Restauranteur

As a quick reminder, Restaurant Group operates close to 400 restaurants and pub/restaurants throughout the UK. Some of its best known names include Wagamama and Frankie & Bennys. It also has a concessions business that are mostly located at UK airports.

So what’s happening with the Restaurant Group share price currently? Well, as I write, the shares are trading for 42p. At this time last year, the stock was trading for 115p, which is a 63% decrease over a 12-month period.

I’m not surprised that Restaurant Group shares have fallen so sharply. The Covid-19 pandemic affected the business badly as locations were closed. Furthermore, recent macroeconomic headwinds have continued to slow any recovery.

To buy or not to buy

So what are the pros and cons of me buying Restaurant Group shares?

FOR: A couple of recent updates by Restaurant Group have been positive, in my opinion. Firstly, a trading update for the 19 weeks to 15 May showed that one of its best brands, Wagamama, had returned to pre-pandemic levels of trading. Net debt actually fell too, by £6m, which is a positive sign. I believe if similar levels of trading can continue, the share price could increase steadily.

AGAINST: When the pandemic struck, many FTSE stocks had to borrow to keep the lights on. Restaurant Group was one of these businesses. As an investor, debt makes me feel uneasy, especially for a firm operating in an industry facing other challenges such as inflation and the current cost-of-living crisis here in the UK. It has managed to decrease debt as mentioned above but it is still something that puts me off.

FOR: Restaurant Group said in its last update it had £220m worth of cash. This is a great buffer to have in case of any potential further Covid-19-related disruption, which is still potentially a threat. It could also be used for growth, the business has said. This is exactly what it has used that cash for. Yesterday, Restaurant Group confirmed it purchased Mexican restaurant business Barburrito for £7m and added it to its umbrella of brands. This acquisition could prove to be a shrewd one to boost performance and returns in the longer term.

AGAINST: Finally, macroeconomic issues will have a material impact on profitability as well as sales. The rising cost of materials will impact profit margins, which would then affect returns. Furthermore, the current cost-of-living crisis in the UK could mean less people are able to regularly frequent their favourite eateries. This could also affect performance and returns for Restaurant Group too.

A FTSE stock I would avoid

Reviewing the pros and cons, I’ve come to the decision that I wouldn’t add Restaurant Group shares to my holdings. For me, the negatives outweigh the positives.

I will keep a keen eye on developments and perhaps revisit adding Restaurant Group shares to my holdings at a later time.

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Generally defined as businesses with a share price of less than £1, these firms also have fairly small market capitalisations. After trawling through the indices, I’ve found two companies that I think could add value to my portfolio and may take off. Let’s take a closer look.

Restaurant Group

Restaurant Group (LSE:RTN) owns and operates restaurants around the UK. Some of these are well-known names, like Wagamama and Frankie & Benny’s. 

Unsurprisingly, the company was hit hard during the pandemic as dining outlets were forced to close. The share price plummeted from around 130p in February 2020 to a low of just 23p. It currently trades at 49p. 

There are now strong signs that the firm is heading back to some degree of normality. For the 19 weeks to 15 May, sales at Wagamama were up 15% compared to the same period in pre-pandemic 2019.

What’s more, its pub sales increased by 10% on the same basis. I’m also encouraged by the fact that net debt has fallen by £6m since the end of 2021. If these trends continue, the share price could also increase. 

The business has a cash balance of £220m, which would place it in a strong position in the event of any further lockdowns.

Inflation is a risk to this company, however. It has forecast that food and drink inflation could reach 9% or 10% and this could eat into future balance sheets. 

Mitie Group

The second penny stock that I’m considering is Mitie Group (LSE:MTO), a firm that specialises in outsourcing and facilities management.

Currently trading at 64p, the business announced in June that it was reinstating its dividend. It will pay 1.8p per share and I find this potential income stream attractive. Furthermore, the company simultaneously initiated a £50m share buyback scheme, an indication that it’s financially healthy.

Recent contract wins from the likes of Netflix and Hammerson have complemented its current contracts at UK military bases overseas. 

This has resulted in a swing from a 2021 fiscal year pre-tax loss of £14m, to a pre-tax profit of £52m for the 2022 fiscal year. 

Revenue also increased by 58% over the same period, indicating that demand for facilities management is recovering. There could be even more growth in this sector as more offices reopen in the future.

The business is, however, under investigation by the Competition and Markets Authority (CMA) over a Home Office contract. If any foul play is found, this could dent the share price. 

I think that these two penny stocks could see their share prices growing sharply in the coming months, given greater demand for restaurants and facilities management. With both sectors likely set for continued growth, I’ll soon be buying shares in both, while always being aware of the risks.       

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A rebounding LSE share

The first company, Halfords, is a retailer and specialist in automotive, motorbike, and cycling products. It currently trades at 257p, down 37% in the past year. For the years ended April, between 2017 and 2021, results have been mixed. 

While revenue increased from £1.1bn to £1.3bn, profit before tax declined from £71.4m to £64.5m. This may be partially due to the impact of the pandemic on profit margins. 

For 2020, the company reported a profit before tax of just £19.4m. It is encouraging to see such a quick rebound in more recent financial results.

On the flip side, earnings-per-share (EPS) rose from 30.3p to 41.7p. By my calculations, this means that the firm has a compound annual EPS growth rate of 6.6%. This is both strong and consistent. 

It should be noted, however, that past performance is not necessarily indicative of future performance.

The business also lifted profit expectations for full-year results in April 2022 due to accelerating growth in the automotive and motorbikes segments. However, it has also warned about the potential impact of ongoing supply chain issues.

A pandemic recovery stock

The second company I’m thinking of buying for long-term growth is Restaurant Group. It owns well-known food outlets in the UK, like Wagamama and Frankie & Benny’s. The firm endured a torrid time during Covid-19, swinging to a £133m loss in 2020. 

Although the business still recorded an £8m loss for 2021, this was a vast improvement in a relatively short period of time. 

What’s more, just about all domestic restrictions have been removed in the UK, paving the way for more consistent footfall in restaurants. It is worth noting, however, that any future variant could halt progress. 

This more positive operating environment has been reflected in net debt levels. This figure stood at £340m in 2020. By 2021, this had nearly halved to just £171m.

Investment bank Berenberg increased its target price from 110p to 125p because of Restaurant Group’s scope to grow earnings. It currently trades at 65.85p, down 46% in the past year.

Overall, these two businesses have rebounded well after the pandemic. On a stronger financial footing, future operational environments look to be much more stable. I will be buying shares in both businesses soon and holding them for long-term growth. 

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Here are two great penny stocks I’m considering buying despite the rising near-term risks they face. I think they could be too cheap to miss following recent crashes.

Topps Tiles

I’d buy slumping Topps Tiles (LSE: TPT) as it carries attractive all-round value right now. As well as trading on a forward price-to-earnings (P/E) ratio of just 9.6 times, the retailer carries a chunky 5% dividend yield.

The home improvements phenomenon that took off during Covid-19 lockdowns in 2020 is yet to run out of steam. In the 12 months to September, a record 247,500 planning applications for home improvement and extension were made, latest figures show.

This suggests demand for Topps Tiles’ building products could remain strong in 2022. But this is not the only reason why I’m optimistic for the retailer. The homes market remains ultra-strong as low interest rates and government support for first-time buyers continues. And so sales of its flooring products to homebuilders should also stay lively as construction rates ramp up.

Topps Tiles could of course see sales slump as the cost of living crisis worsens. However, I think this is reflected in the company’s recent share price reversal and that rock-bottom earnings multiple.

The Restaurant Group

Leisure shares like The Restaurant Group (LSE: RTN) are also in danger from the rising cost of living. The strong revenues recovery following the end of Covid-19 lockdowns could run out of steam if people stay at home to save cash. What’s more, costs at the company’s restaurants could well balloon as commodities like wheat, sugar, cocoa and other essential foodstuffs rise in price.

That said, as a long-term investor I’m still thinking of buying The Restaurant Group shares today. The penny stock’s plunge to 14-month lows leaves it trading on a forward price-to-earnings growth (PEG) ratio of 0.1. This marginal reading is a long way inside the benchmark of 1 and below that suggests a company might be undervalued.

I like The Restaurant Group because of the strength of its brands like Frankie & Benny’s and Wagamama. The huge investment the penny stock has made to revitalise these brands has exceeded many people’s expectations (including my own). This is reflected by sales at group level outperforming those at other major restaurant chains in recent times.

I’d also buy The Restaurant Group as a way to capitalise on changing consumer priorities. What I mean by this is that Britons have been spending an increasingly large percentage of their incomes on experiences like dining out. This is a trend that’s recovering strongly in the post-pandemic environment as people strive to get out and about again.

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The Restaurant Group (trades at 102p)

Leisure shares like The Restaurant Group (LSE: RTN) face some significant near-term challenges. Rocketing inflation is putting consumer spending under massive stress. The cost of ingredients and staffing is also rising sharply. The prospect of further coronavirus lockdowns can’t be ruled out either as Covid-19 endures.

As a long-term investor though, there are some good reasons why I’d still buy The Restaurant Group. The business has made huge strides in turning around its flagging chains such as Frankie & Benny’s and Chiquito in recent years. It also owns the massively-popular Wagamama brand, the success of which has been boosted by a positive reception to ongoing expansion of its vegan menus.

I also like The Restaurant Group because of changing priorities among UK consumers. Spending on material goods as a proportion of income has been steadily falling as the ratio on leisure pursuits has been rising. It’s a theme which this ‘almost’ penny stock, with its 400-odd restaurants across the country, is well-placed to exploit.

Everyman Media Group (trades at 127p)

Like The Restaurant Group, I think cinema operator Everyman Media Group (LSE: EMAN) should also benefit from rising leisure spending in the UK. Cinema attendances have bounced back strongly following Covid-19-related theatres closures. And I’m tipping them to continue increasing at an impressive rate, propelled by Hollywood’s conveyor belt of popular sequels, prequels and reboots.

But I wouldn’t invest in Cineworld to capitalise on this huge investment opportunity. I’d rather buy Everyman because of its considerably healthier balance sheet and its more sophisticated offering.

Everyman prides itself on its screening of independent and foreign movies, giving it a wider audience than mainstream operators. Its sites also incorporate bars and restaurants which give it extra ways to part people from their cash on a night out.

Its unique offering is particularly important given the growing popularity of streaming platforms from Netflix, Disney and Amazon. The huge investment these US media giants are dedicating to programming and technology poses a significant threat to cinema operators. Disney alone plans to spend $33bn on content just in 2022.

That said, trading numbers from Everyman give me cause to be optimistic. Business has been so strong at Everyman that last month the business hiked its full-year forecasts for 2021. Revenues more than doubled last year and, equally impressively, total sales came in at 75% of 2019’s record levels.

I think this ‘nearly’ penny stock has a winning formula and am encouraged by its plans to aggressively expand. It wants to have 41 new cinemas open by the end of 2022, five more than its current crop.

The post 2 ‘nearly’ penny stocks I’d buy to hold for 10 years! appeared first on The Motley Fool UK.

A dirt-cheap penny stock

I’d buy building materials supplier SIG (LSE: SHI), as I think demand for its insulation products could rocket for years to come. A backcloth of soaring energy bills is likely to bolster sales of its heat-preserving products. Growing concerns over the climate crisis also looks set to improve demand for SIG’s energy-saving foam-based hardware.

Housebuilders are being tipped to turbocharge production over the next decade at least to solve the country’s housing crisis. This bodes well for SIG, and particularly as these construction firms put greater focus on the energy efficiency of their products. I do note that a downturn in the housing market, and the subsequent damage this could cause to build rates, could significantly impact SIG’s profits.

I think SIG’s shares could be too cheap for me to fail to act. The business currently trades on a forward price-to-earnings growth (PEG) ratio of 0.2. Investing theory says that any reading below 1 suggests a stock could be undervalued by the market.

Use your noodle

The Restaurant Group (LSE: RTN) is another penny stock I’m paying close attention to today. Even though the pandemic rolls on and we can’t rule out further lockdowns, I think the potential long-term returns here could outweigh the risks. Brits are spending increasingly large portions of their income on eating out and firms like this stand to be big winners.

I like The Restaurant Group in particular because it owns the highly-popular Wagamama noodle chain. Sales here rose a healthy 11% and 8% in October and November compared to the same months in 2019. I’m also encouraged by the improved performance of the penny stock’s other brands like Frankie & Benny’s and Garfunkel’s. Strong trading at The Restaurant Group — allied with the success of disciplined cost-cutting — actually encouraged the business to hike its full-year growth forecasts late last week.

The Restaurant Group is a very different beast to what it was a few years back. Its turnaround plan is bringing hungry customers back in their droves, and I think now could be the time to grab a slice of the stock. But I have to remember that the dining out sector is highly competitive.

Battery-powered profits

I’m also thinking about building my exposure to the green economy. And I believe adding Atlantic Lithium to my portfolio could be an effective way to do this. The company is developing Ghana’s Ewoyya lithium project, which continues to illustrate its exceptional mining potential.

Demand for lithium is predicted to soar over the next decade as electric vehicle production rates increase. Analysts at Statista think global consumption of the battery-making material will rocket to 1.8m tonnes by 2030, up from a projected 497,000 in 2022. As a consequence, I’m thinking profits at Atlantic Lithium could soar. I have to keep in mind that there’s a range of operational problems that could affect a mining company like this, potentially damaging profits. But I’m confident enough to buy the shares for my portfolio.

The post 3 penny stocks to buy in February! appeared first on The Motley Fool UK.

With that in mind, here are the five mid-cap stocks I would acquire for my portfolio today. 

Shares to buy for 2022

The first enterprise on my list is the iron ore producer Ferrexpo (LSE: FXPO). This company operates in the Ukraine and sells iron ore worldwide, so it is not a play on the domestic economy.

However, it is a play on the global economic recovery as the price of iron ore has been rising over the past 12 months.

Demand for the vital steel ingredient has been increasing as countries around the world unleashed massive infrastructure spending plans to try and stimulate their economies after the pandemic. This is generating substantial profits for Ferrexpo and the company’s international peers.

Indeed, group profit before tax increased 165% year-on-year in the six months to the end of June. 

Management is planning to return a significant amount of this capital to investors. In a recent stock exchange announcement, the group said it will pay out 30% of free cash flow to investors as we advance. The report explains that it could also complement this with special dividends in periods of high profitability. 

This cash return policy and the group’s rising profits are the main reasons why I think this FTSE 250 company is one of the best shares to buy now. 

Challenges it could face include commodity price volatility and rising costs, which could hit profit margins. If profits begin to fall, shareholder returns may also decline. 

Real estate investment

Back here in the UK, I like the look of real estate investment trust Capital & Counties Properties (LSE: CAPC). 

This company owns a portfolio of properties in central London. As most of them are commercial, it has suffered a significant decline in income over the past 24 months. But as the UK economy continues to reopen, I expect property values and rental income to rebound. 

What’s more, as the majority of the company’s portfolio is located in the capital, I think its portfolio should outperform the rest of the country, which may struggle if the economic recovery grinds to a halt. 

Additional coronavirus restrictions are the most considerable risk the corporation faces today. Further restrictions could significantly impact levels of rent collection and weigh on property prices. In this scenario, the FTSE 250 company’s recovery would almost certainly slow. 

FTSE 250 recovery play

Speaking of recovery investments, I am also interested in buying the insurance group Beazley (LSE: BEZ). 

Over the past two years, this company has been entangled in a battle with business interruption insurance policyholders. Policyholders have been fighting the firm to pay out on policies due to the disruption from the pandemic. 

After a lengthy legal battle, the Financial Conduct Authority is forcing the corporation to meet these obligations. The subsequent payouts are having a significant financial impact on the company’s balance sheet. 

However, this challenge should only last for so long. At the same time, the international insurer is benefiting from rising insurance rates around the world. Higher rates should translate into higher profits and, as a result, help the company reinforce its balance sheet after the recent disruption.

Considering this recovery potential, I would like to add the FTSE 250 stock to my portfolio in 2022. 

The most considerable risk facing the enterprise is the risk of a significant loss from catastrophes. This is a general risk of doing business in the insurance sector. It is something all firms have to deal with at some point. Beazley’s survival could be at stake if the losses are too big. 

Commuting returns

Even though the latest set of coronavirus restrictions has brought back a work-from-home directive, over the past couple of months, it has become clear that many firms will require staff to return to officers after the pandemic. 

This suggests the outlook for Trainline (LSE: TRN) is looking up. Not only will the company be able to capitalise on this return to offices, but the number of leisure passengers using trains has also returned to pre-pandemic levels.

According to its latest trading update, group sales for the six months to the end of August increased 151% year-on-year. As revenues have recovered, the company has reduced its outstanding debts and overall losses. 

As the economy continues to rebuild in 2022, I think this trend will likely continue. That is why I would acquire Trainline for my FTSE 250 portfolio as a recovery play for next year. Of course, if the government introduces even more stringent restrictions, I will have to re-evaluate my position. This is by far the biggest risk the company faces right now. 

Another FTSE 250 recovery investment

My final recovery play is Restaurant Group (LSE: RTN). The company, which owns a selection of casual dining brands, including Wagamama, is reporting a rapid rebound in consumer spending at its locations. 

It has upgraded profit forecasts several times already this year. However, it has not yet commented on how recent restrictions will impact growth. Consumer confidence is likely to decline following the new rules. That will almost certainly impact growth in the restaurant sector. 

Still, management believes that the company’s robust trading performance will allow it to make a substantial contribution to reducing debt for the year.

If it can make a material dent in debt levels, Restaurant Group will have more financial flexibility heading into the new year. This could help the company capitalise on the economic recovery by freeing up cash to spend on marketing activities. 

The post 5 FTSE 250 shares to buy for 2022 appeared first on The Motley Fool UK.

The company provides software and services in the property, legal and financial industries. Its flagship offering is eConveyancer, which is an online comparison tool for residential conveyancing quotations. It also owns DigitalMove, another online platform that centralises and streamlines the conveyancing process.

It released its half-year report last week that showed revenue growing 48% to £10.2m. The gross margin also improved, reaching 40% and up from 38.8% in the same period one year ago. However, the business remains loss-making. The underlying loss before tax was £1.48m, which increased from £0.64m and does make this penny stock higher-risk.

The firm said this was due to continued investment in eConveyancer and DigitalMove. I think this is the right thing to do as these platforms have the potential to streamline the house-moving process. This is an area that’s ripe for disruption from a technology-led company, in my view.

However, what derisks this penny stock is its net cash position. As I write, the company’s market value is about £50m, but there’s cash totalling £23.1m on the balance sheet. This provides the management team with considerable flexibility to invest in its digital platforms.

There’s never a guarantee of success, of course, particularly if the housing market slows. But with a new CEO coming on board in 2021, and a robust balance sheet, I think ULS Technology could be a much larger business in 2022. It’s a buy for my portfolio.

Eating out

The next company is Restaurant Group (LSE: RTN) as the share price dipped back under 100p in October. The firm released a strong trading update in November and the shares almost reached 100p again. However, recent market weakness related to the Omicron variant has meant the share price has slipped back to 84p as I write.

Restaurant Group operates around 400 restaurants and pubs, including Frankie & Benny’s, Wagamama, and Chiquito. The trading update back in November said that the company was outperforming its market (defined as the Coffer Peach restaurant and pub benchmark in the trading update). Management then upgraded its guidance for adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) to a range of £73m to £79m.

I consider Restaurant Group a recovery play. With this in mind, the company should perform well next year as I believe there’s still a lot of pent-up demand for dining and socialising after lockdowns.

However, this does come with some risk. The company said recently it experienced a minor improvement in UK airport passenger volumes, which increased sales in its concessions business. Any further travel restrictions related to Omicron will likely impact this business division.

Nevertheless, I think this stock should continue to trade well next year as the demand for restaurants and pubs stays high. I’m considering adding the shares to my portfolio.

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A rock-solid penny stock

Sometimes boring can be mega attractive. This is why I’m a big fan of Assura (LSE: AGR). As owner and operator of primary healthcare properties in the UK, its day-to-day business isn’t exactly gripping.

But from an investment perspective this makes it a terrific stress-free stock to buy, at least in my opinion. Even as the Covid-19 crisis worsens again, this penny stock doesn’t have to worry about earnings taking a battering. This remains the case, whatever social, economic or crisis comes along.

It’s possible that changing healthcare policy in Britain might affect demand for Assura’s properties going forward. But as things stand, government need for primary healthcare facilities is rising, not receding. And I expect demand for healthcare properties to rise as the country’s population steadily ages.

Cooking up a storm

A few years back The Restaurant Group (LSE: RTN) was in a heck of a state. No-one was going into its unfashionable eateries like Frankie & Benny’s and Chiquito, in spite of the vast sums it was spending to refresh its menus and improve its brands.

However, it finally seems to be turning the corner,  thanks in large part to its acquisition of super-popular noodle chain Wagamama. And according to its November trading update, the business is outperforming the broader market.

With Britons spending more of their disposable incomes on leisure activities like eating out the future may finally be looking rosy for The Restaurant Group. This is why I’m considering buying this turnaround stock today.

But remember that the mid-table restaurant market has been littered with casualties like Gourmet Kitchen Burger and Jamie’s Italian in recent years. The Restaurant Group will have to keep pedaling wildly to keep the recovery going amid high levels of competition.

Another top buy for my ISA

I’m also thinking about adding City Pub Group (LSE: CPC) to my Stocks and Shares ISA. Like The Restaurant Group, this penny stock could be a great way to exploit rising expenditure on social activities. It operates around 45 pubs and bars in Southern England and Wales.

All of its premium sites offer a high-end experience to drinkers, allowing it to stand out against branded pubs and to capitalise on a fast-growing part of the market.

My main concern with buying City Pub shares is the spectre of ballooning Covid-19 cases in the UK. The emergence of the Omicron variant has pushed the number of people dining out in the UK to their lowest level since mid-May, a recently-released study shows.

I think City Pub has plenty of long-term potential, though I am aware that profits could take a whack in the near term.

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Christopher Ruane:  Safestore

A quietly outstanding company I am eyeing for my portfolio is Safestore (LSE: SAFE). The self-storage operator continues to turn in strong financial results. Diluted earnings per share in its first half rose 75% and the dividend was increased 27%, compared to the equivalent prior period.

A simple business model, growing demand for storage space and its well-established brand mean that Safestore remains attractive to me. One risk is competitors pushing down profit margins in the industry. But I would be happy to tuck Safestore shares away in my portfolio in December and hold them for years.

Christopher Ruane does not own shares in Safestore.

Dan Appleby: Auto Trader

Auto Trader (LSE: AUTO) is the UK’s largest digital marketplace for vehicles. The share price has surged recently, and I expect this to continue in December.

The company has a wide economic moat (to steal a Warren Buffett phrase) from its extensive network effect across the UK. Looking ahead, recent successful price increases and new product launches should boost growth in the months ahead.

However, global supply chain issues may limit the stock of cars listed on Auto Trader’s website. The company has navigated this well until now, so for me, the stock is a buy.

Dan Appleby owns shares in Auto Trader.

Rupert Hargreaves: Restaurant Group

In December, I would buy shares in Wagamama owner Restaurant Group (LSE: RTN) for my portfolio as a recovery play. 

According to the company’s latest trading update, sales at its casual eateries are already outperforming the market. 

As we move into the critical Christmas trading period, I think the company should continue to see further growth. This should help support Restaurant Group shares. 

That is assuming there are no further coronavirus restrictions announced before the end of the year. This is probably the most significant risk hanging over the company right now. 

Rupert Hargreaves does not own shares in Restaurant Group.

Dylan Hood: HSBC

Amongst my best shares for December are HSBC (LSE: HSBA) — at the time of writing, HSBC shares are trading at 440p. This is over 25% less than its pre-pandemic level, offering great room for growth.

What’s more, the stock has generated 16% year-to-date returns. I believe this growth will continue regardless of the UK economy’s direction. If interest rates remain low, then increasing growth will help HSBC through increased lending. If rates rise, then the bank will be able to charge more on the loans it gives out.

Therefore, I think HSBC offers a good long-term addition to my portfolio.

Dylan Hood does not own shares in HSBC.

Nathan Marks: Unilever

Unilever (LSE:ULVR) is one of the few constituents of the FTSE 100 that looks likely to end 2021 in the red. Input cost inflation has strained profit margin expectations. However, I believe Unilever’s portfolio of household name brands have pricing power to pass inflationary costs on to customers.

The share price is down over 13% YTD at the time of writing, creating an attractive yield approaching 4%. 2021’s challenges will likely persist in 2022 but an astounding 2.5bn people use Unilever’s products daily. I see this as an excellent opportunity to buy a quality business at a discount.

Nathan Marks does not own shares in Unilever.

Edward Sheldon: JD Sports Fashion

My top stock for December is JD Sports Fashion (LSE: JD). It’s a leading retailer of athletic footwear and clothing.

There are a few reasons I’m bullish on JD right now. One is that in the US, major retailers are seeing strong growth at present. In November, both Macy’s and Kohl’s posted better-than-expected earnings and raised their full-year guidance. This is good news for JD, which has hundreds of stores across the US.

Another is that the company looks set to benefit from the shift to more casual clothing and footwear.

There are risks to consider, of course. One is the fact that major brands such as Nike are now going direct-to-consumer.

Overall, however, I think the risk/reward proposition here is attractive right now.

Edward Sheldon owns shares in JD Sports Fashion.

Kevin Godbold: Next

In November, retailer Next (LSE: NXT) posted cracking third-quarter results. However, the directors cautioned the fourth quarter would likely see lower sales.

Nevertheless, the guidance is for full-price sales to rise by 10% in the fourth quarter. And that’s despite pent-up demand likely declining. The directors said stock availability has “improved” but “remains challenging”. And the delays in the supply chain are being worsened by labour shortages. However, strong demand is offsetting stock limitations.

These are challenging times for Next. But the business looks fighting fit for a post-pandemic world and it’s one of my best shares to buy for December.

Kevin Godbold has no position in Next shares.

Paul Summers: Games Workshop

The relationship between fantasy figurine maker Games Workshop (LSE: GAW) and some of its followers has turned rather icy of late following the FTSE 250 member’s efforts to protect its intellectual property and stop fans from making animations featuring its settings and characters. The backlash, coupled with recent news of higher freight costs, means the shares have fallen almost 20% in 2021 at the time of writing.

I think this drop is overdone. Games Workshop remains a quality business with a dominant hold on a niche market. Considering the festive shopping season and the potential for colder weather/Covid-19 to keep people indoors, I reckon the stock could recover strongly in 2022. Half-year numbers are due mid-January.

Paul Summers has no position in Games Workshop

Royston Wild: Brickability Group 

I’d buy Brickability Group (LSE: BRCK) ahead of what could be an exceptional half-year trading update on Wednesday, 1 December. The former penny stock certainly impressed me in mid-October when it said like-for-like sales of its bricks between January and June were up 54% and 31% compared with the same periods in 2020 and 2019 respectively. 

I’m fully expecting demand for Brickability’s building materials to have remained strong in more recent months, too, thanks to the impact of low interest rates on new home demand. A word of warning, though: Brickability’s meaty forward P/E ratio of 22 times could prompt its share price to slump if trading conditions suddenly deteriorate. 

Royston Wild does not own shares in Brickability Group.

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