The stock market rally in November saw the FTSE 100 gain 13% in a month. But some UK shares have done much better. The three stocks I’m looking at today have each risen by more than 60% over the last month.
They’re all companies I’ve considered buying in the past, but after such rapid gains, should I wait for better buying opportunities?
This tech stock looks cheap to me
The first company on my list is FTSE 250 software group Micro Focus International (LSE: MCRO). As I discussed in November, Micro Focus has been through a tough period over the last few years.
Its share price has fallen by 85% in three years and its market-cap is now just £1.2bn. However, the firm’s latest trading update caused the shares to soar. I was impressed too — I reckon this business might be starting to turn the corner.
The company’s high debt levels and falling sales still worry me. But I think there are signs the numbers are moving in the right direction. It’s also worth remembering that the company is less than one year into a three-year turnaround plan.
The market isn’t convinced, and the stock currently trades on just three times forecast earnings. I think this is one UK share that’s too cheap. I may buy a few Micro Focus shares for my portfolio.
Will travel return to normal in 2021?
With vaccines on the horizon, bus and train operators will be hoping for a return to normal in 2021. Companies such as Stagecoach Group (LSE: SGC) have only survived this year thanks to massive government bailout payments.
I’ve steered clear of Stagecoach during the pandemic, but I’m starting to wonder if this UK share is now offering an opportunity.
I’d forget about the firm’s current financial year, which ends in May 2021. I expect the numbers to be terrible. But I’m interested in the potential for recovery in the 2021/22 financial year.
Broker forecasts currently suggest Stagecoach could generate adjusted earnings of 7.8p per share in 2021/22. If correct, that would price the stock on less than eight times forecast earnings.
The outlook is still uncertain for Stagecoach, but I reckon the worst might be over. However, I won’t be buying this UK share. One lesson I’ve learned this year is that I prefer to own shares in companies which have more control over their own destiny.
The best UK share you can buy?
Airline and package holiday group Jet2 (LSE: JET2) has also suffered this year. But founder and chairman Philip Meeson owns almost 30% of the business. Meeson took early action strengthen the group’s finances and protect his life’s work.
As we head into 2021, I expect Jet2 to reap the rewards of this prudent management. Analysts expect the group’s sales and profits to bounce back very strongly from April onwards.
That’s a view I share. By then I hope that vaccinations will be gathering pace and the pandemic will be easing. I suspect that demand will be high for affordable summer holidays. These are Jet2’s core product.
The only thing I don’t like about Jet2 is its share price. The shares have doubled since the start of September. At over 1,400p, the price represents 19 times 2021/22 forecast earnings. That seems quite high to me. But I’d still like to own Jet2 shares.