The pound continues to fall, despite the Bank of England’s attempts to stabilise it by buying up government debt. FTSE shares recovered a little on the news, and the FTSE 100 was moving back towards 7,000 points heading into the afternoon.
But plenty of shares are down. And I think it’s made a lot of attractive ones look even more tempting. Here are three that look like better buys to me.
Pillows to cry on
Home furnishings provider Dunelm Group (LSE: DNLM) did well during the pandemic. When it was harder to move house, or even to go shopping for home improvement items, online sales saw big benefits.
That effect has pretty much faded and the share price is back down close to its long-term trend. But could a new squeeze on mortgages lead more people to buy stuff at Dunelm instead of trying to move house?
Investors didn’t seem to think so Wednesday, pushing the Dunelm share price down another 4% by the afternoon. But that’s dropped the stock’s trailing price-to-earnings (P/E) ratio down to 8.6. And it’s boosted the forecast dividend yield above 5%.
There will be uncertainty over that dividend now, and I expect more short-term pain. But I think Dunelm looks like a good one for investors to buy for the long term.
Investors fleeing
The financial sector has taken a battering, and that includes investment manager M&G (MNG). It’s not surprising, as investors withdraw funds to invest in things they consider safer.
I expect short-term pain here again, following an 8% share price fall on Wednesday. And there could well be further declines to come as we head into a gloomy financial winter.
But what about the long term? I reckon all those investors will return when the storm clouds start clearing, shovelling their cash back into investment managers’ hands. It happens every time there’s a stock market slump followed by a recovery. And I don’t know any stock market slump yet that hasn’t recovered.
So yes, I see M&G as a good long-term investment. It might, however, get even cheaper in the coming months.
Drowning sorrows
J D Weatherspoon (LSE: JDW) shares fell 6.5% on Wednesday, tumbling to a 12-month loss of more than 60%.
The pub chain is due to deliver full-year results on 7 October. And it’s not set to be a good year, as the hospitality business is still rebuilding after its pandemic hammering. We should see a second year of losses this year.
But forecasts indicate a return to profit in 2023, with a fairly undemanding forward P/E of around 13. There’s some earnings growth on the cards for 2024 too. These are tentative forecasts, and I think Wetherspoon could be the riskiest of the three stocks here.
But I can’t help seeing a decent stock market recovery candidate here. I mean, Brits and booze, we kind of go together, don’t we? It’s a bit like Americans and incomprehensible sports — though I probably shouldn’t say that, in case anyone mentions cricket.