One of my best shares to buy now. And one I’d sell today!

Finding the best shares to buy now is hard. Tom Rodgers has this recovery stock at the top of his buy list as dividends and profits return.

| More on:

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.

Choosing the best shares to buy now is no easy task. The FTSE 100 is flying on Covid-19 vaccine news. Valuations have started to creep up as optimism reigns.

But many stocks remain volatile. Investors are having to struggle with deciding which offer true value and which are cheap for good reason.

Still, I’ve got a cracking option at the top of my list of the best shares to buy now.

Not my best shares to buy now

It’s difficult to think of a worse combination of the weighty anchor of debt and declining sales. 

While they may be popular with day traders and short sellers for their volatility, I’m swerving away from Cineworld (LSE:CINE) shares right now.

The long-term outlook for cinemas isn’t good. This isn’t just my opinion, it’s borne out by the numbers.  Now production companies know they can make just as much money from streaming films as they can by releasing them physically.

Take the new Borat film, for example. Amazon Prime paid $80m for the exclusive rights and tens of millions of viewers saw the comedy in the days after its debut. 

The pandemic has accelerated a lot of long-term trends and the shift from physical to digital film releases is one of them.

When it comes to my best shares to buy now I also want to avoid companies with gargantuan debt. Cineworld has been significantly downgraded by ratings agencies, which means its £6.6bn debt pile will be very expensive to service. I can see this as a serious drag on profits for years to come. 

One of my best shares to buy now

In terms of recovery stocks poised to benefit from the possibility of a market reset, I can think of few better options than Morgan Sindall (LSE:MGNS).

At a forward price-to-earnings ratio of 9.8, the FTSE 250 construction and refurb company is cheap. But crucially, Morgan Sindall is expected to grow its earnings by a whopping 26% next year. This definitely adds weight to it being one of my best shares to buy now. I won’t buy very cheap shares just for the sake of it. What if the share price continues to fall because a company doesn’t make any revenue?

I also look at the PEG ratio when I’m seeking the best shares to buy now.  This is a metric favoured by value investing legends like Peter Lynch, whose book One Up On Wall Street was a great inspiration. 

A PEG ratio of 0.5 suggests Morgan Sindall shares are undervalued. 

Dividends return

And in even better news out on 4 November, chief executive John Morgan reinstated Morgan Sindall’s interim 21p per share dividend. Morgan Sindall’s average daily cash position was much stronger at £150m+, said the CEO, ahead of expectations. 

MGNS remains one of my best shares to buy now because of its sensible cash retention too. The company now has 7.6 times dividend cover, which bodes well for long-term payouts.

All group activities are now fully operational again and delivering high levels of productivity,” he said, adding, “We welcome the Prime Minister’s clear statement that construction activity should continue through the new lockdown restrictions in England for November.” 

Full-year earnings are now expected to beat the top end of previous guidance. So it’s clear to me why this is one of my best shares to buy now.

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.

TomRodgers has no position in any of the shares mentioned. 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.

More on Investing Articles

Investing Articles

This FTSE sell-off gives me an unmissable chance to buy cut-price UK stocks!

The last few months have been tough for UK stocks and their troubles aren't over yet, but Harvey Jones isn't…

Read more »

Investing Articles

Here’s the forecast for the Tesla share price as Trump’s policies take focus

The Tesla share price surged following Donald Trump’s election victory, but the stock is trading far above analysts’ targets. Dr…

Read more »

Investing Articles

£15,000 in cash? I’d pick growth stocks like these for life-changing passive income

Millions of us invest for passive income. Here, Dr James Fox explains his recipe for success by focusing on high-potential…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Here’s my plan for long-term passive income

On the lookout for passive income stocks to buy, Stephen Wright is turning to one of Warren Buffett’s most famous…

Read more »

artificial intelligence investing algorithms
Growth Shares

Are British stock market investors missing out on the tech revolution?

British stock market investors continue to pile into ‘old-economy’ stocks. Is this a mistake in today’s increasingly digital world?

Read more »

Fireworks display in the shape of willow at Newcastle, Co. Down , Northern Ireland at Halloween.
Investing Articles

My 2 best US growth stocks to buy in November

I’ve just bought two US growth companies on my best stocks to buy now list, and I think they’re still…

Read more »

Investing Articles

£2k in savings? Here’s how I’d invest that to target a passive income of £4,629 a year

Harvey Jones examines how investing a modest sum like £2,000 and leaving it to grow for years can generate an…

Read more »

Renewable energies concept collage
Investing Articles

Down 20%! A sinking dividend stock to buy for passive income?

This dividend stock is spending £50m buying back its own shares while they trade at a discount and also planning…

Read more »