Latest news with #CRuane
Yahoo
2 days ago
- Business
- Yahoo
£10,000 invested in Greggs shares a year ago is now worth…
Over the long term, Greggs (LSE: GRG) has been a decent stock market performer. In the past five years, Greggs shares have moved up 18%. Over 10 years, the share price is up 69%. More recently, though, things have looked far less rosy – something I see as an opportunity. Take the past year as an example. During that time, Greggs shares have lost 31% of their value. So, someone who invested £10,000 in the bakery chain a year ago would now be nursing a paper loss of around £3,100. Ouch. Now, there would have been dividends along the way too. The current yield is 3.6%, although the higher share price a year ago means that someone who invested then would be earning around 2.4%. That would still have added up to approximately £240 over the course of year. That does not much help the overall performance, though, given that £3,100 paper loss. What has gone wrong? City worries about weak growth combined with higher costs due to increased staff wage bills have hurt investors' confidence in the stock. Those fears have some grounding in reality, I reckon. They are risks. But I think the worry has been overdone. Last month, the company announced that sales grew in the first 20 weeks of the year. Not only did total sales grow, but even stripping out new shop openings and just looking at the like-for-like sales, there was growth of 2.9%. That sounds modest but does not indicate a company in poor health to me. The sausage roll maker has not changed its expectation for cost inflation and kept its full-year outlook the same as before. In other words, things sound like they are ticking over pretty much fine. Combined with ambitious shop opening plans, that could mean that Greggs has significant medium- and long-term growth opportunities ahead of it. It has a proven business model, strong brand, and an ability to create consumer buzz about what are essentially mundane products. That gives it pricing power. However, while I am upbeat about the outlook, the price fall in Greggs shares means that they now sell for 13 times earnings. That strikes me as cheap for a company like this one, that I think could be even more profitable in future than it is now. So I bought some Greggs shares several months ago. Last week, I then bought some more. I decided to act, not wait, as I do not expect the current price to be around in the long term. This is because I think the share looks undervalued. I am glad I did not invest a year ago, as I would now be nursing a large paper loss. At today's price, though, I reckon Greggs shares look like good value, so I was happy to invest. The post £10,000 invested in Greggs shares a year ago is now worth… appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has positions in Greggs Plc. The Motley Fool UK has recommended Greggs Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025
Yahoo
27-04-2025
- Business
- Yahoo
Down 28%, is Nvidia stock a bargain – or a value trap?
For a while, Nvidia (NASDAQ: NVDA) looked like one of the hottest things on Wall Street. Lately, it has lost some of its shine. The Nvidia stock price has fallen 28% since January. Still, over five years, the chipmaker's stock has soared 1,370%. Yes, 1,370%. That is the sort of performance that would thrill me as an investor! So given the recent fall in Nvidia stock, could now be the time to add some to my portfolio? Or is the fall a sign of a change in fortunes that ought to put me off buying now? Let's start by looking at the bargain side of the argument. Currently, Nvidia is trading on 36 times earnings. I do not see that as cheap, although it is markedly lower than it has been at some points recently. Created using TradingView In recent years, earnings per share have grown sharply. Created using TradingView That largely reflects the major investment companies have been making as they scale up their artificial intelligence (AI) offer. It could be that there is a lot more where that came from, as really what we have seen so far is essentially just the first wave of big budget expenditure on AI. If that is the case, it could be excellent news for Nvidia's earnings, making the current share price look a potential bargain from a long-term perspective. After all, with proprietary technology, a large client base and strong brand, Nvidia is a clear leader in this space and I reckon it could stay that way. Why then, the fall of close to 30% in a matter of months? For one thing, trade conflict is a significant risk to a multinational company whose clients straddle both the US and China. It could hurt revenues and profits seriously. Even beyond that though, Nvidia's AI windfall has also exposed other potential future risks. What if AI is developed that requires less computing power than currently? That has been a big concern since the launch of the Deepseek AI model. What if the initial ramp-up spending on AI chips is not the first wave, but in fact the one and only wave? After all, in many cases the business case for AI remains to be made. With a market capitalisation of $2.6tn, there is a lot of optimism about the AI chip outlook reflected in Nvidia's stock price, even after its recent fall. It could turn out to be a value trap, but I would be surprised. While the future scale of AI chip demand remains uncertain, my guess is that it will be substantial. Let's not forget too that Nvidia already had a roaring business even before businesses starting shelling out to build AI capability at scale. Still, the risks here look substantial to me and while the P/E ratio is lower than before, I am not comfortable that it offers me sufficient margin of safety. For now, I will keep Nvidia stock on my watchlist. But I will not be buying yet. The post Down 28%, is Nvidia stock a bargain – or a value trap? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
Yahoo
09-03-2025
- Business
- Yahoo
As the FTSE 100 soars, I still see bargains!
Last week was another blockbuster for the FTSE 100 index of leading shares. The blue-chip benchmark hit a new all-time high. It has increased 13% over the past year. Despite the strong performance of the index overall, some of the companies in it continue to look like potential bargains to me. As an example, consider Associated British Foods (LSE: ABF). I added it to my portfolio recently. I reckon the current valuation looks cheap. After a 16% price decline over the past year, the FTSE 100 member now trades on a price-to-earnings ratio of less than 10. I do see risks. Sugar pricing this year is expected to be weak, eating into profits. The company's Primark clothing business is operating in an environment where it is squeezed on one front by cheap rivals like Shein and on the other by an increasingly complex (and therefore costly) global supply chain. But Primark on its own strikes me as a great business. Add to that other brands ABF owns like Twinings and Dorset Cereals and I reckon the profitable business looks like a bargain at its current price. Another retail operator that has been feeling the heat is JD Sports (LSE: JD). After a great few years of stock market performance, the going has got a lot tougher for JD Sports. The FTSE 100 retailer has seen its share price crash 33% over the past year. Multiple profit warnings have shaken City confidence in management. Add to that the expense of an ambitious shop opening programme and a risk that weak consumer confidence could hurt spending on branded sportswear and the price fall makes some sense. Still, the company has a proven formula and global reach, and is solidly profitable. It expects to deliver full-year profit before tax and adjusting items north of £900m. Set against that, I reckon its £4bn market capitalisation is a bargain in plain sight. What is going on? How can individual FTSE 100 members be doing so poorly when the index itself has been going gangbusters? It is like a cricket team or model railway club: overall it may be doing well, but individual members might be doing poorly. But for them, the overall performance would be even higher. I could invest in a FTSE 100 tracker fund to try and benefit from the long-term potential I see for the index. Instead, though, I have been buying individual FTSE shares like ABF and JD Sports. While their recent share price performance has been lacklustre to say the least, I remain upbeat about their long-term potential. By pouncing now, at what I see as bargain basement valuations, I hope that my buy-and-hold philosophy of long-term investing means I could benefit from future price recovery. The post As the FTSE 100 soars, I still see bargains! appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has positions in Associated British Foods Plc and JD Sports Fashion. The Motley Fool UK has recommended Associated British Foods Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
Yahoo
22-02-2025
- Business
- Yahoo
£9K of savings? Here's how that could produce £108 a month in passive income
Putting some savings to work can be a simple way of setting up passive income streams. For example, by investing £9k in a range of dividend shares, I think someone could realistically target £108 each month on average in passive income. Here's how. In my example, I make three key assumptions. One is a compound annual growth rate of 6%. That seems plausible to me in today's market, even while investing in blue-chip shares. The second assumption is that the dividends are initially reinvested (compounded) and, after a period of time, the portfolio is reinvested (if necessary) in dividend shares yielding an average 6%. It might have been like that all along, but it could also have been that some of the growth came from share price increase. When it comes time to draw down the passive income, the whole portfolio should be yielding 6%, not just compounding in value at that level. The third assumption is that the investor stops compounding and starts receiving the passive income after 15 years. This is a serious income building plan, not some get-rich-quick quackery. The same approach could be applied much sooner, but the 15-year timeframe should enable a bigger passive income than, say, waiting only two or three years. At the moment, the blue-chip FTSE 100 index of leading shares yields 3.4%. So the 6% target I use here is quite aggressive. But I think it is achievable even sticking to members of the FTSE 100. For example, I own shares in Legal & General (LSE: LGEN). At the moment, it yields 8.6%. Even better, the financial services firm has set out plans to keep growing its dividend per share annually, as it has done over the past several years. Now, this month it has also set out plans to sell its US protection business. While that could boost shareholder returns in the short-term, it will also likely mean lower long-term cash generation for the smaller firm. That is a risk to the long-term dividend outlook. But I think there is a lot to like about Legal & General and have no plans to sell my shares. Its target market is large and thanks to its powerful brand and large customer base it has a strong competitive position. As the recent news demonstrated, management is focused on shareholder returns. From a passive income perspective, I think that is good news for me and lots of other small, private shareholders who get dividends from the company without needing to work for them. Of course, while that is all well in theory, to join in dividends from Legal & General or any other company, a would-be investor needs to turn into an actual investor. To get the ball rolling, they could put the £9k into a share-dealing account or Stocks and Shares ISA, so they are ready to invest. The post £9K of savings? Here's how that could produce £108 a month in passive income appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has positions in Legal & General Group Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
Yahoo
15-02-2025
- Business
- Yahoo
With a spare £3,000, here's how a new investor could start buying shares
Putting off getting into the stock market can mean that someone who only dreams of making money in it never actually starts buying shares. That might be because they feel they lack experience. However, everyone has to start somewhere. So if a stock market novice had £3,000 and wanted to start investing, here is how they could go about it. It is possible to begin investing with no stock market experience and build wealth. But it is not guaranteed by any means. So I think it makes sense for a would-be investor to begin by getting to grips with how the stock market works. When people sell you a share at a certain price, how can you try and judge whether it is a good share to own – and a good price to pay? Such an approach would also involve taking time to get to understand important risk management concepts like diversifying across a number of shares. And £3k is ample to do that. Another simple initial step would be to put that money into an account that can be used to start buying shares. For example, that might be a simple share-dealing account or a Stocks and Shares ISA. With lots of choices available it makes sense to take time for a new investor to decide what seems to suit their own situation and objectives best. Along the way, the investor may have their eye on some shares as potential purchases. In any case, now would be a good time for them to start looking. When it comes to that search, I think a few simple principles can help. One is to stick to what you know and understand. Another is to focus on finding businesses that seem to have a strong investment case – and then consider whether their share price is attractive, even after allowing for a margin of safety. After all, all shares carry risks. As an example in practice, one share I think new investors should consider is Legal & General (LSE: LGEN). The FTSE 100 financial services company is focused on the retirement-linked market. That is huge, long-term and fairly resilient in my view. Legal & General has a strong brand, large customer base and business model it has proven can throw off a lot of excess cash. That surplus cash helps fund a beefy dividend. Currently, the yield is 8.5%, meaning that for every £100 invested, an investor would hopefully earn £8.50 in dividends annually. Payouts are never guaranteed though. Legal & General cut its dividend per share during the last financial crisis and I see a risk that the next sharp market downturn leads policyholders to pull out money, hurting profits for the firm. Such risks underline the reason why when someone starts buying shares, it makes sense to diversify – and keep that good practice in decades to come as they try to build more wealth! The post With a spare £3,000, here's how a new investor could start buying shares appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has positions in Legal & General Group Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
