though, and a forecast dividend yield of 3.4% adds weight to the investment thesis.

The black horse

However, when all is said and done, I’d pick Lloyds Banking Group over Metro and BGEO.

Lloyds is far from perfect, having struggled through a considerable rough patch in recent years. However, things do now appear to be turning around slowly. Recent half-year results saw underlying profit rise 8% to £4.5bn, and while earnings per share dipped marginally, the bank raised its interim dividend by an impressive 18%. Management stated “as a simple, low risk, UK-focused bank we are well placed to continue to help Britain prosper.”

City analysts forecast full-year earnings of 7.7p this year, placing the stock on a forward P/E ratio of 8.5, and dividends of 4.02p per share are expected, although this level of payout is far from guaranteed.

On the bear side, Lloyds is highly exposed to the fortunes of the UK economy, and the bank is still dealing with conduct charges as well, recently forking out another £1bn related primarily to PPI charges.

However, Lloyds definitely appears to be heading in the right direction, and as such, I’m cautiously optimistic about the bank’s long-term investment prospects.

The post Why I’d buy Lloyds Banking Group plc over these two banks appeared first on The Motley Fool UK.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

Georgia is very much a developing economy, and though Bank of Georgia is the country’s largest retail bank, it still looks very much like a growth stock in the early stages of its lifecycle. Earnings have grown modestly over the past few years, but the real growth looks like it’s yet to come — analysts are expecting a 38% EPS rise for the year ended December 2012, with double-digit rises pencilled in for the next two years too.

That puts the shares on PEG ratios that are more often found with small growth companies —  BGEO is on a ratio of just 0.3 for 2016 results, with 0.4 and 0.5 on the cards for the next two years, based on a share priced of 3,581p.

Dividends too

The annual dividend has been a little erratic recently, but predictions suggest that the 2015 payment of 79p will be boosted by nearly 70% to 133p by 2018 — with the fall in the pound contributing a little to that.

This year is going well so far, with first-quarter profit up 24.3% to GEL108.2m (that’s Georgian Lari), which is approximately £35.6m, and basic EPS rose by 25.7% to GEL2.64 (87p).

There are always extra risks to face when you invest in the less well managed emerging markets of the world’s developing economies, and that’s certainly the case here — but then, UK banking regulations didn’t do a very good job here so recently.

And I reckon there’s more than enough in growth prospects at BGEO to cover the risk.

High flyer

The growth stock I’d sell now is Scapa Group (LSE: SCPA). But first let me tell you what I like about it.

Scapa makes adhesive products for the healthcare and industrial markets — and has achieved several years of double-digit growth which has seen earnings per share soar from 5.5p to 14.8p in just four years.

On top of that, the dividend, which stood at just 0.5p per share in 2013, had quadrupled to 2p for the year ending March 2017.

This year’s results included a 13% rise in revenue, leading to a 37% jump in adjusted earnings per share, with Scapa’s industrial division achieving its target of double-digit margins (something the healthcare division already enjoyed). And chief executive Heejae Chae told us “We have set the goals for the next phase of our growth which we are confident that we can deliver.“

Too expensive

I’m convinced Scapa’s long-term future is solid, but it has that ‘top-heavy growth share’ look about it that I’ve seen so many times over the years.

Growth is impressive, investors pile-in, there’s another cracking year of growth, more jump aboard… and eventually when growth slows and one set of results comes in a little behind expectations, everyone jumps ship and a big chunk is shaved off the share price.

Scapa shares have nine-bagged over the past five years to today’s 497p, putting them on a P/E of 30 (which implies another doubling in EPS is already built into the price) at a time when forecasts are indicating slowing earnings growth for the next two years.

For me the signs of an exuberant bull run coming to an end are all there.

The post One hot growth stock I’d buy right now, and one I’d sell appeared first on The Motley Fool UK.

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Alan Oscroft has no position in any 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.

The low-cost airline announced that revenues soared 13.4% in the year to March 2017, to £707.4m, but it swung to a pre-tax loss of £26.7m from a profit of £6.8m a year earlier.

Flybe had £4.8m worth of IT-related writedowns to thank in some part for last year’s reversal, and the business warned of another £6m worth of similar costs in the present period due to contract cancellations.

But this was not the only cause for some hand-wringing, with Flybe’s ambitious expansion strategy appearing to have overshot the runway. The company announced that it had increased capacity 12.3% in fiscal 2017, to 12.7m seats, but that traveller numbers rose just 7.6% to 8.8m.

As a result, Flybe plans to dial back the number of planes in operation, and has pencilled-in the return of six leased Bombardier craft to optimise its fleet more effectively looking ahead.

Flying high

While Flybe may have been hasty in spreading its wingspan, the stratospheric growth in passenger numbers across the continent still offers the Exeter flyer with plenty of upside further out. Indeed, airport trade association ACI Europe announced this week that average passenger traffic rose 14.1% year-on-year in April.

The City certainly expects earnings at Flybe to snap higher again following last year’s turbulence, and have pencilled-in growth of 39% and 179% for the years to March 2018 and 2019 respectively.

Consequently the budget flyer deals on a forward P/E ratio of 14.2 times, a little distance below the widely-considered value watermark of 15 times.

So with Flybe still trading just off recent record lows of 33p per share, I reckon now is a great time for dip buyers to dive in.

Eastern promise

I believe that BGEO Group (LSE: BGEO) is also on course to deliver stonking earnings growth in the years ahead, thanks to its exposure to fast-growing Eastern Europe.

The business, which incorporates regional powerhouse Bank of Georgia, saw revenues rocket 20.2% during January-March, to GEL221.4m (one Georgian Lari is worth about 32p at the moment). This drove profits 24.3% higher, to GEL108.2m.

BGEO is the country’s largest retail banking operator with some 2m customers, but owing to the relatively low industry penetration rates, as well as the strength of the Georgian economy, it still has plenty of room to go. The financial firecracker noted that Georgian GDP grew 5% in the first quarter.

The number crunchers expect BGEO to keep earnings rolling comfortably higher, and have chalked in expansion of 26% in 2017 and 15% next year. And these projections make the banking behemoth irresistible value for money.

Not only does BGEO deal on a meagre forward P/E ratio of 9.4 times, but the stock also carries a sub-1 PEG multiple of 0.4. I reckon the FTSE 250 bank is worthy of serious attention at current prices.

The post 2 bargain growth shares you need to consider right now appeared first on The Motley Fool UK.

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• Looking for FTSE 100 bargain stocks? Check these out!

Royston Wild has no position in any 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.