Why I Think Wm. Morrison Supermarkets plc Is A Screaming Buy

I’m hugely optimistic about WM. Morrison Supermarkets plc’s (LON: MRW) prospects, and here’s why.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Morrisons (LSE: MRW) (NASDAQOTH: MRWSY.US) is a stock that I’m thinking of buying more shares in.

A key reason for this is that I feel it is unduly cheap at the moment. For instance, it currently trades on a price-to-earnings (P/E) ratio of just 11.3. This is a significant discount to the wider FTSE 100 and to the food and drug retailer sector in which Morrisons sits.

They trade on P/Es of 15 and 13.6 respectively and, to be blunt, I’m scratching my head as to why this is the case.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Indeed, Morrisons has vast potential and I believe that, by buying now, I would be getting ahead of the curve.

For instance, Morrisons is currently in the midst of opening around 100 convenience stores which will change its regional exposure. Previously, Morrisons has had a bias towards the north of England, mainly as a result of it being Yorkshire ‘born and bred’. However, the company has realised that disposable incomes tend to (on average) be higher in the south of England, so is targeting more convenience stores in that part of the country.

This regional shift may not sound like a dramatic change in company strategy but it could have a big impact in future years, as Morrisons could be viewed by investors as a food retailer with more diverse (and, therefore, less risky) operations. A push in the south may also increase margins and profits, too.

Furthermore, Morrisons remains a great stock to hold while bank savings rates are at historic lows and inflation remains an ever-present problem. Shares currently yield 4.6%, which is considerably higher than both the FTSE 100 yield of 3.4% and the food retai sector yield of 3.9%. It is also higher than the current rate of inflation, which is always positive for Foolish portfolios.

So, I’m thinking of adding more Morrisons to my portfolio because I think it offers great value for money (for investors, as well as customers), should benefit from a more diverse regional exposure in future years as well as having an impressive yield, which is very useful for income-seeking investors like me.

However, don’t buy any shares just yet

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Secure your FREE copy

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Peter owns shares in Morrisons. The Motley Fool has recommended shares in Morrisons.

More on Investing Articles

Young female business analyst looking at a graph chart while working from home
Investing Articles

After collapsing 28% today, are Bunzl shares too cheap to ignore?

A poor trading statement has sent Bunzl shares to multi-year lows. Could now be a good time to consider investing…

Read more »

Investing Articles

These 5 stocks could earn £1,600 of annual passive income in a £20,000 ISA

Harvey Jones shows how to generate a high and rising passive income by buying a balanced mix of high-yielding FTSE…

Read more »

Young woman holding up three fingers
Investing Articles

3 things I like about Greggs shares

Greggs shares have tumbled by more than a third over the past year. But this writer has no plan to…

Read more »

artificial intelligence investing algorithms
Investing Articles

Nvidia stock: beware the bear market rally

Andrew Mackie argues that investors should tread carefully before investing in Nvidia stock, as the worst of the sell-off could…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Up 73% in one year, is this the best value stock in the FTSE 100?

A brilliant run of form suggests this FTSE 100 giant should no longer make the cut as a value stock.…

Read more »

Investing Articles

The best could yet be to come for UK shares! I’m buying these ones

Amid ongoing stock market turbulence, this writer's been adding selected UK shares to his portfolio. Here's why and what he…

Read more »

Top Stocks

4 UK stocks trading well below book value to consider buying

Sometimes, it pays to be contrarian: who says the UK market has priced a stock precisely right, anyway?

Read more »

Investing Articles

The S&P 500’s 12% off its highs. Is now a good time to buy US shares for an ISA?

Right now, a lot of British investors are wondering whether it’s a good time to buy US shares. Here, Edward…

Read more »