Here’s my detailed reasoning.

Generating interest

To understand why 2026 could be strong, we need to first appreciate why the company’s doing well right now. After years of net outflows in 2024, Jupiter began to see net positive flows into its funds in 2025, especially in the second and third quarters.

The latest update we had in October showed that assets under management (AUM) climbed to £50.4bn by September, an 11% annual increase. Part of this was driven by market performance and by renewed investor interest.

For those unfamiliar with flows and AUM, they’re key metrics Jupiter uses to highlight how well (or badly) the business is going. The more client money the fund managers receive (inflows), the higher their AUM becomes. Given that Jupiter charges fees and commissions for looking after the money, there’s a correlation between larger AUM and higher revenue.

Ultimately, this ties back to the share price, because higher revenue usually translates into higher profit, which then boosts earnings per share.

The year ahead

Despite the surge in share price, the price-to-earnings (P/E) ratio sits at 11.84. The FTSE 250 index average is 13.3. So it can still be considered undervalued relative to the rest of the index. From that angle, if the earnings per share stayed the same for 2026 but the stock jumped another 83%, it would push the P/E ratio to 21.54. Granted, it becomes more expensive, but with the FTSE 100 P/E ratio just above 18, it’s not crazy.

That also assumes no growth in the earnings per share. In reality, I’d expect to see much better financial performance this year, driven by assets gathered in 2025. So in reality, the stock could rally and still remain reasonably priced if the earnings increase.

The business should also begin to see benefits from the CCLA acquisition during the summer of 2025. CCLA mainly focused on targeting non-profit organisations. So Jupiter’s gained a valuable new book of clients here, helping to both expand and diversify its overall base. I imagine there’s a host of synergies and economies of scale that can be eeked out from this deal over the coming quarters.

As far as risks go, I think the funds’ performance is a concern. If the managers have a bad few quarters, or if investors decide to rotate their money out of active management and into passive index funds, Jupiter could see AUM fall.

Yet despite this, I think the stock’s well placed to beat the FTSE 250 index again in 2026 and therefore could be considered by investors.

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Here’s one FTSE 250 company that could tick this box.

Flying high

I’m referring to Jupiter Fund Management (LSE: JUP). The UK-based investment manager is up 90% in the last year, with a current price-to-earnings (P/E) ratio of 11.40.

The company’s performed well recently for several key reasons. Back in July, it announced the acquisition of CCLA. That business brings £15bn in fresh assets under management, primarily via charity and UK institutional clients. This will help Jupiter scale up its UK business and diversify, which investors viewed positively.

Jupiter’s also reported better investment performance, which helps attract funds and boost investor confidence. For example, in October, quarterly results management celebrated “positive momentum” in retail and wholesale channels. In numbers terms, we’re talking £300m of net positive flows for the quarter.

Finally, the share price gains are significant in percentage terms as the company was trading at a very cheap level a year ago. The active asset management industry in general had been in a rut for a while. For Jupiter, the catalyst for new assets and acquisitions has helped spark a revival.

Why it could still be cheap

The aveage P/E ratio for the FTSE 250 is 13.70. So even with the stock rally, Jupiter still could be seen as undervalued right now, with the ratio of 11.40.

Aside from the P/E comparison, I don’t think investors have fully appreciated the benefits that the CCLA purchase could bring. It enables Jupiter to tap into markets where it traditionally didn’t have a large presence.

Accurately forecasting the size of the new potential market is challenging, but I can see this opening up many doors in the coming years. Ultimately, this could filter down to the business seeing higher profits than currently anticipated.

Another factor to consider is the re-emergence of demand for active management. This year has shown us how volatilty and geopolitics can quickly shift the stock market. I think people are happier now to look to allocate some funds to professional managers like Jupiter. If the trend in higher assets under management continues, it makes the stock look cheap right now.

There are still risks. Much of the future potential success will depend on the performance of the funds being managed. If managers underperform or make poor decisions, it could be a headache for the wider business. Yet overall, I think it’s a stock that’s worth considering by investors.

The post This FTSE 250 stock is up 90% but still has a P/E ratio below average! appeared first on The Motley Fool UK.

Reason for the spike

The big news that has caused the leap today was confirmation of the acquisition of CCLA for £100m. CCLA is the UK’s largest asset manager focused on serving non-profit organisations. This means the managers look after funds for charities and religious organisations.

CCLA currently manages about £15bn of assets under management. This is the key metric that firms in this sector look at, as the fees they charge depend on how much is being managed. The bonus for Jupiter is that currently it looks after £44.3bn. So the size of funds being added from this move is significant.

CEO Matthew Beesley noted another benefit of this deal. He said “it opens up a new client segment for us, broadening our appeal to a range of charitable and religious institutions, both in the UK and internationally“. To tap into a different client base than Jupiter usually targets means there’s no conflict of interest from existing clients.

Still undervalued

Over the past year, the stock is now up 33%. Aside from the move today, the business has benefited from stronger financial results. This has included higher underlying operating margins, along with earnings per share and net income numbers that have topped estimates.

Yet, based on the current share price, the P/E ratio indicates to me that there’s further room for it to move higher. In comparison, competitors such as St. James’s Place (16.55) and Liontrust Asset Management (14.65) have higher ratios. If I factor in a P/E ratio of 15 for the coming year for Jupiter and assume the earnings per share stays the same, this would mean the share price would have to increase by 84%!

This isn’t guaranteed. The business has risks associated with it, such as the reliance on star fund managers. Last year, the departure of Ben Whitmore saw billions move out of Jupiter, highlighting the dependency on good performers who are loyal to the company.

Further, we’ll have to wait and see how well the integration with CCLA goes. Even though it should be a large win, there could be short-term headaches in joining together.

Even with these concerns, I think the company is in a good place right now, and the future looks bright. Given the valuation metrics I’ve gone through, I’m seriously thinking about buying the stock to add to my portfolio.

The post Up 10% in a day, this FTSE 250 stock still looks undervalued to me appeared first on The Motley Fool UK.

Investing sentiment

When interest rates are high and stock markets are dull, investment management companies can underperform. Look at the Jupiter Fund Management (LSE: JUP) chart above, and that 60% five-year decline.

But with first-half results due on 25 July, we see a 15% year-to-date rise in 2025.

I don’t expect a dramatic turnaround. But I thought April’s update showed signs the last few clouds might be clearing.

Assets under management (AUM) fell £1bn in the fourth quarter. But half of that was through market movements. And it meant net client outflows of only a modest £0.5bn. AUM still stood at £44.3bn.

Jupiter’s a relatively small player. And it could still suffer volatility if investors stick to bigger and safer firms as economic uncertainty continues. But as the horizon brightens, I think it could be a good time to consider getting in.

Real estate health

Anything related to property has been through the mill, and that includes Primary Health Properties (LSE: PHP). It’s a real estate investment trust (REIT), and I see two ways of looking at it.

One is as a holding company with falling asset values. In the year to December 2024, net asset value per share fell 3.3%. It followed a 4% decline the year before. The things shareholders own are worth less now.

Or we could look at how those assets are being used. They’re primary health facilities in the UK and Ireland, with long-term NHS contracts playing a big part.

Net rental income rose 2.9% last year, with adjusted earnings per share (EPS) also gaining 2.9%. In 2023, we saw a 5.5% increase in net rental income, with adjusted EPS up 3%.

I think investors who see a thriving business here should consider buying. Those who can’t see past the bricks, however, could keep the share price down a while longer.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Talking of bricks…

Taylor Wimpey (LSE: TW.) has first-half results lined up for 30 July. We’ve seen a rocky past decade here. But isn’t this surely among the industries with the best supported long-term demand in the UK? Housing shortage? Yep, we have a big one.

High interest rates have put a damper on the home construction business. Last year saw Taylor Wimpey’s total number of completions (including joint ventures) dip from 10,848 to 10,593. Back in 2022, the count was up at 14,154.

In an April update, the company reiterated completions guidance in the range of 10,400 to 10,800 this year. That excludes joint ventures, so we might be past the bottom.

With a forecast P/E of 14 and interest rates still high though, I could see more pain for shareholders before things improve.

Meanwhile, some estimates suggest the UK needs more than 4m new homes. That could keep Taylor Wimpey going for another 377 years.

The post 3 potentially hot UK stocks to consider buying in July appeared first on The Motley Fool UK.

However, of the five FTSE 250 companies in my family portfolio, one was taken over in March. This produced a healthy capital gain that will be reinvested. Also, another mid-cap holding is being bought by a rival. Again, this acquisition will deliver more cash to invest in good businesses at fair prices.

Big dividends can be risky

One major issue with dividend investing is that future cash payouts are not guaranteed. Thus, they can be cut or cancelled at short notice. Indeed, when businesses get into trouble and need to preserve cash, dividends (and share buybacks) can be first in the firing line.

Another problem is that ultra-high cash yields can be an indicator of future stresses. Experience has taught me that, say, double-digit dividend yields often don’t last. Instead, either share prices rise or dividend payouts get sliced, both of which reduce future yields.

An industry under stress?

Earlier, I ran a filter on the FTSE 250, looking for its very highest dividend yields. During my search, I noticed several asset-management groups near the top of my table. For example, take this trio of asset managers, whose shares offer dividend yields ranging from almost 8% to over 13% a year. My table is sorted from highest to lowest cash yield:

One problem immediately jumps out at me from this table. Currently, two of these shares don’t generate enough earnings to meet their dividend payouts. Therefore, these firms may have to dip into their cash reserves to maintain their cash payments at such elevated levels.

For me, dividend cover below one is a warning sign to stay away from certain high-yielding shares. Hence, I can’t see myself investing in the first two businesses listed above because I don’t think their yields will last.

Drops of Jupiter?

However, I’m intrigued by the shares of Jupiter Fund Management (LSE: JUP). At their 52-week high, they touched 91.3p on 29 July 2024. However, this stock has tumbled southwards since then, hitting a one-year low of 64.7p on 7 April.

On 17 April, Jupiter shares closed at 69.3p, valuing this once-vaunted group at under £375m. Steep price falls have pushed up this stock’s cash yield to 7.8% a year — more than twice the Footsie‘s yearly dividend yield of around 3.5%.

What interests me about this stock is that its yield is covered 2.3 times by trailing earnings. To me, this is a very healthy margin of safety, indicating that payouts may continue at these levels — or even rise. However, with UK asset management under relentless pressure from low-cost index funds and exchange-traded funds, Jupiter’s future earnings could fall.

In summary, Jupiter may be a ‘fallen angel’ — a good company fallen on hard times, with a depressed share price. I’m considering it so I shall ask my wife whether she agrees this FTSE 250 share deserves to join our family portfolio!

The post Can these FTSE 250 dividend yields of 8% to 13% really last? appeared first on The Motley Fool UK.

A reputational wobble

One that has popped up is GSK (LSE:GSK). The pharma giant saw the share price drop 14% last month which acted to push the price-to-earnings ratio below 10 (my fair value benchmark).

Most of the drop came at the start of the month with news regarding its Zantac heartburn drug legal case. Around 70,000 cases have been brought forward claiming that the drug causes cancer, which if proven would have large reputational and financial implications. The stock dropped by 10% after the court ruled that jury trials could hear expert witnesses as part of the trial.

Even though this situation is a risk, I think the stock has overreacted. The business has been around for decades and has successfully navigated problems like this in the past. I don’t see this being an issue if we fast forward a year. Even when I zoom out from the one month performance, I can see the stock’s still up 9% over the past year.

Further, GSK’s a profitable company that’s growing year on year. For example, versus 2022, the firm increased revenue, operating profit and pre-tax profit last year. This also helps the dividend payments. With a yield just shy of 4%, I think this could be a cheap share to snap up to benefit from both share price gains and income.

Trending lower, but not forever

Another option on my radar is Jupiter Asset Management (LSE:JUP). The stock dropped 11% over the last month, bringing the loss over the past year to 28%.

The business has struggled with the tough macro environment in recent years, alongside tougher competition in the investment management space. However, there comes a point where I think this becomes too cheap to ignore.

After all, total assets under management from Q1 increased to £52.6bn from £52.2bn the previous quarter. A good chunk of this was driven by positive market returns of the funds. Ultimately, the higher the assets under management figure is, the more fee driven revenue and commission Jupiter can earn.

I like the company because even with the difficulties that the whole sector has dealt with, it’s still profitable. Given that fact, I can still use the price-to-earnings ratio to get a feel for value. It’s currently at 5.22.

Of course, the risk here is that I buy now but the trend is still lower for the share price over the next year before it starts to rally. This is possible, but I struggle to see how much lower this can go, given that there are zero signs that the company is going bust anytime soon.

Overall, I’m thinking about buying both shares as we start the month.

The post 2 cheap shares I’ve spotted in my July bargain hunt appeared first on The Motley Fool UK.

But which ones are our free-site writers keen on for the years and decades to come?

Jupiter Fund Management

What it does: Jupiter Fund Management offers a range of actively managed strategies to UK and international clients, including equities and fixed income.

By Paul Summers. The cost-of-living crisis has been tough on asset managers with money being withdrawn at an alarming pace. Jupiter Fund Management (LSE: JUP) is just one of many ‘victims’ in the space. Shares are down nearly 40% in just twelve months.

However, I think this penny stock now looks cheap on a valuation of less than eight times forecast earnings. Although not guaranteed, there’s a 6.2% dividend yield in the offing too.

An immediate turnaround is probably asking too much. Some of Jupiter’s star managers have now left and justifying the high fees remains tricky in the current climate when many cheaper passive investment products are delivering better returns.

But I do think there’s at least a chance that buying now might prove lucrative further down the line. Once interest rates are cut and investing becomes possible for more people, confidence could return in spades.

Paul Summers has no position in Jupiter Fund Management

Michelmersh Brick Holdings

What it does: Michelmersh Brick Holdings sells products to the homebuilding and repair, maintenance and improvement sectors.

By Royston Wild. Britain’s housing shortage has hit crisis levels. It is likely that the next government will have to ramp up construction levels considerably to meet the needs of a growing population.

The current Conservative government has estimated that up to 300,000 new homes are required every year.

It’s a scenario that will play into the hands of companies like Michelmersh Brick Holdings (LSE:MBH). This penny stock produces more than 120m clay bricks and pavers a year, and is a formidable player at the premium end of the market.

Today the company trades on a forward price-to-earnings (P/E) ratio of 9.4 times. It also carries a corresponding 4.7% dividend yield. I find this all-round value highly attractive.

Brickmaking requires huge amounts of energy, leaving Michelmersh vulnerable to spikes in electricity costs. But the company has set up price contracts for 70% of its predicted power requirements in 2024 to reduce this risk. It also has arrangements in place for the following two years.

Royston Wild does not own shares in Michelmersh Brick Holdings.

Michelmersh Brick Holdings

What it does: Michelmersh Brick Holdings is the UK’s largest specialist brick manufacturer and owns a collection of premium brands.

By Ben McPoland. I’d feel comfortable tucking a few shares of Michelmersh Brick Holdings away in my portfolio for the long term.

The firm manufactures and distributes specialist clay bricks. These tend to be a bit more pricier, resulting in better profit margins.

Unfortunately, high inflation and interest rates have hit the construction market. This has weighed on the share price, which is down about 32% in three years.

However, the company continues to grow. In 2025, brokers expect a £10.2m net profit on revenue of around £84m. That’s up from 2018’s revenue of £46.3m and £5m net profit.

Dividend growth has been strong too, with the payout growing at an average of 7% over the last few years. The forward yield is a respectable 4.6%, while the stock is trading at just 9.7 times earnings.

Ongoing weakness in the construction sector is a risk. However, net migration to the UK is projected to remain strong in the coming years, so I expect plenty of construction long term. This should boost sales of bricks (premium or otherwise).

Ben McPoland does not own shares of Michelmersh Brick Holdings.

Topps Tiles

What it does: Topps Tiles runs a network of depots and websites selling tiles and other flooring materials to trade and retail customers.

By Christopher Ruane. When the economy weakens, spending on homebuilding and DIY can fall – sometimes significantly. I that risk explains the ongoing weakness in the share price of Topps Tiles (LSE: TPT), down 13% over the past year.

Across five years, the shares have fallen 41%. The company has been facing challenges. In the first half of its current financial year, total sales fell 6% year on year.

That said, the prior year period had been Topps’ best ever. The business remains solidly profitable and the current share price means it offers a dividend yield of 8.4%.

Demand may vary but tiles are here to stay over the long term — and Topps sells one in every five bought in the U.K.

It has developed an extensive online presence across a range of platforms. I think that positions it well for future growth alongside its physical depots, ideal for the heavier weight of large orders from the trade.

Christopher Ruane owns shares in Topps Tiles.

The post 3 penny stocks Fools actually love for the long term! appeared first on The Motley Fool UK.

A clear fair value discount

The NextEnergy Solar Fund (LSE:NESF) is down 31% over the past year. The FTSE 250 fund has over £1.2bn worth of assets under management, in the solar energy and energy storage areas.

The fall in the stock over the past year can be put down to several reasons. Forecasts for UK power prices have fallen, which has a negative impact on the business. This does remain a risk going forwad.

The continued high interest rates in the UK (above 5%) mean that debt costs become more expensive to service. Even though the total gearing (leverage) ratio isn’t that high at 46.4%, it still acts as a drag.

Despite all of this, I think it’ll rebound over the course of the next year. A large factor in this is the fall in the share price relative to the net asset value (NAV) of the fund. The latest estimated NAV is 33% lower than the share price! If the stock returns to a fairer level relative to the NAV, this would erase all the losses from the past year.

Further, if interest rates do start to fall later this year, this should ease investor concerns about the cost of leverage.

In the meantime, the 10.27% dividend yield is something that can provide a great source of income.

Down long term, up short term

Another option is Jupiter Fund Management (LSE:JUP). The 33% fall in the stock over the past year has pushed down the valuation to an attractive level.

What’s interesting to note is that in the short term, the stock is rallying. The positive full-year results released a month ago have seen the share price jump 12% since then. The report details how assets under management grew by 4% versus 2022. Underlying profit before tax hit £105.2m, up from £77.6m a year prior.

I think the stock can continue to rebound in coming months, as the latest earnings still only give a price-to-earnings ratio of 6.22. This is below the benchmark of 10 that I look for in setting the bar for a fair value stock. Therefore, given that the earnings per share will stay the same until the next results, a share price rally is the key driver that would pull the ratio closer to 10.

Of course, the risk of continued macroeconomic uncertainty exists. This is something the management team have flagged up. With a host of global elections, central bank policy meetings, and much more going on this year, it could be a rocky road for an investment manager like Jupiter.

Both stocks are on my watchlist at the moment, to look at buying when I have some free money.

The post Down more than 30% in a year, I think these UK stocks could be primed to rebound appeared first on The Motley Fool UK.

FTSE 250 stocks often grow faster than those in the FTSE 100 when markets turn bullish. And I have some on my list of potential buys for 2024.

Big fall

Jupiter Fund Management (LSE: JUP) fell 10% on the back of a trading update. I’d say that could make the stock a better buy now.

The firm has seen net outflows of £1bn since the start of the year. And, perhaps worryingly, it all happened in the third quarter.

Assets under management still stood at £50.8m at the end of the quarter, though. And the firm says we should see “modest outflows” for the full year, in line with expectations.

It looks like high interest rates and rising bond yields are swaying investors’ minds right now, and I expect that to mess with firms like Jupiter. But I can only see it as a short-term thing.

I still have Jupiter down as a potential long-term buy. I do see volatile times ahead, and perhaps a rocky end to the year. So I’ll wait for full-year results, due in February.

Big dividend

House builder Bellway (LSE: BWY) had a steadier day, and it’s among my top FTSE 250 dividend stocks for 2024 and beyond. The share price is recovering from its 2022 slump, but it’s still down 21% in five years.

That means a fatter dividend yield, with the full-year payout up to 6.4% on the current share price.

The company itself seems to agree that its shares are cheap, snapping them up under its share buyback programme.

A 2.3% fall in full-year completions looks fair to me in the current property market. Underlying earnings per share, however, fell 22%. House prices are squeezed, and inflation has pushed up materials costs.

I fear we might see a tougher year in 2024. But this is another I’d buy for long-term dividends, even if I might suffer some short-term pain. I just see the home construction business as a long-term cash cow.

Big jump

I’ll end on a high, with a Q3 update giving Moneysupermarket.com (LSE: MONY) a 7.5% boost. After a strong 2023, the shares are now down 7% in five years.

The financial comparison company saw a 14% rise in revenue in the quarter, up 12% in the nine months to September.

That’s good, but I’m cautious. We’re in tough financial times, and that’s when people most try to save money by switching suppliers.

Interestingly, the rise is almost entirely from insurance switching. It includes motor and home insurance, but I’m just not sure how sustainable that jump might be.

We’re looking at forecast dividend yield of 4.8% and rising, and it’s a cash-strong business. But might profits fall off in better times when people aren’t so squeezed?

Still, I wonder if this might be the kind of “wonderful company at a fair price” that billionaire investor Warren Buffett loves so much?

The post 3 hot FTSE 250 stocks to consider buying for 2024 appeared first on The Motley Fool UK.

This ties in with a just-released Q3 trading update from the firm. Could this simply be some panic-selling, or is this something to stay away from?

Details of the report

One of the key metrics the businesses uses to judge success is the assets under management (AUM). If investors decide to park money with the firm, this is flagged as an inflow. This is good because it shows confidence in the fund managers. It also allows Jupiter to make more money, because it charges fees based on the amount of assets it manages.

For Q3, AUM dropped by £1bn to £50.8bn. A good amount of this outflow was by retail clients, spooked by the sharp moves in the bond markets.

The report spoke of how “macro-economic uncertainty” was continuing to weigh on investors minds.

It did reaffirm expectations for the full-year of only having “modest outflows”, but this is a rather vague statement.

A large move lower

I believe part of the reason for the sharp drop in the share price is due to the difference in tone from the half-year report. If we rewind back to the end of July, the report was upbeat.

Underlying profit before tax was £46.4m, up from the £29.7m from H1 2022. It declared an ordinary dividend of 3.5p and a special dividend of 2.9p.

Of course, over the past couple of months the uncertainty with interest rates and inflation has remained. This has weighed on investors and so I think some were anticipating a slightly disappointing trading update. But it’s clear from the size of the fall that this was worse than investors were expecting.

Assessing the current value

The fall has got me focused on two points. The first is the dividend yield. Given that there was no change in the Q3 statement on dividend payments, the lower share price has acted to push up the dividend yield.

The yield is now 10.84%, making it one of the highest in the FTSE 250. Granted, there’s a risk that the dividend could be paused if the business continues to lose assets. But for the moment I don’t think this is a realistic possibility.

The other angle is the fall in the price-to-earnings (P/E) ratio. Jupiter now has a P/E ratio of 7.73, below the figure of 10 that I use as a fair value number. This could indicate that the stock is becoming undervalued and oversold.

On balance, I do think the reaction in the stock today isn’t justified. The update wasn’t great, but I don’t think the business is in a seriously bad place going forward.

On that basis I think investors should considering adding the stock to a portfolio.

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