Let’s take a look to see if these stocks are buys for my portfolio.

A UK share to profit from the booming housing market

The first company I’m looking at is Belvoir (LSE: BLV). It’s a property franchise group specialising in residential lettings and property sales. The share price has had an unbelievable run since the pandemic low at around 90p in March 2020. As I write, the share price is 260p which marks a near 200% return since then. There’s been some weakness lately though as the shares have dropped around 20%.

On Thursday, Belvoir released a trading statement for the 10 months to October saying that the company has performed ahead of the board’s expectations. Income grew across the group, with notable strength in property sales that the company said was “mainly a result of the strongest market for property transactions seen since 2007”.

I normally look out for franchise groups as an investor as they can achieve fantastic business economics. It’s up to the franchisee to invest any upfront costs, leaving the franchisor to collect an income from the potential profit. Indeed, Belvoir’s cash generation is excellent, and the business requires little cash investment itself. Last year’s operating margin was a stellar 31% too.

I have to keep in mind that Belvoir’s business is dependent on the housing market staying strong. Any slowdown in property sales or lettings and profits will fall. But I see this as a quality stock to keep in my portfolio as we head into next year.

A quality investment management company

I’ve also been looking at Liontrust Asset Management (LSE: LIO). It’s an investment management company offering a range of funds across various asset classes.

Liontrust released its half-year report to 30 September on Wednesday and it was very impressive, in my view. Adjusted profit before tax was £43.1m, which increased from £22.3m in the same period during 2020.

A key metric for an investment management company is assets under management and advice (AuMA) as this figure determines its income generation. Liontrust’s AuMA increased by 73% over the 12 months to £35.7bn.

One of the reasons I think Liontrust is a quality business is its operating margin. It’s able to generate double-digit operating margins consistently, and last year it was an impressive 37%. Not only this, but its return on capital is also consistently in double-digits.

A risk to consider before I buy the shares is that stock markets may crash next year. This would lower Liontrust’s AuMA, and therefore income would fall. But on balance, I still think this is a quality UK share for me to own for the long term.

The post UK shares: 2 quality stocks I’d buy for 2022 appeared first on The Motley Fool UK.

Both of the companies I’ve looked at today have delivered share price returns of at least 70% over the last year. Should I jump on board and buy these fast-growing stocks, or is it too late?

Solid foundations

The share price of groundworks contractor Keller Group (LSE: KLR) is up by 10%, as I write. Keller went through a difficult patch in 2018. This small-cap stock is a former FTSE 250 name, but a difficult period in 2018 set the business back.

The good news is that Keller has been recovering steadily since, despite the impact of the pandemic. Pre-tax profit rose by 24% in 2020 and the company has just said 2021 profits are expected to be “materially ahead” of previous expectations.

I should point out that Keller isn’t just any old construction company. It’s a “geotechnical solutions specialist”. Past projects have included building the foundations for stadiums, container ports and oil refineries. Keller has also been responsible for underpinning central London property where new tunnels and sewers are being built.

The company’s financial situation looks quite healthy to me, and Keller has maintained or increased its dividend every year since 1994.

However, there are a couple of risks that make me cautious about investing in construction. First, this is a cyclical sector — we do see boom and bust cycles. Second, the kind of projects Keller works on are large but have quite low profit margins. One troublesome project can have a big impact on annual profits.

Despite these risks, I’ve always been impressed by Keller. I think the group’s specialist focus on infrastructure means demand is likely to stay strong over the next few years.

With that in mind, I think the shares look reasonably priced, with a price/earnings ratio of 12 and a 4% dividend yield. This is a stock I’d consider buying.

This small-cap stock has doubled in a year

My second pick is £100m property firm Belvoir (LSE: BLV). This group manages franchised estate agency chains including Belvoir and Northwood, and also has a mortgage business. In total, Belvoir has 439 offices across the UK. These manage over 70,000 rental properties and handled more than 8,000 home sales last year.

The latest update from Belvoir suggests that the housing market remains pretty strong. Revenue rose by 41% during the first half of 2021 and the company expects to report a strong result for the full year.

I’m always careful about investing in property stocks because of the potential for a housing slump. A sharp drop in home sales could hit the group’s fee income. However, I think the group’s strong presence in the rental market should help to offset this risk. Even during lockdowns, rental fees remained fairly stable.

Belvoir shares currently trade around 15 times forecast earnings, with a 2.5% dividend yield. The stock has doubled over the last year and I’m not sure it’s cheap anymore.

However, I think Belvoir is a good quality business that’s well run. I’d still consider buying the stock and would certainly keep holding if I already owned it.

The post These small-cap stocks are rising: would I buy now? appeared first on The Motley Fool UK.

However, I’ve always owned a portfolio of small-cap stocks because I like to follow small businesses. What’s more, I think they can be easier to understand than larger enterprises. 

Small-caps and penny stocks also provide more exposure to the UK economy, making them attractive investments as it starts to open up. 

There’s one company, in particular, I’d buy for this reason. I think the business below has the skills and financial flexibility required to capitalise on that UK economic recovery. 

A champion of penny stocks

Any company with a market capitalisation of around £100m or less technically qualifies as a penny stock, even if its share price is above 100p. 

Property specialist Belvoir Group (LSE: BLV) has a market-cap of around £92m, at the time of writing. It’s a small-cap company that has big ambitions. 

Belvoir operates a nationwide property franchise group with 439 offices across six brands specialising in residential lettings, property management, residential sales and property-related financial services.

The company has benefited from the boom that’s gripped the UK property market over the past 12 months. Group revenue increased 13% in the year ended December 2020. Profit before tax jumped 20%, the 24th year in a row the organisation has reported growing profits. 

What I’m excited about is Belvoir’s is growth potential. The company is generating a tremendous amount of cash, which is reinvesting back into the business. At the end of December, the group’s cash balance stood at £5.9m. Such a strong balance sheet is relatively rare in the realm of penny stocks. 

Acquisitions drive growth 

Acquisitions form a crucial part of management growth strategy. Earlier this year, it acquired Nicholas Humphreys, a network of 18 franchise and three corporate-owned estate and lettings agencies, for £4m in cash. A few months later, it paid £600,000 to buy Nottingham Mortgage Services Limited, a wholly-owned subsidiary of the Nottingham Building Society. 

As the economy reopens, I think the property market will return to normal, which may mean reduced transaction volumes. But letting volumes should increase. The group generates around 60% of gross profit from letting revenues. So, coupled with the new acquisitions, I think Belvoir is on track to report a strong performance in 2021. 

That said, there are plenty of risks to the company’s approach. Acquisitions don’t always work out. This could leave the business with a costly mistake. At the same time, there’s no guarantee the property market will remain buoyant. A sudden increase in interest rates could send transaction volumes plunging. That would severely impact Belvoir’s growth. 

Despite these risks, I’d buy the company for my portfolio of penny stocks today, considering its growth potential.

The post Penny stocks: here’s 1 I’d buy in July appeared first on The Motley Fool UK.

The first stock to buy right now on my list is property franchisor group Belvoir (LSE: BLV). With evictions banned by the government and young people losing their jobs, I might assume the lettings agent would have seen rents drop. Yet it seems to have had a pretty good pandemic, with its franchisees continuing to do well, which bodes well longer term.

Belvoir provides both property sales and lettings, as well as financial services. Moving away from lettings, where it started, provides more diversified earnings. The expansion of financial services is particularly exciting. Also, Belvoir has formed some great partnerships, for example with The Nottingham Building Society. 

With a P/E of 12, the stock is fairly valued. Operating margins are high and the balance sheet looks strong. It’s all very positive. An added bonus is analysts forecast the share price rising by around 33%.

But as government takes tax breaks away from property investors, there might end up being less demand for Belvoir’s services. The property group is also acquisitive so there’s a risk it could overpay for future growth.

Overall through, I back management and the pandemic has shown the business model is resilient even in a difficult economic environment. I really do think it’s a stock to buy right now and will very likely add it to my portfolio soon.

Another high flyer

K3 Capital (LSE: K3C) is another stock with a lot to like, in my opinion. The Bolton-based business operates professional services businesses that advise SMEs. It has been growing revenue at a rate of knots. From 2015 to 2020 revenue more than tripled. It’s forecast to go from £15m in 2020 to £50.9m in 2022. That’s explosive growth, in my book.

Operating profit is also climbing strongly, margins are high and dividend growth is strong. With a market capitalisation of only £250m, there’s plenty of room for yet more growth.

With any share there is the possibility that the share price might not perform, of course. When it comes to K3 Capital, the main risks I see are that acquisitions may not integrate well or be too expensive. And as a professional group, people are key to its success so losing senior executives and managers could be a big blow.

Overall for me, the pluses massively outweigh the minuses. K3 is, for me, a stock to buy right now.

A final stock to buy right now

EKF Diagnostics is a final stock I want to briefly look at. The healthcare group grew revenues from £30m in 2015 to £65.3m in 2020. It’s projected to grow much further with revenues of £56.2m in 2022.

The risk with this one is the shares are potentially expensive with a P/E of around 29. But I’ll research further and potentially add to my portfolio as a riskier investment.

All these stocks strike me as high-quality growth opportunities. I won’t be at all surprised if they all see explosive growth in the coming months and years.

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A share I’ll add to my Stocks and Shares ISA

Calnex Solutions (LSE: CLX) specialises in testing and measurement services for telecommunication (5G) networks. Given that we have just had the auction for the 5G spectrum in the UK, the timing for this share couldn’t be better.

A trading update in February showed that the future looks bright. The company was able to say that its revenue for FY21 would be ahead of market expectations. Lower costs (particularly less travel and events) also mean margins will improve as well. A combination of higher revenues and better margins is, I think, very good for a growth share and bodes well.

With a market capitalisation of only around £100m, there’s plenty of potential for the shares of this AIM-listed group to move up.

The main risks with this share are twofold. One is that as it reports in US dollars, a weaker dollar could hurt profitability. The other is its valuation. The P/E is around 29.

On balance though I think Calnex Solutions is a share that might be added to my Stocks and Shares ISA.

All that being said, there is another similar and larger company, Spirent. Its share price has been weaker, which could be seen as a pro or a con, depending on my timeframe. For long-term investors, its lower P/E at 22, and falling share price, may make it more attractive than Calnex. Ultimately, they are well positioned for growth, and I will be researching both. 

Another growth share I like the look of

Belvoir (LSE: BLV) is a property franchise group, providing branding and support to property sales and lettings franchisees. It has done remarkably well through Covid-19, which is perhaps surprising.

Back in December, it was able to announce that trading in the 10 months ended 31 October had been ahead of its pre-Covid-19 expectations. Tenants seem to have, by and large, been paying rent through the pandemic.  

Before Covid-19, Belvoir was doing very well. Revenues had risen from £6.95m in 2015 to £19.25m in 2019. Profits had also risen impressively. I feel growth can continue into the future, based on its resilient performance through the pandemic and its expansion into property financial services in recent years. The valuation seems reasonable at a price-to-earnings ratio of around 15. 

There’s a risk that franchisees could become unhappy with the brand, as has happened at Domino’s Pizza. That would affect sales, as would tenants struggling to pay rent if the economy takes another downturn.

Also, as a franchisor, Belvoir’s brand is very important. That means any negative actions on the part of franchisees could impact the overall value of the franchise.

I aim to make sure I make the most of my Stocks and Shares ISA this month and beyond and I think Calnex Solutions and Belvoir Group could help me get the growth to build my wealth through investing.

The post The new Stocks and Shares ISA allowance: 2 shares I’ll add for growth appeared first on The Motley Fool UK.

My approach to finding shares with big growth potential

To get big gains from something like a £400 investment, I’ll want to focus primarily on smaller shares. That’s not the same as the absolutely smallest shares, which can be risky and volatile. Instead, I’ll focus on what’s often referred to as micro-cap or small-cap shares. Personally I quite like shares of companies with market capitalisation between £40m and £250m. That’s quite a range but opens up a large pool of high-quality, high-growth companies.

I want to avoid the very smallest shares as mentioned, while also avoiding the very the biggest companies. These are often less agile and slower growing. Although of course there are exceptions.

Also when it comes to achieving a return like 400% or more I’ll need to be realistic about how long that might take. Unless I take an inordinate amount of risk it’ll take a few years to happen, but that’s still a huge return. To quadruple my money is very good going. If that performance can be replicated over a long timeframe it would lead to serious wealth creation.

Investing in shares with room to grow rapidly

When it comes to the type of fast-growth shares that could give me a 400%-plus return over a reasonable timeframe (let’s say 3-5 years), these are some names my research has turned up.

One is Belvoir Group (LSE: BLV). The property franchise group has done remarkably well through Covid-19. Back in December, it was able to announce that trading in the 10 months ended 31 October had been ahead of its pre-Covid-19 expectations. I’d have expected tenants to withhold rents because of Covid-19-related job losses, but by and large, that doesn’t seem to have been the case at all. 

Before Covid-19, Belvoir was doing very well. Revenues went from £6.95m in 2015 to £19.25m in 2019. Profits have also risen impressively. I’m confident the growth can continue into the future. The valuation seems reasonable to me at around a price-to-earnings ratio of 15. 

There’s a risk that franchisees could become unhappy with the brand, as has happened at Domino’s. That would affect sales, as would tenants struggling to pay rent if the economy takes another downturn.

Also, as a franchisor, Belvoir’s brand is very important. That means any scandal by its franchisees could impact the overall value of the franchise. Overall though I’m very confident about Belvoir’s ability to keep growing and to keep its franchisees onside. 

When it comes to smaller, growth-style shares, I also like the look of MPAC, Venture Life, Motorpoint, and the larger Sylvania Platinum. The latter has a market cap nearer £300m, but for me still falls into a potentially high-growth stock category.

So if I wanted to earn a 400% return on an initial £400 by investing in shares, I’d focus on smaller cap shares. I’ll particularly focus on companies that are profitable, such as Belvoir Group. 

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Edward Sheldon: Calnex Solutions

My top micro-cap stock is Calnex Solutions (LSE: CLX). It’s an under-the-radar technology company that specialises in testing and measurement services for telecommunication networks.

Calnex is benefitting from the rollout of 5G networks and the widespread adoption of cloud computing. The company’s H1 results for the six months to 30 September 2020, for example, showed revenue growth of 37%. Meanwhile, the company recently advised that its revenue for FY2021 would be ahead of market expectations. It also said that it is well positioned to deliver its historical growth rates over the long term.

Like any micro-cap, this stock could be volatile. However, overall, the investment case looks attractive, in my view.

Edward Sheldon owns shares in Calnex Solutions.

Christopher Ruane: Foxtons

Estate agent Foxtons (LSE: FOXT) offers exposure to any rebound in the London property market.

The pandemic had an impact and revenue fell 12% last year. However, the pre-tax loss was sharply reduced from the prior year despite the difficult market. The company moved back into profitability in the second half of last year and says financial performance has continued to improve. Revenue in January and February was well ahead of the prior two years.

Its well-known brand is an asset in the crowded London market. I would consider buying Foxtons at its current price.

Christopher Ruane does not own shares in Foxtons.

Jonathan Smith: McBride 

McBride (LSE: MCB) is a UK-based manufacturing firm that offers private label services as well as producing some own-label products. This is mostly in the household cleaning area. 

The share price is up over 40% over the past year, thanks to increased demand from lockdown for many lines. Fiscal half-year operating profit (H2 of 2020) was up 83.6%, which impressed me.

Going forward, I think the business is well diversified with operations in 12 countries. It also appeals to ESG investors, given that 99% of packaging produced is recyclable.

Jonathan Smith has no position in McBride.

Royston Wild: Michelmersh Brick Holdings 

Continued strength in the UK housebuilding industry leads me to believe that Michelmersh Brick Holdings (LSE: MBH) will release encouraging trading news later this month. The AIM-quoted company is due to unveil full year results on Tuesday, March 30. 

Michelmersh certainly impressed when it last updated the market in November. Then it said that production capacity had returned to pre-coronavirus levels and that trading had remained “resilient” since June. Consequently it said that underlying revenue and profit would beat market estimates for 2020.

Today Michelmersh trades on a price-to-earnings growth (PEG) ratio of just 0.9 for 2021. This suggests that the company is being undervalued by market makers. And it’s a reading so low that I think another positive update in the coming days could prompt a sharp re-rating of the brickmaker’s shares.

Royston Wild does not own shares in Michelmersh Brick Holdings.

Conor Coyle: MacFarlane Group 

MacFarlane Group (LSE:MACF) is a micro-cap stock I think could be set for significant long-term growth. The company designs, manufactures and delivers packaging to businesses throughout the UK. Demand for packaging products has shot up as the number of online deliveries has increased due to the pandemic.

The Glasgow-based company is a well-established business and has continued to post strong profits despite economic uncertainty in the last year. I think its online retail profits will continue to grow, and with key customers in the aerospace industry bouncing back this year I see further growth ahead.

Conor Coyle does not own shares in MacFarlane Group.

Roland Head: UP Global Sourcing

One small-cap stock whose prospects excite me is UP Global Sourcing (LSE: UPGS).

This firm owns and licences a range of consumer goods brands, such as Russell Hobbs, Salter, Beldray and Constellation. Demand for kitchen, laundry and cleaning products has been strong during lockdown, with sales up 11% during the six months to 31 January.

There’s obviously a risk that demand could slow as the UK exits lockdown. But the firm recently upgraded its sales guidance for the year ahead, reporting “strong momentum” in new orders.

UPGS shares are up by 50% from their pre-pandemic levels. I believe they have further to go.

Roland Head owns shares of UP Global Sourcing.

Tom Rodgers: Alumasc

Sustainable building materials producer Alumasc (LSE:ALU) is one of my favourite kinds of stocks. The kind that no-one’s heard of until suddenly everyone’s heard of it.

Established in 1945, the AIM-listed firm’s shares are trading at a three-year high, and it will pay a hefty 5.4% dividend yield next year. It boasts a forward P/E ratio of just 7.8 and a forward PEG of 0.4, making it seriously undervalued in my book. The fact that the company’s £61.7m market cap is well below its annual £80.4m revenue does it no harm at all, either.

Tom Rodgers has no position in Alumasc.

Jabran Khan: Yourgene Health

Yourgene Health (LSE:YGEN) is a genetic testing firm that produces non-invasive products for male fertility and prenatal screening for cystic fibrosis and more. Yourgene joined the Covid-19 products market with a testing solution.

It has established a presence in the UK, Europe, the Middle East, Africa and Asia. YourGene relies on commercial partnerships with larger firms, which I see as a positive.

Trading in the past year has shown progression for the £117m market-cap business. FY results are due soon and are expected to be positive. At just 16p per share, Yourgene could be a micro-cap gem for the long term in my portfolio. 

Jabran Khan has no position in any of the shares mentioned.

Rupert Hargreaves: Belvoir Group

Property franchise group Belvoir (LSE: BLV) offers a range of services from lettings to sales and financial services.

Growth since 2014 has been outstanding. Net income has grown at a compound annual rate of 28%. And Belvoir is expecting to report revenue growth of 12% for 2020.

Despite its historical growth, Belvoir has its risks. If the UK property market should start to struggle, the firm’s income may begin to shrink. Still, I would buy this micro-cap stock considering its potential to grab market share over the next few years.

Rupert Hargreaves does not own shares in Belvoir.

G A Chester: Trans-Siberian Gold 

Trans-Siberian Gold (LSE: TSG) is a low-cost, high-grade producer from its Asacha mine in Far East Russia. It also has exploration and development assets in the region. 

Its strong balance sheet and cash generation enable it to invest for growth, and reward shareholders with dividends and share buybacks. It aims to pay a sustainable base dividend through the commodities cycle, and – as currently – higher payouts when cash flows permit. The running yield is near 8% right now. 

Operational risk is currently concentrated due to TSG’s single producing mine, but it does have ambitions to become a mid-tier, multi-asset gold producer. 

G A Chester has no position in Trans-Siberian Gold.

Andy Ross: Totally 

Shares in healthcare services provider Totally (LSE: TLY) have more or less trebled over the last 12 months. In my opinion, it’s a strong micro-cap business with long-term potential and room for more share price growth.  

I believe that the shares should continue to do well because the group has launched an insourcing business, has a strong relationship with the NHS and has made selective acquisitions that will boost earnings growth. It’s addressing a huge potential market across the UK & Ireland, and in time potentially further afield.  

The group is likely to become profitable shortly, has been growing revenues rapidly year-on-year and already pays a dividend, which is a bonus.  

Andy Ross does not own shares in Totally.

Nadia Yaqub: Scancell

I reckon things look promising for Scancell (LSE: SCLP). It’s an immuno-oncology company. That’s a fancy way of saying it develops treatments that stimulate the body’s own immune system to treat or prevent cancer. Some of Scancell’s products are being tested in clinical trials.

But I reckon the real gem is its second generation Covid-19 vaccine. According to Scancell, its version of the jab could develop long-term immunity to the virus and offer better protection against the variants. It’s still early days, but I think Scancell has bags of potential.

Nadia Yaqub does not own shares in Scancell.

Kevin Godbold: Ramsdens Holdings

Ramsdens Holdings (LSE: RFX) operates from around 157 stores in the UK, offering pawnbroking, financial, retail and foreign currency exchange services. It’s a decent business and the firm sports some impressive quality indicators. City analysts expect earnings to bounce-back by almost 60% in the trading year to September 2022.

With the share price near 172p, the forward-looking earnings multiple is just above 11. And the anticipated dividend yield is around 3.5%. I like the net cash position on the balance sheets and the positive outlook for growth in earnings. That’s why I’d buy this micro-cap stock to hold for March and beyond.

Kevin Godbold does not own shares in Ramsdens Holdings.

Kirsteen Mackay: Trans-Siberian Gold

My top micro-cap stock for March is Trans-Siberian Gold (LSE:TSG). I think gold stocks can help achieve a diversified portfolio. With low interest rates likely to stay low for some time, this provides a favourable environment for gold. And hints of inflation on the rise make me think gold remains a good hedge.

Trans-Siberian Gold operates in Russia and recently reported a significant upgrade to the resources at its flagship gold mine following a successful drilling campaign. Its market cap is £81m and it has a price-to-earnings ratio of 14. The company pays a 7% dividend yield. 

Kirsteen Mackay does not own shares in Trans-Siberian Gold.

Zaven Boyrazian: Tracsis

The UK government recently unveiled its roadmap to ease lockdown restrictions within the UK. As more people head back to the office or go on a long-overdue holiday, the demand for Tracsis’ (LSE:TRCS) services is rising.

Tracsis engages in traffic data analysis, along with railway fault detection systems. Using its software solutions, optimised routes for vehicles can be plotted within pedestrian-rich areas.

The business is far from risk-free. Covid-19 led to a significant rise in operational expenses, and there are numerous competitors to outperform.

But despite these threats, I think the stock is on track to continue delivering long-term growth for my portfolio.

Zaven Boyrazian does not own shares in Tracsis.

Manika Premsingh: McBride

The private label household and personal-care goods’ manufacturer McBride (LSE: MCB) has made share price gains since late 2020. However, its price is still way below its pre-pandemic levels.

I could see it staying there if McBride was Covid-19 hit. But the opposite is the case here.

It has actually seen a rise in revenues for the six months ending December 31, 2020 as the pandemic drove up cleaning products’ demand. It is also profitable and expected its full-year pre-tax profits to be 10% ahead of the consensus estimate at the time it made the statement.

McBride’s profits have fluctuated in past years and its debt is growing. But on balance, I am optimistic about its prospects, making it my top micro-cap stock for the near term.

Manika Premsingh has no position in McBride.

Paul Summers: Ramsdens Holdings

My top micro-cap pick for March is Ramsdens Holdings (LSE: RFX).

Investing in a pawnbroker may not be everyone’s cup of tea but Ramsdens is also a jewellery retailer, precious metals buyer/seller and foreign currency specialist. Although there can be no guarantees, the last of these might recover strongly once UK holidaymakers are allowed to travel again. In addition to this earnings diversity, the company’s finances look strong and it makes great returns on invested capital. 

Shares remain far below the highs hit in early 2020. With lockdown restrictions set to end, I think we might see this gap close over the rest of the year. 

Paul Summers owns shares in Ramsdens Holdings.

The post Top micro-cap stocks for March 2021 appeared first on The Motley Fool UK.

And following the recent stock market crash, it looks very attractively priced. Not only does it carry a forward price-to-earnings (P/E) multiple of around 10 times, the AIM stock also boasts a 5.3% dividend yield for 2020.

Belvoir is a share loaded with near-term risk though. It’s why the lettings and estate agent has decided to axe last year’s final dividend in recent weeks. With agencies shutting up shop amid the UK-wide lockdown, the property market has fallen off a cliff. According to estate agency Knight Frank the number of house sales will tumble 38% year-on-year in 2020, to 526,000.

It didn’t give a forecast for 2021. But with economic conditions expected to implode, a prolonged and painful drop in the housing market is clearly quite possible. For these reasons I’m happy to ignore Belvoir’s attractive paper valuations and go ISA shopping elsewhere.

A better ISA buy?

Could Kingfisher (LSE: KGF) prove a wiser place to invest your ISA cash? Sure, it also scrapped last year’s final dividend in response to the coronavirus breakout. However, City forecasts for the current financial year (to January 2021) result in a gigantic 6% dividend yield. The DIY colossus carries a mega-low prospective P/E ratio of 10 times too.

The FTSE 100 retailer has been in trouble for a long, long time. Tough retail conditions in the UK and France, allied with a botched transformation plan, have caused like-for-like sales to plummet in recent years. Admittedly though, trading has been a bit stronger of late. Underlying revenues dropped 1.5% in the last fiscal year. But in the final quarter, corresponding turnover grew 1.7% year-on-year.

Steer clear of the pain train!

Can Kingfisher keep this positive momentum going? It’d take a braver ISA investor than me to suggest so, given the economic catastrophe that hovers above all of its markets. It’s likely that consumer spending on paintbrushes, drills and garden furniture will topple as GDP falls off a cliff. The aforementioned collapse in the housing market will especially hit the Footsie firm hard.

In that Knight Frank study, it’s estimated spending on DIY and renovations will topple by a staggering £7.9bn in 2020. The estate agency isn’t alone in predicting tough times for the likes of Kingfisher though. In a recent report, Alvarez & Marsal predicted UK sales of DIY and gardening products will drop 2.9% this year. The business consultancy had previously been expecting growth of 1.8%.

No wonder Kingfisher’s share price has dropped 34% during the past two months. Belvoir’s drop has been even worse though, plummeting an eye-watering 42%. It’s difficult to envisage either of these two dividend stocks rebounding in value any time soon either.

In my opinion, both shares carry too much risk for ISA investors today. I think they should be avoided.

The post These cheap stocks yield 5% and above! Should you buy them for your ISA? appeared first on The Motley Fool UK.

A changing market

The housing market is undergoing a major change at the present time. The days of paying estate agents a percentage of the sale price of a house may be numbered, with many companies now offering low-cost fees in return for an online-focused presence. This means they offer a similar amount of online exposure to potential buyers as traditional estate agencies, as well as a local property expert to guide the seller through the process.

The popularity of such services is growing, with Purplebricks being one of the leading operators in this area. As online-focused estate agency services gradually become more mainstream, the company could experience a tailwind due in part to its dominant position within the industry. This may act as a catalyst on its financial performance and share price over a multi-year period.

Growing market

While house prices have fallen marginally in value this year, their outlook in the long run remains relatively positive. High demand plus a limited supply of new houses means there is likely to be a supply/demand imbalance for some time to come. This should mean that the average time it takes to sell a house remains somewhat limited. This could persuade more sellers that they do not require a traditional estate agency service, but rather can take a risk by using a cheaper alternative such as Purplebricks.

Certainly, Purplebricks may not be a cheap stock to buy at the present time. For example, it has a forward price-to-earnings (P/E) ratio of 223. But with significant growth potential, it could gradually begin to justify its valuation in the long run.

A further opportunity

Also offering upside potential within the property sector is Belvoir Lettings (LSE: BLV). The UK’s largest property franchise reported on Thursday that it has acquired Brook Financial Services for a total consideration of £2m. Of the amount, £1.5m will be paid in cash, while the remaining £0.5m will be paid for in new shares in the company. The acquisition is expected to be immediately earnings accretive and could help to better position the company within the mortgage marketplace.

Looking ahead, Belvoir is expected to deliver earnings growth of 18% this year and a further 10% next year. This puts its shares on a price-to-earnings growth (PEG) ratio of just 1.1, which suggests they could offer capital growth potential. With trading in line with expectations and a sound strategy despite a management reshuffle, now could be the right time to buy a slice of the business.

The post Why I’d buy and hold long-term growth stock Purplebricks Group plc forever appeared first on The Motley Fool UK.

Clearly, this is good news for the company and investors have reacted positively to the update. Today’s share price rise takes Independent Oil & Gas’ capital gains since the turn of the year to 27%, with at least some of those gains being due to a higher oil price.

Looking ahead, there is further potential for gains if the oil price rises, although the supply/demand imbalance which has been present in recent years looks set to persist in the short term at least. Therefore, buying smaller exploration plays remains relatively high risk, although Independent Oil & Gas may be of interest to long term, less risk averse investors.

Also rising today are shares in Belvoir Lettings (LSE: BLV), with the property specialist announcing the acquisition of Northwood GB Limited for a total consideration of up to £22m. With Northwood being the largest remaining independent UK lettings franchise which operates 86 outlets nationwide, Belvoir will be the largest property franchise group in the UK upon completion of the deal.

To fund the acquisition, Belvoir is conducting a placing to raise gross proceeds of up to £2.5m. The deal appears to be a logical one for Belvoir and fits in with its multi-brand strategy to grow both organically and through acquisitions.

With Belvoir forecast to increase its bottom line by 12% this year and 9% next year, it appears to be performing well even without the acquisition of Northwood. And with greater diversity and increased resilience during what could prove to be a relatively challenging period for the UK property sector, buying Belvoir now seems to be a sound move for long term, less risk averse investors.

Meanwhile, investment specialist Tern (LSE: TERN) has also been engaging in M&A activity of late, with it announcing the purchase of Flexiant Limited last month. It is a provider of cloud management software for cloud orchestration for on-demand, fully automated provisioning of cloud services. The deal has been paid for through the issue of 8m new ordinary shares in Tern and with its shares rising by 13% in the last month, investor sentiment in the business seems to be improving.

Clearly, the cloud and internet of things spaces have considerable long term appeal and could allow Tern to deliver rising profitability over the coming years. However, with it being a loss-making entity last year and there being other options within that space, it may be prudent to await further news flow and improved financial performance before piling in.

The post 3 unmissable small-caps? Independent Oil & Gas plc, Tern plc and Belvoir Lettings plc appeared first on The Motley Fool UK.