The pace of the recovery in advertising spending continues to surpass most expectations as we close out 2021. I reckon they could continue to surprise in 2022 too, so there’s a good chance Reach’s earnings next year could end better than expected.

I wouldn’t just buy Reach for the ad industry rebound though. I’d also buy it because of the impressive progress it’s making to digitalise its operations. It has added an extra 1.3m reader registrations since the end of July, a trading update this week showed. I’d buy Reach despite the continued problem of falling circulation across its print operations.

Investing for future growth

Door, window and conservatory manufacturer Eurocell (LSE: ECEL) is another cheap UK share on my radar today. A robust housing market and strong consumer spending on home improvements is helping sales to soar. In fact, latest financials this week showed like-for-like revenues between January and October jumped 21% and 38% respectively, versus the same periods in 2019 and 2020. 

Eurocell isn’t just thriving because of bright market conditions however. Revenues are also ripping higher as it effectively steals market share from its competitors. Buoyant customer spending and these share grabs have prompted the business to raise profits forecasts at various times in 2021. Eurocell has invested heavily in new warehousing and to boost production capacity to keep this momentum going too.

City analysts think earnings will leap 200%+ in 2021 and by a further 7% next year. Consequently, Eurocell trades on a P/E ratio of 12 times for 2022, a reading I consider good value. I’d buy the company despite the threat posed to profits by rising input costs in the more immediate future.

A cheap UK share for the downturn

A troubling outlook for the British economy suggests that Manolete Partners (LSE: MANO) should witness rising demand for its services. This UK share finances insolvency litigation cases, an industry which I think could grow in 2022 as the number of companies hitting the rocks is unfortunately likely to rise.

Government support for business has suppressed the number of corporate insolvencies during the public health crisis. But even so, Manolete saw case completions rise 23% in the six months to September, latest financials showed. And it said that it’s witnessing “a sharp increase both case enquires and signed cases” since temporary government measures ended on 1 October.

Researchers at Atradius are expecting insolvency levels in the UK to be 33% higher in 2022 compared with pre-pandemic levels. This is the second-highest rate in the world, level with Australia and behind only Italy (where insolvencies are tipped to soar 34%).

So I’m thinking of buying Manolete shares, despite the risk of unfavourable decisions on the litigation cases it finances.

The post 3 UK shares under £5 that I’d buy appeared first on The Motley Fool UK.

A rising UK share

Shares in insolvency litigation specialist Manolete Partners (LSE: MANO) have halved in value over the past 12 months. This is because a strong economic recovery in the UK, and significant government support to ailing businesses, has hit the number of new cases experienced by the firm.

But Manolete’s share price edged 1% higher on Wednesday following the publication of full-year financials.  Revenues soared 49% during the financial year to March, to £27.8m. Meanwhile, Manolete’s retailed share of gross cash from completed cases rocketed 113% to £6.8m. And the UK legal share completed on a record 135 insolvency cases last year. It made 198 new case investments too, another all-time record.

The impact of that government assistance, along with increased staffing costs and a reassessment of the value of in-process cases during the pandemic, caused pre-tax profit to slump 26% to £7m. But Manolete expects the number of cases to rise as Covid-19 lockdown measures are rolled back and the government’s emergency suppression of insolvencies ends in September.

“With the widely reported large backlog of insolvency cases, we expect new case enquiries to increase over the foreseeable future and we will continue working hard to deliver outstanding returns to both the creditors of insolvent estates and our investors,” Manolete commented.

Good momentum

The Marlowe (LSE: MRL) share price has fared much better than Manolete Partners during the past 12 months. The UK health and safety share has ballooned almost 80% in value as its aggressive approach to M&A has paid off. The business rose 1% on Wednesday too following the release of its own full-year financials.

Revenues rocketed 15% year-on-year during the 12 months to March, to £192m. And margins rose to 16.2%, from 13.1% previously. This was thanks to the positive impact of acquisitions, steps taken to improve productivity, and the leveraging its back-office infrastructure. All this meant that pre-tax profit soared 31% over the period to £17.1m.

Marlowe – which provides safety and compliance software and services — noted too that current 12-month run-rate revenues sit at £280m, 83% of which is recurring in nature. The company made 15 acquisitions in total last year and has continued spending heavily on M&A to supercharge future earnings growth. It’s made a further eight acquisitions since April to improve its presence in key markets.

Today, Marlowe affirmed its plan to generate run-rate revenues of £500m and adjusted EBITDA of £100m by financial 2024. The UK share said it hopes to achieve this “through deepening our market share across our sectors, broadening our activities across the business-critical arena, strengthening our business via operational improvements and delivering on our digital strategy.”

And for the current financial year? Marlowe said it’s enjoyed a “strong start” with “good” levels of organic growth in the high-single-digit percentages across its businesses.

The post Here’s what UK shares Manolete Partners and Marlowe reported today appeared first on The Motley Fool UK.

Massive Brexit uncertainty has cost Britain a fortune in lost productivity and delayed investment already. Under all scenarios, the domestic economy will suffer — at least in the short-to-medium term — from the UK’s withdrawal from the European Union. However, a no-deal Brexit would deliver a hammerblow and many UK shares will suffer considerably.

Brexit bother

But you don’t just need to take my word for it. Bank of England chief Andrew Bailey laid out the dire consequences of a hard Brexit in comments to MPs this week. Speaking to the Commons Treasury Committee, the big cheese at Threadneedle Street said: “The long-term effects [of a no-deal Brexit], I think, would be larger than the long-term effects of Covid.”

Negotiators in London and Brussels have less than five weeks to avoid falling off the Brexit cliff edge. Bickering over key issues like trade standards and fishing continue and the chances of a post-Brexit trade deal failing to materialise are significant.

Two UK shares on my ISA radar

Clearly, Brexit is an issue that UK share investors need to take extremely seriously. But, like the Covid-19 crisis, the consequences of a cliff-edge EU withdrawal won’t stop me for one from continuing to invest in my Stocks and Shares ISA.

Here are two UK shares whose profits could soar if a no-deal Brexit occurs in the coming weeks:

1) Polymetal International

Significant Brexit uncertainty has been a major driver for precious metals prices in recent times. Gold might have spiked to record peaks above $2,000 per ounce this year because of the Covid-19 crisis. But fears of a disorderly Brexit was helping to sweep bar and coin demand higher before the start of 2020. I reckon it could swing higher again before long too.

I’d buy gold mining giant Polymetal International shares to ride this theme. This UK share’s price-to-earnings (P/E) ratio of 8 times for 2021 offers significant bang for one’s buck. And its 8.2% dividend yield beats the corresponding yields of all but a couple of other FTSE 100 shares.

2) Manolete Partners

Unfortunately, the prospect of a no-deal Brexit threatens to do more irreparable damage to British business. But revenues at insolvency litigation financing specialists Manolete Partners are likely to leap under this scenario.

The AIM company already has the bit between its teeth following the coronavirus crisis. Revenues and pre-tax profits exploded 153% and 49% respectively in the six months to September. And 2021 looks like it’ll be another big year for Manolete Partners. Today, the UK share trades on a forward P/E ratio of 14 times. I reckon this makes it an attractive buy at current prices.

The post I’m not worried by a no-deal Brexit! 2 UK shares I’d buy in an ISA to get rich appeared first on The Motley Fool UK.

One in 10 SMEs have already closed for good, found an April study by the Corporate Finance Network. It says 39% of businesses will not be able to access the cash they need to survive two more weeks of lockdown.

In the coming UK recession I believe insolvency companies will profit massively.

FRP Advisory (LSE:FRP) could hardly have chosen a better time to IPO, at the start of a UK recession. And the market agrees with me. Its shares, starting at 80p on 6 March 2020, are already up 60%.

CEO Geoff Rowley said his company’s debut on AIM was “a significant milestone“, as the business seeks to expand its profile and market share. Operating from 19 UK offices, its business is in corporate restructuring, company and personal insolvency, refinancing debt, and advising on pensions.

FRP is very new to the market. It was only founded in 2010. It has not yet released financial reports, so we can’t see its profitability or earnings. An investment here would be for the more adventurous among us, betting on the sector profiting in general.

The two other publicly listed insolvency companies I’m going to cover make more robust investment cases. They are both highly profitable, for one.

Manolete Partners

Manolete Partners (LSE:MANO) revealed high pre-tax profits of £5.9m on £13.7m revenues for the year ending 31 March 2019. It is a market leader in its particular field, which I always put significant weight on when I’m looking for strong long-term investments.

Manolete doesn’t just fund insolvency litigation. It buys 90% of the cases it deals with from other insolvency companies further down the chain. This allows it to work at lower costs and on much higher margins than other companies in the sector.

As such it has a 67% market share, giving it a wide economic moat. This is a favourite metric of Warren Buffett when seeking the best investments.

Like the most agile companies working under Covid-19, it has moved to a remote-working model and CEO Steven Cooklin said business had been little impacted by the pandemic.

A trading update for the year to 31 March 2020 shows a 131% increase in new cases, with 54% more claims completed.

Begbies Traynor

Begbies Traynor (LSE:BEG) is one of the best-known insolvency business operating in the UK. I particularly like that the Manchester firm still has its original founder Ric Traynor at the helm. Begbies has built a strong reputation for turning around failing companies. Its most recent results showed £3.5m pre-tax profits on £60m revenues.

And its in-house Red Flag Alert report showed record numbers of British companies — some 494,000 — in financial distress even before the coronavirus changed our lives forever.

That’s a broad market to approach, and one which could provide significant profits. The firm’s buyouts of profitable rivals has both boosted its balance sheet and given it greater market share, which is good.

Pre-Covid, City analysts said Begbies earnings would jump 18% in 2020. With the harshest UK recession in the record books now approaching, I think those those figures could rise significantly.

It’s clear to me that these businesses will profit the most from the British economic shutdown and the coming UK recession.

The post Why I’d buy these 3 insolvency firms in May with UK recession coming appeared first on The Motley Fool UK.