While the deal still needs to be approved by SXX shareholders, I think there’s a good chance that it will go through (although there’s still a small chance other mining giants such as BHP could come in with a higher offer). Sirius directors, who have been advised by JP Morgan Cazenove and Lazard, believe that the deal is in the best interests of shareholders as a whole and consider the terms to be “fair and reasonable”. And without a deal, there’s a “high probability” that Sirius could be placed into administration or liquidation within weeks, according to SXX Chairman Russell Scrimshaw.

Unfortunately, a 5.5p per share deal will mean that many private investors will lose a lot of money on this investment. This is due to the fact that a lot of people purchased SXX shares at much higher prices. If you’re one of these investors, here’s my advice.

Don’t stop investing 

My first piece of advice is: don’t let a Sirius loss stop you investing in the stock market. While investing losses are undoubtedly painful, stocks remain one of the best ways to generate wealth over the long run. Just look at the long-term track record of the FTSE 100 – it’s returned about 9% per year since its inception in 1984.

Losses are part of investing. Even the best investors in the world lose money on stocks at times. For example, Warren Buffett lost hundreds of millions of dollars on Tesco shares. The key is to diversify your portfolio so that one or two bad performers don’t ruin your overall performance.

Focus on profits 

My next tip is to focus on companies that are already profitable and generating cash flow (instead of investing in ‘pie in the sky’ companies that have no profits) and hold on to these companies while their profits rise. Having lost a fair chunk of money on unprofitable companies myself in the past, I now only invest in firms that are profitable and cash generative. And this has made a big difference to my investment returns.

Big gains

For example, about six years ago I bought shares in dotDigital, a highly-profitable little technology company, for around 24p. Those shares are now worth 114p (a gain of 375%), as the company’s profits are now far higher than they were when I bought the stock.

Another profitable company I’ve done well on is identity specialist GB Group. I first bought the shares at around 80p in 2012. Today, they’re worth 732p a pop as profits are much higher. More recently, last year I picked up some shares in Alpha FX, a very profitable currency specialist for around 650p. It’s now trading for over 1,300p due to the fact that profits have risen, meaning I’ve doubled my money in less than a year.

Of course, not every profitable company performs this well. However, in my experience, if you focus on cash generative, profitable companies that are growing at a strong rate, buy at a reasonable valuation, and hold for the long term, you’ve got a good chance of boosting your wealth.

The post Set to lose money on Sirius Minerals shares? This is what I’d do appeared first on The Motley Fool UK.

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Edward Sheldon owns shares in dotDigital Group, GB Group, and Alpha FX. The Motley Fool UK has recommended Alpha FX, dotDigital Group, and Tesco. 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.

If you want to see just how bad things can get, take a look at Tullow Oil (LSE: TLW). 

The recent plunge in the company’s value – leaving it trading on a little under 70p as I type – is nothing compared to the long-term trend. Go back almost eight years, to March 2012, and the stock was trading at over 1,500p.

So, it’s now a bargain?

Not so fast. Tullow’s now in a very sticky spot for a number of reasons: production guidance has been slashed, the company is currently rudderless following the resignations of both its CEO and exploration director, and the balance sheet is still under severe pressure, suggesting a fresh bout of fundraising is likely. 

All companies experience problems. Indeed, I’d be willing to stick with a stock if there was reason to believe it might recover and pay dividends to compensate holders in the meantime. Unfortunately, the latter is no longer the case with Tullow as the dividend has now been cancelled. 

There may be talk of it now being a takeover target but this should never be the sole reason for taking a position in a business. I’m steering clear. 

Shorter’s heaven

Industry peer Premier Oil (LSE: PMO) is another energy stock I’m wary of, albeit for a slightly different reason.

As I’ve said many times before, it’s always worth keeping an eye on what short sellers are doing. For those new to the investing, these are traders that bet against a company’s share price.

Given the volatile nature of the industry, it’s not exactly surprising if a few oil stocks make the list of shorting favourites. Premier Oil, however, has recently shot to the top.

Some readers may be scratching their heads. As my Foolish colleague Rupert Hargreaves explained recently, recent production has been healthy, and investors have embraced the idea of asset disposals. On the face of it, Premier seems a different beast from Tullow.

Or is it? Like Tullow, the investment case of Premier makes sense when the price of black gold is sky-high but it’s less than ideal if it’s falling or stagnating. 

This explains why a fund based in Hong Kong – Asia Research and Capital Management – has taken a massive short position on the stock as a hedge on its own $380m holding of the company’s huge debt pile. This way, it has some protection if the oil price stays low until the debt becomes repayable.

The fact that ARCM has stated that this is normal practice may help to assuage concerns, but it’s not exactly a ringing endorsement of Premier’s position. Ask yourself: if professional investors feel the need to make such a massive bet against a company they already have an interest in, do its shares truly represent the best opportunity for retail investors to make money?

If you’re tempted by either Tullow or Premier, I think the message is simple: only put cash in that you can afford to lose. 

The post Tullow Oil isn’t the only stock I’m running a mile from appeared first on The Motley Fool UK.

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Paul Summers 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.

Sirius’s problems are hardly a secret. A lack of funds has forced the company to slow the development of its Woodsmith mine in North Yorkshire — a project that could revitalise the region if it actually gets completed. This has hit the share price hard. Indeed, the company’s value is almost 85% lower today than at this time last year. 

Notwithstanding this, Sirius does have a plan. Last week, the company revealed that it would seek $600m from an investor to get it to the point that it’s capable of producing. By asking for far less than the £3bn it originally looked to raise, Sirius hopes it can then tap investors for more money further down the road. 

Whether any of this funding will be secured is still up in the air, of course. That said, my Foolish colleague Manika Premsingh thinks the share price has now fallen so low that the risk/reward ratio is very attractive.

While I don’t disagree that it’s better to buy a high-risk stock at a low price, I’d be inclined to wait until the funding was secured before venturing near Sirius again. You might miss out on a big jump, but this is far preferable to losing your entire stake. If it really is that great an investment, there will be plenty of chances to make money later on. 

Instead, I’d be more likely to put my money to work in established, profitable businesses, even those trading on traditionally expensive valuations. FTSE 100 life-saving technology firm Halma (LSE: HLMA) is one such example, especially after today’s record set of half-year results. 

Life-saving, money-making

Following “good organic and acquired growth“, revenue moved 12% higher to a little under £654m over the six months to the end of September with all four of Halma’s sectors (Infrastructure Safety, Process Safety, Environmental & Analysis and Medical) recording sales growth and the company performing well in all major regions in which it operates. Adjusted pre-tax profit came in at almost £129m — a 14% increase on that achieved over the same period in 2018. 

Unsurprisingly, Halma’s share price rocketed this morning. As I type, it’s well over 11% higher. That’s a mighty move for such a big company, but it does emphasise how confident investors are that recent growth rates will continue, even if the asking price before this morning (33 times earnings) was already high. 

It looks like they’re right to be optimistic, however, with CEO Andrew Williams commenting that order intake “has continued to be ahead of revenue and order intake last year” since the end of the trading period. Considering the resilient markets in which Halma operates and the fact that it continues to acquire smaller players at a fair clip, I suspect the share price will push even higher over the medium-to-long-term. 

It’s also worth remembering that, as well as being a great growth story, Halma has also been a very reliable source of income having raised its payouts by 5% or more every year for the last 40 years. The interim payout was raised by another 7% today to 6.54p per share. That’s the sort of consistency most dividend investors love.

The post Buy Sirius Minerals (SXX)? I’d rather back this FTSE 100 growth stock appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma. 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.

After informing investors it would be slowing the pace of development at its North Yorkshire polyhalite project in mid-September (after the company failed to get its stage 2 funding off the ground), the market has been eagerly awaiting further news from management.

At the beginning of last week, the company finally broke its silence by publishing the first part of that review.

A new plan

Rather than seeking a partner to fund the whole second stage of the project, Sirius is now looking for a strategic investor and financial investor to provide funding of $600m to “achieve the key de-risking milestone of first polyhalite.“

Management believes by meeting this smaller, initial milestone first, it will “significantly de-risk the proposition for senior debt providers at a later date and therefore facilitate the raising of senior debt to fund the remaining infrastructure.”

In my opinion, this is a very sensible plan. Sirius had previously been looking for around $3bn to fund the second phase of construction, a vast sum for such a small company in the early stages of development. It was always going to be an uphill struggle for the firm to raise this money, considering the risks involved for backers.

However, management’s new plan is to use this initial $600m to de-risk the project by proving that the mine can produce polyhalite. When this critical milestone is complete, I think the outlook for the company will significantly improve.

Time to buy?

Even though Sirius is still on track to run out of money in the first half of next year unless it raises new funding soon, I think its chances of success have greatly improved with this new plan.

$600m is still a sizeable sum, but it’s only 20% of that $3bn the business was initially seeking. That opens up the playing field for potential backers, especially for other commodity companies, with stronger balance sheets, which might be happy to stump up the extra cash in return for a piece of the business.

Still, while Sirius’ outlook has improved in my eyes until a backer has signed on the dotted line, the firm’s outlook remains uncertain.

The new funding target is a lot less demanding, but that doesn’t mean backers will leap at the chance. And until the funding is in place, the chances the company could run out of money in 2020 are still high.

On that basis, even though the Sirius share price has risen strongly over the past week, I’m not a buyer. I would much rather wait until we have clarity whether or not the company will survive the next 12-months before I take a position. Even though sitting on the sidelines might end up costing me money.

The post The Sirius Minerals share price rebounds 20%! Here’s what I’d do now appeared first on The Motley Fool UK.

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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.

Highs and lows

I’m not complaining. I knew the risks (although I never expected Woodford of all people to foul up so badly). Save your sympathy for the locals who put a fat chunk of their life savings into Sirius, hoping that it would regenerate an economic backwater, or relied on Neil Woodford to manage the bulk of their retirement savings. I’ve still lost real money, though, and I can’t afford to do that very often.

I bought Sirius a couple of years ago, when the share price was trading at around 35p. Right now, the share price stands at 3.15p. I have lost 85% of the money I’ve invested, and will lose the rest until CEO Chris Fraser can engineer a remarkable turnaround.

Some people think he can. A government-backed rescue package would send the stock flying to where it was and higher. If it returned to the level I bought at, it would turn £1,000 into more than £11,000. So far, the Treasury has been cautious. The risk is almost impossible to assess, making this a total punt, and I’m not a gambler.

From big to small

Luckily I bought CF Woodford Equity Income soon after launch, so I benefited from his first successful year. After that it was all downhill, but I hung on in the hope that his strategy would finally come good, while ignoring the fact that the blue-chip dividend investor now fancied himself as a small-cap stock picker, with disastrous results.

Woodford also got his timing wrong on Brexit, investing in British companies that should recover when our EU exit was resolved, only for the process to drag on longer than anybody expected. He also made a string of lousy stock picks from Kier Group to Provident Financial, which meant failure on three separate fronts, rather than just one. One factor ties it all together – hubris. Almost three decades of being told you’re a genius can only go to your head.

According to my Hargreaves Lansdown account, I’m only 25% down on Woodford. I expected that to be a bigger hit but I’ll find out more next year, when the fund winds down and we all get what’s left of our money back. So what was the one thing I got right in this apparent omnishambles?

I diversified.

Even at its peak, Sirius Minerals never made up more than 0.5% of my portfolio. With Woodford, it was less than 1.5%. Year-to-date, my ISAs are up around 12%, including both capital growth and dividends, so overall I am still richer than before.

Individual share price meltdowns and fund collapses hurt, but as long as you spread the risk around, you can still come out on top.

The post I backed Sirius Minerals and Neil Woodford. Here’s one thing I did get right appeared first on The Motley Fool UK.

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• This UK growth share’s already doubled this year. I reckon it might just be getting going!

Harvey Jones owns shares of Sirius Minerals. 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 stock entered the year above 20p, and it looks as if it is on track to end the year below 5p. A series of setbacks has whacked the stock over the past 12 months. These include the company’s announcement in mid-September that it was scrapping the bond sale required to get its multi-billion-dollar Phase 2 funding package off the ground.

Following this announcement, shares in the mining group plunged by more than 50%. 

Since then, shareholders have been left waiting for further updates. At the beginning of October, Chris Fraser, chief executive of Sirius, told The Times the company would have an alternative fundraising plan to put to investors before the end of the month. But so far, no plan has emerged.

In fact, since Sirius revealed its devastating fundraising news, there has been little in the way of news flow from the business.

No news

A few days after Fraser’s comments appeared, Sirius announced a 10-year supply and distribution agreement with state-owned Qatari company Muntajat, but there’s been no other substantial news in the meantime.

This is quite concerning. Sirius is not on the verge of running out of money just yet, although it is dangerously close. In its half-year financial report, the company declared that it would “need to secure additional external financing in order to allow it to continue operations after 31 March 2020.” Job cuts have already been implemented at its North Yorkshire potash mine project to conserve cash.

Simply put, Sirius’s future is unclear. However, what I think is clear is the fact that the company will have to ask investors for extra cash at some point in the next four to five months. 

Shareholder funding 

Sirius has always leaned heavily on its investors to provide financing for the company with share placings and rights issues. I think any further fundraising is going to include a significant shareholder contribution as creditors will want to minimise their exposure, and the group already has quite a lot of debt to contend with. 

Still, at this point, it is impossible to tell how much money the company will need to squeeze out of investors. A ballpark figure of, say, £400m might be enough to keep construction going — it would certainly put the business back on a stable footing — but require a two-for-one rights issue (shareholders could buy two new shares for every one they already own) according to my rough estimates.

Uncertain outlook 

Increasing the shareholder base by 200% would likely push the share price down a further 60%+ if all else remained equal. However, the company’s new-found financial stability would undoubtedly attract new investors, and that will have a positive impact on the share price.

In other words, it is quite difficult to tell what the future holds for the Sirius Minerals share price and with that being the case, I think this investment is only suitable for the most risk-tolerant of investors. 

The post Could the Sirius Minerals (SXX) share price ever return to 20p? appeared first on The Motley Fool UK.

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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.

Investors have been waiting with bated breath for further updates ever since. However, so far, there’s been no official updates. CEO Chris Fraser has caused a bit of a storm by reportedly claiming the company may be better off quitting the stock market. Sirius quickly rubbished this on Twitter. 

Unfortunately, it could be some time before Sirius issues any further updates. After failing to get its financing package together, management has commissioned a six-month strategic review to determine its options.

Sirius believes it has enough money to pursue this path, with £117m of uncommitted capital at the end of August. 

Weighing up the options

Although Sirius isn’t out of options yet, the company’s running out of time. There’s been speculation that some of the firm’s larger backers might be willing to stump up the extra cash required to complete the North Yorkshire mining project.

These include the Qatar Investment Authority, Norway’s $1trn sovereign wealth fund and Australian magnate Gina Rinehart. Each of these investors could single-handedly fund the project from their own resources. Fraser and team are also still pursuing government support for the project. 

So there’s still a chance Sirius could get the funding to complete its project. And if it does, how much could the stock be worth? 

Double or nothing?

At this stage, it’s tough to tell. When I’ve covered Sirius in the past, I’ve estimated the shares could be worth more than 60p when production is in full swing, based on average peer multiples.

A lot has changed since I put together these targets. Most importantly, the firm has issued hundreds of millions of new shares, diluting existing shareholders. Ultimately, the outlook for the Sirius share price will depend on the terms it manages to receive for the second stage of financing — if it manages to agree one at all.

If the company has to issue a lot more shares to get the deal off the ground, then the potential upside would decline substantially, although it would put the threat of bankruptcy to sleep for the time being. 

On that basis, at this point, I think it’s impossible to say if the Sirius Minerals share price can double your money. The company’s outlook is just too uncertain. We don’t even know if Sirius will be solvent 12 months from now.

With that being the case, I think it might be worth avoiding the stock for the time being until we have more clarity on what the future holds for the business.

The post Can the Sirius Minerals (SXX) share price double your money? appeared first on The Motley Fool UK.

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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.

If the former, the stock could be a bargain. If the latter, investors would do well to steer clear, and shareholders to cut their losses. Here, I’ll look at what’s gone wrong for Sirius, and how I think the future could pan out.

Stage 1

The company did a remarkable job in gaining all the necessary consents to take forward the development of its planned polyhalite mine in North Yorkshire. The $1.2bn stage 1 financing it managed to put together in 2016 was also notable for its achievements.

The £370m new equity it raised was a record for an AIM-listed mining company, the $400m of convertible debt was an AIM record full stop, and the $250m royalty financing and $50m equity funding from Australian billionaire mining magnate Gina Rinehart was seen as a ringing endorsement of the project.

The funding was a little more generous to new investors than I’d envisaged, but not too bad. Particularly as the company intended to use project finance debt, and no further dilutive equity issues, in the stage 2 financing to see the mine through to production.

Mrs Rinehart bagged a nice deal for herself and her heirs in the stage 1 round. Namely, 5% of the revenues on the first 13 million tonnes per annum (Mtpa) for each calendar year and 1% for any volumes above 13 Mtpa. The royalty to run for “the life of the project or 70 years, whichever is longer,” and “secured over the assets of the project, with such security to be fully subordinated to the stage 2 financing senior debt security once established.”

Stage 2

Despite trying to secure stage 2 financing ever since completing stage 1, Sirius has had its proposals knocked back by prospective lenders. In the latest setback, the company couldn’t find takers for a $500m bond offering, which was necessary to trigger a deal for a $2.5bn revolving credit facility from JP Morgan.

It seems the stage 2 financing Sirius had envisaged has proved a bridge too far. Probably not helped by last year’s announcement of an increase of $400m-$600m in the estimate of capital costs for the project, taking the stage 2 funding requirement from $3bn to $3.4bn-$3.6bn.

Mine, all mine

Shortly after midday on Friday, Sirius announced another polyhalite supply agreement, taking future aggregate peak contracted volumes to 13.8 Mtpa. That the shares rallied only insipidly on this news is testament to the market’s near-single-minded focus on the crucial matter of financing.

It seems highly likely to me that any alternative funding of the project would be hugely dilutive to existing shareholders. Meanwhile, if no alternative can be found, Sirius would drift into insolvency, leaving Mrs Rinehart’s royalty unpayable but “secured over the assets of the project,” and bond holders also ranking ahead of equity holders.

With options for any would-be owner of the asset to more or less cut existing equity out of the equation, I’d put the outlook for Sirius’s shares as somewhere between very bad and dire. As such, I see this as a stock to avoid for investors, and even a poor bet for inveterate gamblers.

The post Does the Sirius Minerals share price make it worth buying? appeared first on The Motley Fool UK.

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G A Chester 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.

Unfortunately, it now looks as if management is not going to be able to agree on a package with its lenders before the firm runs out of cash. And while management says it is doing everything it can to try and keep the lights on, it is clear that time is running out.

Essentially, the Sirius share price is now a lottery ticket. Either the company manages to clinch a last-ditch deal with creditors to keep the project going, or it doesn’t. If the enterprise fails to find more money, the only real option is bankruptcy.

With this being the case, if I owned shares in Sirius, I would swallow the loss and sell my shares today. 

High risk, low reward 

Taking a substantial loss on an investment is always hard to swallow. However, it is important to remember that if you’ve lost 90% of your capital, you still have 10% left to make a comeback. If you suffer a loss of 100%, you’re out of options.

Sirius might be able to agree on a last-minute deal with its creditors, and if it does, the stock could jump substantially from current levels. However, that is a big if. 

Investing is a game of probabilities. According to statistics, only around 5% of commodity projects make money for investors. The reminder either collapse or never make it off the drawing board. If you look at this statistic from a different perspective, it implies that 95% of commodity projects fail. This figure suggests there’s a 95% chance that Sirius will run out of money and collapse.

Live to fight another day 

Based on these figures, there is a chance that Sirius could pull through its current problems, but it’s so slim, I think investors will be better off selling up and investing their money elsewhere.

The FTSE 100 could be a great alternative. While an investment in this index might not promise the kind of life-changing returns Sirius initially offered, it is extremely unlikely the FTSE 100 will ever fall by 90% or wipe out investors. 

While returns are not guaranteed, over the past 10 years the FTSE 100 has produced an average annual return for investors in the region of 7%, nearly doubling a £1,000 investment. Meanwhile, a stake in Sirius has lost almost all of its value.

The bottom line 

So that’s why I would sell the Sirius Mineral’s share price after recent declines and move my money elsewhere. While a loss of 90% might be painful to stomach at first, it will leave you with 10% to fight another day rather than risk losing everything if the company declares bankruptcy.

There are plenty of other stocks out there with brighter prospects that could be a much better home for your money.

The post Here’s what I’d do with the Sirius Minerals share price right now appeared first on The Motley Fool UK.

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• This UK growth share’s already doubled this year. I reckon it might just be getting going!

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.

The former has lost 95% of its value in just 18 months due to a major accounting error, savers rushing to withdraw their cash and a poorly received (and subsequently pulled) bond issue. To say that the challenger bank finds itself challenged is putting it lightly.

Kier’s recent performance is equally shocking. Over the last 12 months, the share price has fallen 86% for many of the same reasons: an emergency cash call, an accounting error, and a profit warning. Restructuring costs remain a drag and Brexit continues to cast a shadow over the property, residential, construction and services firm.

With things looking so bleak, it’s natural that some should try to find a way of profiting. As I type, both Metro and Kier rank among the most shorted stocks on the London Stock Exchange. In other words, investors are making sizeable bets that the share prices of both are likely to fall further. 

Regardless of what you feel about the ethics of short-selling, it can be very lucrative. Many of those that wagered against market casualties like Carillion and Debenhams made a lot of cash in the process. That’s not to say it isn’t high-risk — losses are technically infinite if they get their calls wrong and share prices rise.

There is, however, another business that’s more hated than either Metro and Kier. 

The silver medal goes to…

With 9.7% of its stock currently being shorted, FTSE 250 member and oil services provider Wood Group (LSE: WG) ranks second in the leaderboard and above both Kier and Metro. Worryingly, the only company with more short positions hanging over it is Thomas Cook. 

At first glance, this all seems a bit harsh, especially when you take the company’s recent interim results into account. Back in August, the Aberdeen-based business revealed a $13m profit over the first six months of 2019 compared to a $52m loss over the same period last year (despite logging a 2.6% decline in revenue to $4.8bn). Wood also maintained its outlook for the full year and stated that it was “well-positioned for growth across the energy and built environment markets” beyond this.

Unfortunately, the market just doesn’t seem interested, with the fall in Wood’s share price over the last year showing no signs of abating just yet. Arguably the biggest concern is the amount of debt the company still carries.  

Net debt stood at $1.77bn by the end of June, 14% higher than at the same point last year. And while the sale of its nuclear business for $305m is expected to reduce leverage once the deal is completed in Q1 2020,  it would appear some also have concerns about Wood’s limited exposure to the recovering offshore and liquid natural gas markets compared to rivals.

A price-to-earnings (P/E) ratio of just over eight might look cheap, but there’s certainly an argument for saying that even this valuation might come under review if the health of the global economy were to deteriorate. At 8.3%, the yield is one of the highest in the FTSE 250 but dividends are, somewhat ominously, barely growing.

The shorters have been wrong in the past — Ocado being a perfect example. Could they have got Wood Group wrong as well?

The post This FTSE 250 stock is even more hated than Metro Bank and Kier Group! appeared first on The Motley Fool UK.

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Paul Summers 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.