Building it up

First up is Rightmove (LSE:RMV). The stock is down 35% over the past year, with most of the decline occurring in recent months. Part of the concern came late last year, with a strategy pivot to invest heavily in AI as part of a digital upgrade plan for the coming years. This shift is meant to modernise the business and support future growth, but ultimately will slow near-term profit growth. This remains a risk going forward.

Although I understand the share price movements, I think that for long-term investors, it now makes the stock look like good value. In the years to come, I expect this AI investment to pay off handsomely, rewarding patient holders of the stock.

Further, the company has a dominant market position. It’s the largest online UK property portal, with a commanding market share by some distance. This means estate agents almost have to be on its platform. This network effect gives it pricing power and a strong competitive protection, especially during periods like this, when the share price is under pressure.

Looking ahead, further cuts to the UK base rate should stimulate demand for cheaper mortgages and therefore help the property market later this year. With this lens on the future, I think the current sell-off in the stock market looks overdone.

Read all about it

Another stock that could be seen as good value is Bloomsbury Publishing (LSE:BMY). Down 32% in the past year, the company currently has a price-to-earnings (P/E) ratio of 10.60. Although it’s not in the FTSE 100, the index’s average P/E ratio is 18, for comparison. So on that basis, I can already see why it could be termed a value share right now.

The fall has been triggered in part by company updates detailing softer consumer book sales, although it was always going to be hard to follow an exceptionally strong previous period. Yet, it did enough to raise concerns that momentum was slowing rather than accelerating.

Another factor has been recent UK macroeconomic uncertainty, which weighs more on small-cap domestic shares like Bloomsbury.

Yet when I look ahead, I think there’s plenty to be optimistic about. The academic and professional publishing division has shown strong growth. In December, it inked an AI licensing deal with Alphabet enabling it to use tools to develop AI-driven platforms and personalised learning services. This has huge potential going forward, and digital products offer higher-margin revenue streams for the company.

It will also continue to benefit from the vast catalogue of intellectual property it owns, including works from the past. Should any of these be spun out into a movie or a theatre show, it would stand to gain financially.

I don’t think the market is appreciating the growth potential, particularly with the Alphabet deal. I believe both Bloomsbury and Rightmove could be considered by investors as value opportunities at the moment.

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Our monthly Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of small-cap recommendations, to help Fools build out their stock portfolios.

Why we like it: “Bloomsbury’s (LSE: BMY) best known for being the publisher of the Harry Potter series of books in the UK. The books continue to be bestsellers some 26 years after the boy wizard’s first appearance. Much like share investors hoping to spot the next Microsoft before anyone else, the same is true in publishing where taking a risk on an unknown talent can pay enormous dividends in the long run. The company appears to have unearthed another gem in fantasy author Sarah J. Maas, whose latest book, House of Flame and Shadow, helped the company perform far ahead of analysts’ expectations.

“The success of House of Flame and Shadow has driven demand for the author’s previous 15 books published by Bloomsbury as readers want to buy the whole set to be up to date. Bloomsbury says fantasy has grown in popularity around the world – with the sci-fi and fantasy genre growing by 54% in the last five years, according to Nielsen Bookscan. While there’s likely to be an element of feast and famine with consumer sales, as audience’s tastes are unpredictable, investors can be given comfort by the further six books Bloomsbury has under contract with Sarah J Maas, which seem likely to sell well.”

Why we like it now: Bloomsbury Publishing offers a compelling mix of growth and resilience. Blockbuster authors like Maas and Rowling continue to drive strong consumer sales, with recent and upcoming releases topping bestseller charts. The integration of Rowman & Littlefield’s academic business — the company’s largest acquisition — expands its high-margin, recurring digital revenue base, with 5,300+ titles already digitised. Consensus forecasts remain robust, with FY25 pre-tax profit projected at £41.6m on £335.9m revenue. Supported by its diversified ‘portfolio of portfolios’ strategy and the long-term Bloomsbury 2030 vision, it’s well-positioned to deliver sustained earnings growth and shareholder value.

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This underperformance reflects a bleak outlook for the UK economy, along with increasing pessimism over interest rate cuts as inflation rises. Roughly 40%-45% of the FTSE 250‘s earnings come from Britain, far higher than the internationally flavoured Footsie.

Some of the index’s top quality constituents have actually fallen sharply since 1 January, which I believe represents a potential dip-buying opportunity. Here are two such stocks I think demand serious consideration today.

Bloomsbury Publishing

Bloomsbury Publishing‘s (LSE:BMY) shares have dived 29% in the year to date. While its Harry Potter franchise remains as popular as ever, weakness in other parts of the business has pulled the book producer sharply lower.

More specifically, poor sales at its academic publishing division have taken the shine off the firm’s other operations. Organic sales here dropped 10% in the last financial year, it announced in May, due in part to budgetary pressures in the UK and US. The company’s failed to recover ground since then.

While these troubles may persist, I think there’s a lot to like at Bloomsbury that makes it worth a close look. The long-term outlook for its academic publishing unit remians robust, helped by its gamechanging acquisition of high-margin operator Rowan & Littlefield.

But what really draws me in is the quality of its consumer division, and more specifically its pedigree in the fast-growing fantasy and sci-fi fiction markets. Harry Potter isn’t the only star series in its portfolio — Sarah J Maas’s A Court of Thorns and Roses is another one of its bestselling series, with 75m sales and more books contracted to come down the pipeline.

City analysts are united in their view that Bloomsbury shares will rebound over the next 12 months. The consensus view is for a 64% rise from current levels, to 783p per share.

Ibstock

Ibstock‘s (LSE:IBST) share price has dropped 21% since 1 January. It’s fallen on fears that the recent housing market recovery could be flagging as the UK economy struggles and inflation rises.

For long-term investors, however, I think the brick manufacturer’s investment case remains a robust one. It’s why I hold the company in my own Stocks and Shares ISA.

Despite high competition, the demands of a growing population could supercharge product sales over the next decade. The government plans to build 3m new homes to 2029 alone. Wisely, Ibstock’s invested heavily in capacity to meet future demand.

But that’s not all that’s attracted me, as I think the company can also expect robust off-take from the repair, maintenance and improvement (RMI) sector. The UK housing stock is one of the oldest in the world, so there should be steady demand here for years to come.

As with Bloomsbury, City brokers are united in their belief Ibstock shares will rebound over the next year. The average share price target among them is 189.4p, representing a 36% premium from today’s levels.

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Our monthly Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of small-cap recommendations, to help Fools build out their stock portfolios.

Why we like it: “Bloomsbury’s (LSE: BMY) best known for being the publisher of the Harry Potter series of books in the UK. The books continue to be bestsellers some 26 years after the boy wizard’s first appearance. Much like share investors hoping to spot the next Microsoft before anyone else, the same is true in publishing where taking a risk on an unknown talent can pay enormous dividends in the long run. The company appears to have unearthed another gem in fantasy author Sarah J. Maas, whose latest book, House of Flame and Shadow, helped the company perform far ahead of analysts’ expectations.

“The success of House of Flame and Shadow has driven demand for the author’s previous 15 books published by Bloomsbury as readers want to buy the whole set to be up to date. Bloomsbury says fantasy has grown in popularity around the world – with the sci-fi and fantasy genre growing by 54% in the last five years, according to Nielsen Bookscan. While there’s likely to be an element of feast and famine with consumer sales, as audience’s tastes are unpredictable, investors can be given comfort by the further six books Bloomsbury has under contract with Sarah J Maas, which seem likely to sell well.”

Why we like it now: Bloomsbury Publishing offers a compelling mix of growth and resilience. Blockbuster authors like Sarah J. Maas and J.K. Rowling continue to drive strong consumer sales, with recent and upcoming releases topping bestseller charts. The integration of Rowman & Littlefield’s academic business — the company’s largest acquisition — expands its high-margin, recurring digital revenue base, with 5,300+ titles already digitised. Consensus forecasts remain robust, with FY25 pre-tax profit projected at £41.6m on £335.9m revenue. Supported by its diversified “portfolio of portfolios” strategy and the long-term Bloomsbury 2030 vision, BMY is well-positioned to deliver sustained earnings growth and shareholder value.

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For various reasons, the following FTSE 250 stocks have dropped a quarter in value or more in the year to date. I think this represents an attractive dip-buying opportunity that savvy investors may wish to research further.

Bloomsbury: top buying opportunity?

Powered by the Harry Potter franchise, Bloomsbury Publishing (LSE:BMY) shares have risen strongly over time. But signs of weakness more recently have pulled the publisher sharply lower — it’s down 27.7% since 1 January alone.

The chief problem I see is weakness at its academic publishing division. It’s facing two issues: “current UK and US budgetary pressures and the accelerated shift from print to digital”, as the firm described in May’s full-year update. These pressures pushed academic organic sales 10% lower in the 12 months to February.

Risks remain, but I believe Bloomsbury’s powerhouse consumer unit — and more specifically its fantasy and science fiction catalogue — makes it a great stock to consider. Harry Potter remains a colossal money spinner decades after its release. Genre heavyweight Sarah J Maas has roughly half a dozen more books to come too, boosting the company’s packed pipeline of new titles.

I think Bloomsbury’s recent performance is a rare bump, and I’m confident a busier release schedule following a disappointing last year will help it turn things around. Investment in artificial intelligence (AI) could also revive academic demand.

Today, it trades on a forward-looking price-to-earnings (P/E) ratio of 12.7 times. That’s well below the five-year average of 17.4 times and I think makes it a brilliant recovery stock to think about.

Greggs: shares too cheap to ignore?

Without doubt, buying Greggs’ (LSE:GRG) shares has proven a disaster for me. Since opening a position in late November, the baker has fallen a whopping 40.8% in value.

A series of underwhelming trading statements continuing into 2025 means it’s dropped 43.4% this year too. Consequently, the company’s valuation has toppled — a forward P/E ratio of 12.1 times today is significantly below the 10-year average of 22-23 times.

Greggs could face further turbulence as the cost-of-living crisis endures and consumers cut back. Latest financials showed like-for-like sales growth cooled to just 2.6% between January and June, while operating profit dropped 7.1%, reflecting large expansion costs.

However, I believe Greggs shares are now so cheap that they merit a close look. To my mind, the business still has enormous growth potential as it builds its store network to 3,000 outlets over the next few years, up from 2,649 today.

Focusing this strategy on high footfall transport hubs, as well as plans to increase the number of especially profitable franchise stores on its books, is especially encouraging to me. Greater evening trading, and rising investment in digital and delivery, also bodes well for its recovery.

Indeed, I’m optimistic Greggs’ share price will rebound strongly over time, and that my long-term investing strategy will pay off. With a sharply revised valuation, the baker’s worth serious consideration, in my book.

The post Down 27% or more, I think these FTSE 250 shares are brilliant bargains! appeared first on The Motley Fool UK.

Our monthly Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of small-cap recommendations, to help Fools build out their stock portfolios.

Why we like it: “Bloomsbury’s (LSE: BMY) best known for being the publisher of the Harry Potter series of books in the UK. The books continue to be bestsellers some 26 years after the boy wizard’s first appearance. Much like share investors hoping to spot the next Microsoft before anyone else, the same is true in publishing where taking a risk on an unknown talent can pay enormous dividends in the long run. The company appears to have unearthed another gem in fantasy author Sarah J. Maas, whose latest book, House of Flame and Shadow, helped the company perform far ahead of analysts’ expectations.

“The success of House of Flame and Shadow has driven demand for the author’s previous 15 books published by Bloomsbury as readers want to buy the whole set to be up to date. Bloomsbury says fantasy has grown in popularity around the world – with the sci-fi and fantasy genre growing by 54% in the last five years, according to Nielsen Bookscan. While there’s likely to be an element of feast and famine with consumer sales, as audience’s tastes are unpredictable, investors can be given comfort by the further six books Bloomsbury has under contract with Sarah J Maas, which seem likely to sell well.”

Why we like it now: While Bloomsbury’s FY 25 results looked uninspiring against a strong prior year, looking forward the consumer division should be given a boost by the new Harry Potter television show as well as the (yet to be announced) new release by Sarah J. Maas. Without any books by star author Maas in 2025, total sales grew 5%, with profit declining from £48.8m to £42m as the consumer profit margin returned to a normalised level following the exceptional sales and high operational gearing in 2024. The company’s academic and professional division is being affected by budgetary pressures in the US and UK and “the accelerated shift from print to digital” – though as an owner of trusted academic and professional IP, the company could develop powerful educational AI tools. Without a new title by Maas, and with non-consumer division facing struggles, the market has shown impatience by marking down the company’s share price. But to us, a forward P/E of just 14 could provide a good entry point for long-term investors, providing sales and profits can regain their former fizz.

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While the last year was a difficult one for the company in terms of its financial performance, I think there are a number of reasons to be positive. And investors might not have to wait around too long. 

Weak results

In the 12 months leading up to the end of February 2025, Bloomsbury’s revenues climbed 5%. By itself, that’s not a bad result, but there were some concerning signs beneath the surface. 

While total revenues in the company’s academic publishing division were up, this was largely due to the acquisition of Rowman & Littlefield. Organic sales, by contrast, fell 10%.

Bloomsbury attributed this to the increasing shift from print publications to digital ones. Academic happens to be my industry and from what I can see, that trend is very unlikely to reverse in the future. 

Another source of concern was a 22% decline in pre-tax profits. The firm put this down to higher costs of sales, administration, and distribution. 

With inflation in the UK starting to pick up, investors should keep an eye on the potential threat to the company’s margins. This is also something to take seriously. 

Bloomsbury’s results are underwhelming. But I think the market might be overreacting to the latest news and missing some important positives in both the long term and the short term. 

Positive catalysts

Over the long term, one of the major reasons for optimism is Bloomsbury’s intellectual property and agreements with its authors. Its most obvious asset is the Harry Potter series. 

This is something I underestimated when I first looked at the stock. With the last novel released in 2007, it’s easy to think the ongoing appeal of the franchise is limited, but I think this is a mistake. 

While people aren’t queueing outside bookshops for the latest releases, there’s a steady series of companion books that are proving popular. And new releases are on the way later this year. 

The biggest positive, though, is Sarah J. Maas. There wasn’t a release from Bloomsbury’s best-selling author in the last year, but the next book in the A Crown of Thorns and Roses series is on the way.

I think this is a reason to be extremely positive about the next year for the FTSE 250 company. And with a total of six books currently under contract, this has a longer-term significance as well. 

In other words, while the most recent year has been relatively quiet, the pipeline looks strong. So with the stock falling sharply, I think this is one to consider buying. 

Ups and downs

Bloomsbury isn’t exactly a cyclical business. But with no Sarah J. Maas publication in the last 12 months, I think there’s reason to believe the last year has been unusually bad. 

I expect this to change in the relatively near future. And with a strong catalogue, I see the falling share price as a potential buying opportunity investors should consider seriously.

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When assessing stocks, long-term investors like myself often utilise key metrics such as the price-to-earnings (P/E) ratio, dividend yield, and measures of profitability like return on capital employed (ROCE) or return on equity (ROE). These indicators help assess whether a share is attractively priced and capable of delivering strong returns over time. 

With the FTSE 100 edging towards all-time highs, I’ve uncovered three lesser-known shares outside the index that I think are worth considering this summer. They each have a combination of financial metrics that I think make them key contenders for growth in 2025.

The recovering publisher

Bloomsbury Publishing (LSE: BMY) is a mid-sized publishing house famous for the Harry Potter series, among others. It enjoyed a spectacular rally following the pandemic and now, after a brief dip, looks to be resuming. With a modest market-cap of £506m and a reasonable P/E ratio of 13.89, the shares aren’t overly expensive.

Yet despite a strong niche, its fortunes remain tied to unpredictable publishing trends and consumer demand. A slowdown in book sales, especially in academic or trade titles, could hit revenues. Additionally, inflationary pressures on printing and distribution costs may squeeze margins, while reliance on a few major titles poses concentration risks.

Still, its financials are looking good. Its 2.4% dividend yield’s modest but sustainable, while a standout ROCE of 23.5% suggests efficient capital use. These solid fundamentals, combined with a niche dominance in academic and fantasy publishing, could support further growth in 2025.

The pensions specialist

XPS Pensions Group (LSE: XPS) specialises in pension consultancy and actuarial services, boasting a moderate £834m market cap and a favourable P/E ratio of 14.43. Its dividend yield of 2.65% adds steady income, but the highlight is a remarkable ROE of 38.12%, signalling exceptional profitability and shareholder value creation.

It’s worth noting that it operates in a heavily regulated sector, and changes to pension legislation or funding rules could impact demand for its services. The high ROE may not be sustainable if growth slows or margins contract. Furthermore, competition from larger financial firms and automated pension platforms could threaten future profitability.

But considering the persistent demand for retirement planning, I think it has promising growth potential. I mean, it’s already up 237.5% in the past five years, equating to annualised growth of 27.5% a year!

The online trading giant

A heavyweight in financial derivatives and trading platforms, IG Group (LSE: IGG) commands a vast £19.27bn market-cap. A staggering net margin of 35.31% highlights the company’s exceptional operational efficiency. 

Yet despite strong margins, it faces regulatory scrutiny across multiple jurisdictions, which could restrict product offerings or increase compliance costs. Revenue’s also highly sensitive to market activity — a prolonged period of low volatility or reduced client trading could lead to earnings pressure. Cybersecurity risks and reputational exposure in the trading sector also remain material concerns.

What I like is the low P/E of 11.61, which suggests the shares may be undervalued, especially considering a generous 4.17% dividend yield. And if market volatility persists, it could benefit from increased trading activity and strong earnings growth.

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The FTSE 100 share

Investing in companies whose revenues are government-backed can be dicey business. But while some areas of public expenditure can be prone to savage cuts, defence tends to be more robust, and especially in the current geopolitical climate.

This is what makes BAE Systems (LSE:BA.) a solid selection for capital gains and dividends, in my book. Indeed, shareholder dividends here have risen every year since 2011.

This FTSE 100 company’s more robust than many too. It’s a market leader across a range of technologies, giving it robust relationships with governments across the world. Its order backlog was a record £77.8bn at the end of 2024.

Reduced military expenditure from the US poses a risk going forward. However, this may be offset by soaring defence spending from other NATO members. There’s also the possibility of accelerating sales from other regions like Saudi Arabia and India.

The trust

The JPMorgan Global Growth & Income (LSE:JGGI) investment trust helps investors chase returns using a diversified approach. Spreading risk doesn’t necessarily feed through to lower gains as this financial vehicle shows — it’s delivered an average annual return of 12.8% since 2015.

In terms of dividends, this pooled instrument aims to pay a sum equivalent to at least 4% of the previous year’s total net asset value (NAV).

In total, the trust holds between 50 and 90 different companies from across the globe at any one time. At the moment, these range from the ‘Magificent Seven’ tech stocks such as Nvidia and Microsoft, to luxury goods group LVMH, defence business Safran, and food and drink producer Nestlé.

This in turn helps it absorb shocks in particular industries and geographies, and the ability to provide a smooth return across the economic cycle.

Investors need to consider JPMorgan trust’s use of borrowed funds however. As it mentions on its factsheet: “Gearing may magnify gains or losses” depending on market movements.

The FTSE 250 stock

Supported by the cash cow that is the Harry Potter franchise, Bloomsbury Publishing (LSE:BMY) has one of the FTSE 250‘s greatest dividend records.

Up until the Covid-19 crisis, cash rewards had risen for 24 consecutive years. Since then, dividends have resumed with a bang, and in the year to February 2024 it raised the payout 25%. Another hefty hike is tipped for financial 2025 when results are released on Thursday (22 May).

Bloomsbury doesn’t just rely on the student wizard to drive profits either. It has a packed stable of fantasy fiction winners from popular authors including Sarah J Maas. And it’s making huge strides in the academic publishing field to supplement its heavyweight consumer division.

There’s no guarantee the company can keep delivering bestsellers, of course. Bad reviews and significant competition are just a couple of threats it faces. But I feel it may have the strength in depth to overcome future disappointments and still deliver great returns.

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This stock could recover strongly

Shares in Bloomsbury Publishing (LSE: BMY) have lagged the domestic-focused FTSE 250 index in 2025. But I don’t expect this sticky patch to last.

Back at the end of March (which feels like an awfully long time ago), the home of Harry Potter and other bestselling series stated that trading in FY25 had been “ahead of consensus expectations“. At the time, these expectations were that revenue would hit £333.4m and profit would come in at £39.6m.

As one might expect, the stock bounced a little on the news. However, they’re still significantly down on the 52-week high hit back in October 2024. If full-year numbers on 22 May prove to be even slightly better than anticipated, that gap could quickly narrow.

No sure thing

Naturally, no investment is devoid of risk. One snag here is that the shares still trade at a price-to-earnings (P/E) ratio of 16 — not exactly cheap for a stock in the Consumer Cyclicals space.

Most publishers also tend to depend on a few key authors to keep delivering the goods. Even if they do (and books might not break the bank in tricky times the way that other items do), many avid readers will probably be looking to hold back on spending where they can.

However, this a quality company. Margins have been climbing in recent years and the balance sheet is strong. A 2.7% forecast dividend yield, while not massive, looks set to be easily covered by profit.

On top of this, the acquisition of Rowman & Littlefield last year and the expansion of its Digital Resources division suggest Bloomsbury stock could still deliver for new investors like me.

Now oversold?

Drinks firm Diageo (LSE: DGE) has been an absolute horror show for holders recently. Shares in the owner of Johnnie Walker whiskey and Guinness have tumbled 18% in the last 12 months and now sit at a multi-year low. The reasons for this range from the impact of a cost-of-living crisis and health-conscious trends. Donald Trump’s threats on tariffs have only added to the toxic mix.

As poor as this form has been, we know that the market has a tendency to be too bullish on stocks during the good times and too harsh when their outlook is more uncertain. Does it make sense that a company which still boasts a bumper bunch of internationally-recognised brands, strong margins, and cash flow should be worth so much less in a few months? I’m not so sure.

Challenges ahead

To be clear, I’m not denying this FTSE 100 juggernaut has issues and a change of strategy is required. A worse-than-expected Q3 trading update, due to be served up on 19 May, could also put more pressure on the share price.

However, the current P/E of 17 is significantly below Diageo’s five-year average valuation of 23. That feels like a pretty large margin of safety. I think the 3.7% dividend yield also looks safe for now.

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