For me, National Express (LSE:NEX) and Bank of Georgia (LSE:BGEO) are two of the best stocks to buy and hold right now. My portfolio is currently geared around shares offering attractive dividends that can help my portfolio negate the impact of inflation. But I’m also on the lookout for stocks with great growth potential.
Neither of these two picks are beat-up shares but there’s definitely opportunity for growth and positive signs from both companies.
National Express
The National Express share price is down 25% over the past year. At 232p a share, it is considerably down on its year’s high of 331p and less than half of its pre-pandemic peak.
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However, the share price belies some positive performance data. Naturally, 2020 and the Covid-19-induced lockdowns that carried on into early 2021 were bad for business. But in 2021, the group reported underlying operating profit of £87m, an impressive turnaround from the £50m loss recorded in 2020.
On a statutory basis, National Express’s operating losses narrowed from £381.4m to £36.2m. This was reflected in pre-tax losses that were reduced from £444.7m to £84.9m.
National Express added that its improved performance was, in part, driven by a “significant rebound” in underlying operating margins in North America, up at 9%.
The Birmingham-headquartered firm is seemingly through the worst of its Covid-induced troubles and said it would restart dividend payments in 2022.
It is worth noting that further waves of Covid-19 could derail near-term growth. Wage inflation and rising fuel prices could also hamper growth. However, National Express has fully hedged fuel through to 2023, reducing its exposure to the current high prices.
I bought shares in National Express this week.
Bank of Georgia
The Tbilisi-based bank has an exceptionally low price-to-earnings ratio of just 3.25 — the metric indicates a company’s value relative to its earnings. The current figure is certainly influenced by a recent share price collapse induced by Russia’s invasion of Ukraine. However, even before the invasion, the price-to-earnings ratio did not exceed five.
Despite a small surge over in March, the stock is still trading at a 27% discount versus three months ago. Like National Express, the fall in share price also belies some positive performance data. In 2021, the bank turned a pre-tax profit of £192m, driven by strong growth in the Georgian economy. The pre-tax profit was better than in any year in the past five. Likewise, revenue of £327m exceeded the bank’s performance in all of the past five years.
Situated in one of Tbilisi’s most iconic buildings, I believe the bank is well positioned to benefit from stable long-term growth in Georgia. Despite the war in Ukraine and its fallout, Georgia’s economy is still expected to grow by 3.5%, according to new report of the Asian Development Bank. This is down from 6.5% but I don’t see this being a long-term trend.
It’s worth noting that Georgia elected not to impose sanctions on Russia. However, Tbilisi claims it is in full compliance with the financial measures that the international community imposed on Moscow. Anecdotally, I believe Tbilisi has become a haven for thousands of Russians fleeing sanction-ridden Russia.
I bought shares in the Bank of Georgia this week.
