Advanced Medical Solutions

What it does: AMS designs, develops, and manufactures innovative tissue-healing technology and wound-care.

By Dr James Fox. I bought Advanced Medical Solutions Group (LSE:AMS) shares a few weeks ago, and while I was buying for the long run, they’ve been good to me so far. At the time of writing, the stock is up 7% since purchase.

It’s a medium-sized business with a track record of delivering strong cash flows and has a competitive advantage in its specialised medical products. It also operates in a highly resilient sector – namely healthcare. Moreover, given the elective procedure backlog, demand should be strong.

The Cheshire-based firm has a reputation for healthcare innovation, and this will likely be enhanced by the launch of LiquiBandFix8. The hernia surgery product was granted pre-market approval ahead of schedule and is now in the partner selection phase.

US LiquiBand sales fell in the first half of the year, and that’s a concern, but the company says partner negotiations are progressing well. Hopefully this will contribute to an uptick in sales and overall revenue in the second half.

James Fox owns shares in Advanced Medical Solutions.

Barclays 

What it does: Barclays is an international bank with operations including retail and investment banking.  

By Charlie Keough. I recently opened a small position in Barclays (LSE: BARC). The stock has struggled year to date, down around 8% as I write. However, I’m optimistic. 

First of all, it offers a dividend yield of over 5%, which should be well covered by earnings. Its half-year results also saw its interim dividend increase, while a new share buyback scheme of £750m was launched.

On top of this, its shares also trade on a price-to-earnings ratio of just 4.3.  

Barclays also has an edge over some of its competitors with its balance between tight-knit risk management versus global opportunities, in my opinion.  

And in the years ahead, banks should bounce back when interest rates begin to come down again closer to the 2-3% range.  

Global economic uncertainty and volatility surrounding the banking sector could damage the share price. After all, the turmoil we saw earlier this year saw the stock hit a 52-week low.  

However, as a long-term buy, I think Barclays shares are a smart move.  

Charlie Keough owns shares in Barclays.  

Cerillion

What it does: Cerillion is a software business that provides billing, charging, and customer relationship management (CRM) solutions, predominantly to telecoms firms.

By Edward Sheldon, CFA. Cerillion (LSE: CER) shares recently experienced a pullback and I took the opportunity to boost my holding in the software company.

This is one of my favourite stocks on the UK’s Alternative Investment Market (AIM). For starters, the company is growing at a rapid rate. Over the last five financial years, revenue has more than doubled as businesses have embraced Cerillion’s software solutions. For the year ending 30 September 2023, analysts expect top-line growth of 17%.

Meanwhile, its financials are strong. Return on capital (a key measure of profitability) is high and there’s no debt on the balance sheet. As for the dividend payout, it’s growing at a very fast pace (the H1 payout was hiked by 27%).  

The downside to buying these shares is that its valuation is relatively high. Currently, the forward-looking price-to-earnings (P/E) ratio is a little over 30, which doesn’t leave much room for error.

I’m comfortable with this valuation, however, given the company’s growth track record and superb financials.  

Edward Sheldon owns shares in Cerillion

EOG Resources

What it does: EOG Resources develops, produces, and markets crude oil and natural gas liquids, primarily in New Mexico and Texas.

By Gordon Best. I’ve been buying shares in EOG Resources (NYSE:EOG) recently. 

After the energy sector soared in 2022 amid geopolitical uncertainty, the sector has been the worst performing of the S&P 500. However, the price of crude oil has started to rebound, indicating a potential buying opportunity. EOG Resources has always been a favourite of mine, with a price-to-earnings (P/E) ratio of 8.1 times well below the sector average of 13.2 times. 

A notable risk is how cyclical the energy sector can be, amid growing focus on clean energy. Negative sentiment or reduced demand would impact the share price. However, through economic uncertainty, oil demand is likely to be high, and with large cash reserves, the company is well positioned to perform decently regardless.

With a generous dividend of 5.6%, and a strong track record of growth, I see EOG Resources as a solid defensive investment for my portfolio. 

Gordon Best own shares in EOG Resources.

Glencore

What it does: Glencore is a leading global producer of metals and minerals, and also makes money from commodity trading and arbitrage.

By Harvey Jones. My portfolio is light on commodity stocks so when I saw Glencore (LSE:GLEN) shares had dipped 20% in a matter of months, I jumped at the chance to buy on 26 July. I’ve had a bumpy ride so far, although I expected that. This sector is more volatile than most.

Investors have been spooked by signs of disinflation in China while the US could still fall into recession, hitting commodity demand and prices.

On Tuesday, Glencore reported that first-half earnings had halved to £9.9bn, due to weaker commodity and energy prices. Management also blamed “inflation, tighter monetary conditions and limited global economic growth”.

Despite that, I’m happy with my purchase. The stock looks good value trading at 9.5 times forecast earnings and is still expected to yield 7.91% this year and 6.68% in 2024.

Since I’m aiming to hold for a minimum of 10 years and ideally longer, I can ignore short-term bumpiness and allow time for my dividends and share price growth to compound.

Harvey Jones owns shares in Glencore.

Lloyds

What it does: Lloyds is the UK’s largest mortgage provider. It’s also one of the nation’s biggest banks with over 30m customers.

By John Choong: With the Lloyds (LSE:LLOY) share price sinking below 50p recently, I’ve been steadily buying up shares of this leading UK bank. While headline results disappointed some investors, causing the sell-off, I focused on the fundamentals instead.

Rather than reacting to short-term noise, I’m taking a longer-term outlook. After all, management upgraded guidance despite economic uncertainty, with its dividend jumping 15% as well. Bearish views seem to overlook Lloyds’ strong outlook too, as I expect net income to jump as structural hedges take effect in H2, with cost-cutting benefits expected to provide a tailwind.

Trading below tangible book value as well, Lloyds shares offer deep value versus peers as the bank has room to expand margins through fee income and digital offerings. While some fret over near-term headwinds, I’ve been opportunistically buying Lloyds stock on weakness. The future looks bright for this stable UK bank once the clouds clear.

John Choong has positions in Lloyds

Mastercard

What it does: Mastercard is a payment processing company enabling consumers and businesses to complete electronic payments.

By Zaven Boyrazian. While the ongoing cost-of-living crisis continues to put pressure on families, the economic landscape has started to improve both in the UK and internationally. Consumer spending is slowly recovering as inflation begins to cool off. And it’s allowed payment processing giants like Mastercard (NYSE:MA) to enjoy some impressive transaction volumes.

Looking at its latest results, a total of $2.3trn (£1.8trn) moved through Mastercard’s payment network between April and June this year. And that’s up from $2.1trn (£1.7trn) just three months prior.

By charging small fees on each transaction, the company has bolstered its revenue and earnings by double-digits. And while it’s fiercely fighting for market share against the likes of Visa, Mastercard continues to consistently beat analyst expectations.

Future growth prospects are strongly tied to the Asian and African markets, which may be difficult to penetrate. Nevertheless, I remain optimistic about the long-term potential of this enterprise, and bought the shares recently.

Zaven Boyrazian owns shares in Mastercard.

Ramsdens Holdings

What it does: Ramsdens Holdings is a financial services group that offers foreign currency exchange, pawnbroking loans, and the buying and selling of jewellery.

By Ben McPoland. I’ve recently started a position in Ramsdens Holdings (LSE: RFX). This is a penny stock with a market capitalisation of just £70m, so high volatility is an unavoidable risk here.

Nevertheless, there are a number of things I like about this company. One is its diversified offerings, which range from jewellery retail and pawnbroking to foreign currency exchange.

Pawnbrokers tend to do well when consumer incomes come under pressure, and that’s no different during the current cost-of-living crisis. The firm is posting record revenue and operating profits across the full business.

Second, the stock carries a 4.3% dividend yield covered 2.5 times by trailing 12-months earnings. It just hiked the half-year dividend by 22%.  

Finally, the stock trades on a cheap P/E multiple of 9.2. That’s attractive because earnings growth is set to continue as Ramsdens adds to its 158 stores around the UK. Its online offering is also growing rapidly and the company intends to consolidate the highly fragmented market in which it is thriving.

Ben McPoland owns shares in Ramsdens Holdings.

Ten Entertainment

What it does: Ten Entertainment operates a network of bowling alleys around the UK, which also offer a range of other entertainment options.

By Roland Head. Ten Entertainment (LSE: TEG) has recovered strongly from the pandemic and recently reported half-year sales 57% above pre-Covid levels.

The business is continuing to expand and expects to open at least four new centres in 2023, taking its total estate to more than 50 centres.

The firm’s more recent accounts show attractive double-digit profit margins and strong cash generation. Ten Entertainment has no debt other than lease liabilities.

There’s obviously some risk of a slowdown in consumer demand if the UK suffers a recession. Growth could become a challenge, too — I don’t know how many more centres the firm will be able to open.

However, Ten Entertainment’s offering is relatively affordable and appeals to a broad market. The company’s shares look decent value to me too, trading on just nine times forecast earnings, with a 4.1% dividend yield.

I think the stock could deliver a decent return from current levels.

Roland Head owns shares in Ten Entertainment.

The post 9 shares that Fools have been buying! appeared first on The Motley Fool UK.

Ten Entertainment Group

Businesses selling non-essential goods and services remain in danger as the cost-of-living crisis endures. Persistently high inflation could see profits disappoint towards the end of 2023 and into next year.

Yet the resilience of the leisure sector suggests to me there could be some gems here to invest in. One such company on my radar today is ten-pin bowling operator Ten Entertainment Group (LSE:TEG).

The business owns 49 bowling centres across the UK. And despite tough conditions for consumers, its performance continues to impress.

Sales in 2022 hit the higher end of expectations as it admitted 8m people through its doors. And despite tough comparatives it has continued to grow revenues. Like-for-like sales were up 2.7% in the first 10 weeks of the new calendar year, latest financials showed.

Fresh trading numbers from Ten’s industry rival Hollywood Bowl further underline the healthy state of the bowling market. This week it announced revenues of £111.1m in the six months to March, up 10.9% year on year. This represented record half-year sales for the company.

People’s love of ten-pin bowling continues to strengthen. It’s a cheap and fun night out and is a market that has plenty of room for further growth. And this UK share has an ambitious expansion strategy to make the most of this opportunity. It plans to open four new centres this year alone.

Ten Entertainment’s share price has risen an impressive 13% since the start of 2023. And the cheapness of its stock provides scope for further gains. Today the business trades on a forward price-to-earnings (P/E) ratio of 8.9 times.  

The PRS REIT

Real estate investment trust (REIT) The PRS REIT (LSE:PRSR) is another great UK value share on my radar. In fact the business — a major player in the private rented accommodation sector — offers a blend of low earnings multiples and big dividend yields.

For this financial year, PRS trades on a price-to-earnings growth (PEG) ratio of 0.7. This is well inside the bargain benchmark of one and below.

Meanwhile, the firm’s prospective dividend yield sits at a healthy 4.8%. It is able to offer such big yields due to REIT rules that require these shares to pay at least 90% of annual rental profits out in the form of dividends.

Due to a shortfall of available properties, residential rents in the UK are booming. Its a theme that pushed like-for-like rental income at PRS up 5.7% in the three months to March. And its one that looks set to continue as demand growth outstrips supply.

The REIT is expanding rapidly to make the most of this opportunity, too. Indeed it has just finished construction on its 5,000th home. Rising building costs are a problem here but on balance I still think it’s a great share to own right now.

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.

The post 2 UK value shares I’d buy to hold for 7 years! appeared first on The Motley Fool UK.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

3i Group

What it does: 3i Group is an investment business that operates in the private equity and infrastructure fields.

By Edward Sheldon, CFA. I’m convinced that 3i Group (LSE: III) shares are undervalued right now.  

For starters, the company’s price-to-earnings (P/E) ratio is very low. Currently, it’s just four. That’s well below the UK market average.

Secondly, 3i’s Chairman David Hutchison recently purchased around £230,000 worth of company shares. Generally speaking, corporate insiders buy company stock when they believe it’s undervalued. It’s worth noting that Mr. Hutchison is very experienced in the investment world. Previously, he was Head of UK Investment Banking at Dresdner Kleinwort. So, he is likely to have a good idea of 3i’s intrinsic value.

Now, 3i’s revenues and profits can fluctuate quite a bit. If they were to deteriorate, the stock may not look so cheap.

I’m encouraged by the recent director dealing activity, though. I think the risk/reward skew here is attractive.

Edward Sheldon has no position in 3i Group.

Centamin

What it does: Centamin explores, mines, and develops precious metals via its operations in Egypt and Côte d’Ivoire.

By Charlie Carman. Centamin (LSE:CEY) shares offer gold exposure, which can prove invaluable in times of crisis. The Sukari gold mine in the Nubian Desert is the jewel in the company’s crown when it comes to productive assets.

One advantage to investing Centamin over an ETF that tracks the precious metal is the passive income the stock produces. Currently, the firm boasts a 6.5% dividend yield.

The miner has lifted gold production guidance by around 5% for 2023. In addition, it expects its costs will fall below the industry average. This bodes well for future share price growth.

One risk facing Centamin is its reliance on its Egyptian operations. After a rock fall hit production at Sukari in 2020, the share price plummeted and is yet to recover.

However, a pre-development study at Centamin’s Doropo mine in Côte d’Ivoire shows efforts to diversify the company’s revenue streams are underway. I’d buy these value shares this month.

Charlie Carman has no positions in Centamin.

Forterra

What it does: Forterra makes bricks. Most notably, it makes the London Brick Company bricks that are used in UK houses. 

By Stephen Wright. Shares in Forterra (LSE:FORT) trade at a price-to-earnings (P/E) ratio of around 8. I think the shares are great value at that price.

Sometimes, when a stock is trading at a low P/E ratio, it can be a sign that the market is expecting a decline in earnings. I think that’s probably true of Forterra.

Higher interest rates making mortgages more expensive is likely to reduce demand for new houses. That will be a headwind for Forterra.

But at today’s prices, I think that the stock has enough of a margin of safety built into it. The stock pays a dividend, which yields just over 5% at today’s prices.

Even if that gets cut in half due to lower earnings, a 2.5% dividend is still not a bad return in the short term. And when housing demand normalises, I think that buying Forterra shares today will prove to be a good investment.

Stephen Wright does not own shares in Forterra.

Redrow

What it does: FTSE 250 housebuilder Redrow specialises in building high-quality homes, targeting more affluent buyers.

By Roland Head. Redrow (LSE: RDW) is known for its popular Heritage range of house designs. However, the company is pushing ahead with introducing modern, low-emission technology to its new homes. Air source heat pumps and underfloor heating are now becoming standard in Redrow’s detached houses.

This FTSE 250 stock has sold off as the market has priced in a slowdown. Although I can see some short-term risk, I think this business is already priced for a cautious outlook. The shares are trading around 10% below their 580p book value and offer a forecast yield of 5.6%.

Another attraction is that founder Steve Morgan remains the company’s largest shareholder, with a 17% stake. I’d guess his influence will help ensure that management avoid costly mistakes.

Although the outlook for 2024 is uncertain, Redrow’s financial position looks healthy to me. I believe this stock offers good value at current levels, on a medium-term view.

Roland Head does not own shares in Redrow.

Ten Entertainment Group 

What it does: Ten Entertainment Group operates 1,143 ten-pin bowling lanes in the UK across around 50 sites. 

By Royston Wild. Ten-pin bowling has enjoyed a renaissance in the UK over the past decade. This upsurge was disrupted by Covid-19 lockdowns, but player participation has been impressive since alleys reopened. 

Strong trading from leisure share Ten Entertainment Group (LSE:TEG) illustrates the strength of the rebound. Like-for-like sales were up 40% year on year in 2022, a result that led the company to predict consensus-beating profits growth. 

I’m expecting the firm’s full-year report on Wednesday 22 March to reveal that trading has remained robust at the start of 2023. Bowling isn’t an expensive way to keep the family entertained and I reckon sales will remain strong this year despite the cost-of-living crisis. 

Ten Entertainment’s shares are quite cheap on paper. They trade on a forward P/E ratio of just 8.5 times. Such a low valuation gives extra space for fresh share price gains if full-year numbers impress. 

One final thing: at current prices, Ten Entertainment also carries a meaty 4.9% prospective dividend yield. 

Royston Wild does not own shares in Ten Entertainment Group. 

The post Best British value shares to buy for March appeared first on The Motley Fool UK.

Making an impression

4imprint Group’s (LSE: FOUR) a great way to ride the continued rebound in marketing spending in my opinion. The business generates almost all of its profits by making and selling promotional products in the US. You know the sort: mugs, pens, USB dongles, bags and the like. This is a steadily-growing industry in which 4Imprint has been relentlessly grabbing market share.

City analysts believe earnings will rise 46% year-on-year in 2022. This leaves it trading on a PEG ratio of 0.7, a decent distance below that benchmark of 1 that suggests a stock could be undervalued. Orders at the business are bouncing back strongly and the total tally for 2021 recovered to an impressive 90% of pre-pandemic levels. Pre-tax profits came in towards the upper end of expectations for the full year, too, a good omen for the new year.

4Imprint could encounter problems if the US economy begins to stutter, however. A surprise drop in non-farm jobs in January — the first drop since the end of 2020 — certainly caught my eye this week. But as things stand I think there’s more to be encouraged about than worried by at 4Imprint.

A mega-cheap leisure stock

Now that Covid-19 lockdowns have ended, Britain’s ten-pin bowling craze of recent years has exploded again. Ten Entertainment Group (LSE: TEG), which operates almost 50 bowling centres across the UK, is a cheap stock that’s obviously well placed to play this boom.

Ten Entertainment’s sales soared an astonishing 32.4% between 1 May and Boxing Day from pre-pandemic levels. The leisure stock’s January trading update also showed the business had record profits each month since June 2021. Given this evidence it’s perhaps no surprise that City analysts think profits here will soar 260%+ in 2022.

Encouragingly Ten Entertainment is adding venues to maximise its revenues opportunities too. It plans to open four new bowling centres this year alone. The ongoing public health emergency poses an obvious risk as further social restrictions could transpire at short notice. But I think the company’s cheapness reflects this possibility. Ten Entertainment carries a forward PEG of just 0.1.

In the fast lane

I also think Wincanton (LSE: WIN) has a bright future as e-commerce steadily grows. The transport titan offers a range of end-to-end fulfilment services that enable retailers and manufacturers to reach their customers. And it continues to do a roaring trade despite the end of coronavirus lockdowns on physical retail; revenues in its Digital and eFulfilment operation surged 51% year-on-year in the three months to December.

My chief concern for Wincanton is a chronic shortage of van and lorry drivers. This has the potential to cause operational disruptions and push up costs. Still, City forecasters don’t think this will derail near-term earnings growth (an 18% profits rise is predicted for this fiscal year to March 2022. A 9% increase is anticipated for financial 2023 too). I think Wincanton’s forward PEG ratio of 0.6 could make it too cheap for me to miss.

The post 3 super-cheap stocks to buy for £500 in February! appeared first on The Motley Fool UK.

Of course, investors need to be extremely careful before buying these stocks. The global pandemic remains far from beaten, and many UK shares carry huge debt piles following earlier lockdowns. Still, I think there are great opportunities for those who do their research before buying reopening stocks.

A ‘picture perfect’ reopening stock

I’ve explained in detail why I’d be reluctant to buy Cineworld shares today. The company’s gargantuan debt pile, allied with the growing threat posed by streaming services like Netflix, make this particular UK reopening stock a risk to far for me.

That said, I’m considering buying Everyman Media Group (LSE: EMAN) before the upcoming ISA deadline. This is because this operator’s cinemas offer a more luxurious viewer experience than the bog-standard theatres the likes of Cineworld can. It’s therefore much better placed to tempt people off their sofas following Covid-19 lockdowns to catch a movie.

As analyst Susannah Streeter of Hargreaves Lansdown comments: “The footprint of the large cinema chains is set to contract further and there is likely to be a refocus on smaller more luxury venues, providing a high-end cinema experience people are unable to get at home.”

Of course, Everyman isn’t immune to the dangers posed by the streamers. What’s more, this reopening stock’s near-term recovery might take an awful whack if a fresh wave of coronavirus infections prompts further lockdowns and previously-eager movie lovers choose to stay away.

Encouragingly though, the business has just boosted its debt facilities to help it ride over any near-term speedbumps. And I think the company’s dedication to provide a premier viewing experience allows it to bounce back strongly when the pandemic passes.

Bowled over

I believe that Ten Entertainment Group (LSE: TEG) is another attractive reopening stock to buy before April’s ISA deadline. I’ve tipped this particular UK share before because the popularity of ten-pin bowling has ballooned in recent years. And by the looks of things, this renaissance remains in very rude health despite the pandemic. Ten Entertainment said this week it experienced “strong demand in the summer when the business reopened after [the] first lockdown.”

Like Everyman, this UK share has a very robust balance sheet to help it sail through any further pandemic-related problems. It had £18m of liquidity headroom as of last week.

It’s quite possible that the current bowling craze could run out of steam once more. But I think this popular form of entertainment has more life left in it. Besides, Ten Entertainment has invested huge amounts in its network to keep the punters rolling in.

The post UK share investing: 2 ‘reopening stocks’ I’d buy in my ISA without delay appeared first on The Motley Fool UK.

Bowled over

The mass closure of its bowling alleys during lockdown hit Ten Entertainment Group (LSE: TEG) hard. Its revenues almost halved in the six months to June compared to the same period in 2019. The introduction of fresh lockdowns in the UK mean more year-on-year sales disappointment for the second half of 2020, too.

But could now be the time to buy this UK share in an ISA? I think so. The 10-pin bowling market remains a lucrative one for investors to play, a sector that’s growing by 4% a year. And Ten Entertainment introduced share placings, cost cutting, and accepted government support to ride out the current crisis. It still had around £15m of available liquidity in its locker near the end of September.

There still remains a huge amount of uncertainty over Covid-19 vaccines. It’s quite possible that more lockdowns could be in store in 2021 should infection rates keep rising. Still, I’m giving Ten Entertainment serious attention as a way to play the bull market. And especially so at current prices. This UK share trades on a forward price-to-earnings (P/E) ratio of 12 times and carries a chunky 4.5% dividend yield as well.

Leisure stocks are some of the earliest to rise when broader economic conditions improve. Provided the fight against Covid-19 turns a corner, this UK share should soar much more impressively than the broader market. And it will surely provide titanic returns in the longer term too as the bowling craze returns.

Another cheap UK share I’d buy in an ISA

I’d also consider buying Britvic (LSE: BVIC) shares for the next bull market. Like Ten Entertainment, its operations have been hit by the Covid-19 crisis. In this case lockdowns in the UK and abroad damaged sales in the ‘out of home’ drinks segment.

Thankfully, though, sales of this UK share’s soft drinks for in-home consumption have soared, easing the sting. Clearly Britvic could suffer again in the near term but this shouldn’t worry long-term investors like me.

The FTSE 250 company has the financial might to ride out the current crisis. And it has the exceptional brand power to keep outperforming the broader drinks market too and deliver long-term earnings growth. Indeed, labels like Robinsons juices, R Whites lemonade, and Pepsi Max cola have allowed it to build market share. And these five-star products — allied with Britvic’s commitment to innovation — should allow it to ride the economic recovery as wider consumer spending activity improves.

City analysts reckon Britvic’s annual profits will soar around 25% in this fiscal period. This leaves the UK share trading on a forward price-to-earnings (PEG) ratio of just 0.6. With the drinks giant carrying a chubby 3.3% dividend yield, too, I reckon it’s a terrific buy for the new bull market.

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Generally, such beasts have a great ‘story’ but nothing much to show in terms of revenue and profits now. Classic ‘jam tomorrow’ propositions, if you will. But I think there’s a better way to aim for riches from shares – ‘jam today’ companies with revenue, earnings and cash flow growth now, such as the company below.

Value and growth

When I look at the numbers for Ten Entertainment (LSE: TEG) the value jumps off the screen at me. With the share price close to 314p, the forward-looking dividend yield for the ten-pin bowling operator is around 4.3% for 2020, with the anticipated earnings multiple at 13.5.

Shareholders have already seen the stock shoot up by around 30% since last autumn, but City analysts’ estimates are robust. They expect both earnings and the dividend to increase by percentages in the mid-to-high teens next year.

Meanwhile, the balance sheet looks strong with modest borrowings, and the shares have been breaking out from a long period of consolidation that started at the beginning of 2018. I think that kind of price action suggests favourable sentiment in the investing community.

I’m encouraged by today’s full-year trading update, which leads with the headline, “Another year of significant profitable growth.” Like-for-like sales increased by 8% in 2019 compared to the prior year and sales from new centres came in 2.2% higher, giving an overall increase in sales of 10.2% — the eighth consecutive year of growth for TEG.

The company made two acquisitions in the period and recorded the first full-year effect of four acquisitions and one closure completed during 2018. Indeed, growth has been both organic and acquisitive. Now the firm claims to be the second-largest ten-pin bowling operator in the UK market with 45 sites and around 1,100 bowling lanes.

Maximising revenue

On top of that, revenue is enhanced with other entertainment offerings, such as amusement machines, table-tennis, soft play, escape rooms, laser games and pool tables, plus food and beverages. It’s an age-old strategy, I reckon, involving the squeezing of the maximum spend from every customer that crosses the threshold.

The firm has been busy with its investment programme, refurbishing four sites during the year, “including one prime location that has received additional investment as a concept site format to trial new entertainment experiences.”  And in the first half of 2020, the first new-build site should open, called Manchester Printworks.

Looking ahead, the company plans to develop its pipeline of site opportunities with new developments and acquisitions. The outlook is positive, trading is robust and the company is expanding. I wouldn’t touch the shares with a bargepole if I believed there was a general economic slump coming soon, but right now, I’m sorely tempted!

The post Forget risky shares like SXX! I’d buy this 4.3%-yielding value and growth stock appeared first on The Motley Fool UK.

Let’s take a closer look at Ten Entertainment Group (LSE:TEG), a leading UK operator of bowling and family entertainment centres, trading under the Tenpin brand. This is a simple, easy-to-understand business I believe is of high quality and, at present, undervalued.

The group operates within the broader UK leisure market, and at present bowling has a share of 0.29% of this £126bn market. TEG’s strategy is to increase participation in bowling through providing reasonably priced, good-quality food and broaden its family entertainment offering. Sounds reasonable to me.

Capitalising on the experiential leisure trend

As mentioned, increasing bowling participation is the key driver. To support this and encourage families to visit sites, TEG is targeting areas of high footfall such as retail outlets. Attracting customers through its doors will over time become easier, with online streaming making a trip to the cinema simply less appealing and once on site, families will be more likely to play on the machines and enjoy a meal before, during or after they’ve enjoyed a game or two of tenpin bowling. Food and beverage and amusement machines contribute towards half of the groups sales, so this is a big part of the business.

Research shows that consumers are looking to spend their money on “doing things” rather than “buying things”, and this desire for experiential leisure time leaves TEG well placed to take advantage of this opportunity. TEG is also committed to reinvesting in its estate to keep sites modern and relevant. They typically operate a six to seven-year cycle and impressively manage to generate £1.50 for shareholders for every £1 spent over the course of this investment cycle.

Strong acquisition pipeline in a highly fragmented market

Ten Entertainment currently has a market share of around 20% of the tenpin bowling market, which is worth approximately £350m in total sales a year. The market leader Hollywood Bowl Group has a share of just over 40%, with the balance held by a high number of independent operators with between one and five sites. This fragmentation naturally presents an opportunity for the business to grow through acquisition and has identified a pipeline of 60 sites, which meet the group’s criteria.

Sales and profits set to soar

Ten Entertainment is trading at a discount to its larger competitor Hollywood Bowl, with a price-to-earnings (P/E) ratio of 16.7 versus 17.9. The investment case is strengthened with the knowledge TEG is expecting sales to reach £100m by 2021 and pre-tax profit is set to rise to £21m, representing over 100% growth from 2017 through to 2021. With a modest market share, a strong acquisition pipeline and an accomplished management team focused on delivering shareholder value, this is a quality business that is set to see its share price rise further.

The post 10-bagger alert! Why I’m ‘bowled over’ by this small-cap superstar appeared first on The Motley Fool UK.

City expectations of a 14% earnings jump in 2019 leave it trading on a dirt-cheap forward P/E ratio of 10.2 times. What’s more, predictions of strong bottom-line growth this year and next lead to suggestions that dividends will keep growing too, giving Devro monster yields of 5.5% and 5.8% for these corresponding years.

I’ve long lauded the small-cap’s Devro 100 programme designed to slash costs, improve sales processes and supercharge new product revenues in fast-growing regions like China and the US. The measures put Devro in pole position to create brilliant profits growth as sausage demand bulges across the globe — recent data from Statista suggests that annual volumes of hot dogs and sausages will hit 6.4bn kilograms by 2021, up 14% from 2014 levels.

Another 5%+ yielder

Ten Entertainment Group (LSE: TEG) is another small-cap riding a terrific structural opportunity, in this case the renaissance of ten-pin bowling in the UK.

This was apparent in half-year results unpacked last month, results which showed revenues up 10% in the six months to June and adjusted pre-tax profits leaping 14%. Ten Entertainment isn’t content to sit on its hands and is investing heavily to capitalise on this bright trading landscape.

It intends to continue adding to its network of alleys the length and breadth of the country. And by rolling new concepts like the ‘HyperBowl’ high-adrenalin format and other measures to improve the customer experience (it has signed a deal to trial the madly-popular Escape Rooms at its sites), it’s aiming to attract even more families and groups through its doors.

City analysts expect earnings here to grow by double-digit percentages over the next couple of years, leading to a rock-bottom forward P/E ratio of 13.2 times and, as at Devro, expectations of some strong dividend hikes as well. Thus yields at Ten Entertainment sit at 4.5% and 5.2% for 2019 and 2020 respectively.

Flooring it

Headlam Group (LSE: HEAD) might not be for the faint of heart, the company suffering right now from a mix of tough trading conditions in the UK and softer activity in Continental Europe too. In fact these troubles are expected to create the first annual earnings dip at the floor coverings giant for donkey’s years in 2019.

I would argue, though, that the long-term outlook for Headlam remains quite compelling. It appears as if trading has ‘bottomed out’ in both its major markets, with like-for-like sales rising by a muted-if-welcome 1.8% and 3.2% in Britain and Continental Europe respectively in the six months to June. And by implementing a variety of back-office measures to improve stock availability and boost warehouse space, and with work to open a new distribution hub in Ipswich by next spring also well under way, I’m backing it to thrive over the next decade.

Right now Headlam boasts a rock-bottom forward P/E ratio of 11.7 times and chunky dividend yields of 5.5% for 2019 and 5.7% for 2020. I reckon it’s a brilliant contrarian buy at recent prices.

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Even with UK inflation rumbling at three-year lows of 1.7%, even those invested in the best-paying instant-access cash product in the market (Skipton Building Society’s latest E-saver product with a rate of 1.3%) are seeing the value of their money crumble in real terms. Clearly, those seeking to make handsome little nest egg need to find better ways to make their money work for them.

Bowled over

You’d be much better off using your money — bar capital needed for a rainy day, or some spare, everyday cash — to buy shares in Ten Entertainment Group (LSE: TEG), I believe.

This particular share offers a whopping, inflation-mashing 5.1% forward dividend yield for 2019, and a 5.9% one for next year too. The potential for abundant income flows now (and in the future) isn’t the only reason to pile into the business — with Britons flocking to ten-pin bowling alleys in their droves, Ten Entertainment is a terrific pick for growth investors as well.

Latest financials showed like-for-like sales growth improved to 7.4% in the first six months of 2019, from 3.1% a year earlier, a result which helped push group revenues and profits to record levels. No wonder the leisure giant continues to splash the cash on acquisitions (it’s bought another two sites so far this year) and to refurbish its estate.

Reflecting these numbers, City analysts are predicting mammoth earnings growth of 25% and 18% in 2019 and 2020, respectively, figures which, incidentally, leave Ten Entertainment trading on a low prospective P/E ratio of 11.6 times. Given the breakneck rate at which sales are growing, this sort of value makes it a steal.

Even bigger yields!

I reckon Residential Secure Income (LSE: RESI) is also another better destination for your surplus funds than a Cash ISA.

Sure, it might not be as cheap as Ten Entertainment — at current prices it actually carries a high forward P/E ratio of 29.5 times. However, I’d argue that the small-cap’s exceptional long-term profits outlook merits such a hefty premium. Besides, chunky dividend yields of 5.5% for the year to September, and 5.7% for fiscal 2020, take the sting out of this high reading.

Residential Secure Income is a major player in the realm of social housing, a sector which is attracting vast amounts of government spending. Last year, Whitehall pledged to release an extra £2bn for housing associations over the next decade. But so colossal is the homes shortage in this area that even-greater sums are likely to be needed further out.

What’s more, the company is stocking up on acquisitions like there’s no tomorrow. In the first half of this fiscal year alone it paid £83m to buy another 332 residential units, taking the total paid on M&A since its IPO in mid-2017 to a staggering £302m. And the business has plenty of financial firepower to continue on this ambitious growth strategy, thus delivering some titanic shareholder rewards in the years ahead.

The post Forget a Cash ISA! I’d prefer to get rich with these 5%+ dividend yields appeared first on The Motley Fool UK.