With interest rates increasing, the income I could make from a Cash ISA has jumped this year. At the moment, I could get almost 4% from some providers if I locked up my cash for a year. Even though some might pick this option, I’m still putting my spare cash into dividend stocks to enhance my passive income potential. Here’s how and why I’m doing this.

Why I’m picking dividend shares

On the face of it, I might seem a little strange to pick stocks over a Cash ISA. After all, my risk on my capital with the ISA is almost zero. The income is also virtually guaranteed. In comparison, when I buy a stock, my capital is at risk as the share price fluctuates. My dividend is also paid out of company earnings, so it depends on how the business performs.

This is true, but it ignores the potential upside. Sure, the above can be seen as a risk. Yet what about the other side of the coin? The Cash ISA ties up my funds with no chance of improvement. If I’m smart and pick a company that is performing well, I could easily eclipse the return over the course of the next year.

For example, I could have invested in Aviva a year ago. The dividend yield at that point was 5.25%. In this period, the share price has also risen by 11%. This isn’t just one isolated example either. There are plenty of income stocks with yields greater than a Cash ISA that also have enjoyed a rising share price in the past year.

How I can build lifetime passive income

One aim of mine is to be able to enjoy a minimum passive income of £650 a month for the rest of my life. I’ve figured that this amount of money would cover all my expenses of a holiday abroad each month.

Before I start booking flights, I need to invest and reinvest my dividends over a period of time. I’ve figured that if I buy stocks (such as Aviva), I could average a dividend yield of 5.5%. I’m also going to assume that my pot will grow at a rate 4% a year just from capital appreciation (which isn’t guaranteed). This is arguably a conservative estimate, but I’d rather not overestimate.

By putting in £250 a month, I’d be able to reach my goal after 18 years. From that point onwards, even if I assume the portfolio doesn’t gain any further value, I’d still be able to enjoy £650 a month from the dividends paid for the rest of my life.

Clearly, planning that far into the future does come with assumptions. I’d have to sell a stock if the dividend was cut years down the line and replace it with another. Yet this isn’t a deal-breaker for me when I look at the bigger picture.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

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Jon Smith 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.

The new month brings some new opportunities to tackle some old problems. UK inflation hit 10.1% in September, the same level it was at back in July. Without banging the same old drum too hard, I think that dividend shares are a good way for me to offset some of this inflationary pressure. The income isn’t a perfect counterbalance, but it’s certainly one of my best options for a spare £500 as we hit November!

Mining for income gems

The first stock I’m keen on is the BlackRock World Mining Trust (LSE:BRWM). The investment trust focuses on holding a collection of shares within the commodity space. It also has the option to hold up to 10% of assets in physical metals (like gold).

At the moment, the dividend yield sits at 7.14%, with the share price also up 7.98% over the past year. I think this is a smart buy for me at the moment as I have one eye already on 2023. I think that companies in this sector should continue to benefit from the volatility in metal prices next year. On top of this, I think there are strong use cases for different metals rising significantly in value. For example, lithium should continue to move higher due to its role in electric vehicle batteries.

Some of the top holdings have done very well in 2022, providing me with confidence in the stock-picking ability from the trust manager. For example, Glencore is one of the largest holdings, with 8.44% of the portfolio.

This can also be flipped to a risk as the trust has some large, concentrated positions. This means that if one stock underperforms, it could drag down the overall price. From a dividend perspective, if a large payer such as Rio Tinto cuts the dividend, my income payout could be quite negatively impacted.

A dividend share in property

I think I’ll put the other £250 in Supermarket Income REIT (LSE:SUPR). As far as names go, the stock really does what it says on the tin! The real estate investment trust (REIT) owns supermarket property that it leases out to major chains including Tesco, Sainsbury’s and Asda.

In this way, the fund should rise in value over time due to the capital appreciation from the assets held. Yet crucially, it should provide a steady stream of income in the form of dividends from the lease payments received. At the moment the dividend yield is 5.81%.

Even though the property market in general could be in for a tough patch, I think this area of commercial property should be fine as we go into winter. Supermarkets are defensive stocks that usually perform well even in a recession. This is because the goods offered are essential for consumers.

If the supermarket has steady demand, payments to the income REIT should continue to be paid. I don’t see a scenario where a major UK supermarket gets into financial trouble in the near term.

There’s a risk that the value of the property owned by the REIT falls. However, I’m not too concerned about this as unless the business sells the plot, it won’t realise this as a loss.

Both of the above stocks will go some way to help me offset the impact of inflation. I’m considering buying both stocks in November.

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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Sainsbury (J) and Tesco. 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.

One of the areas within renewable energy that I’m optimistic about is lithium. The role this metal plays in batteries for electric vehicles means that companies involved in producing it could perform very well going forward. One company that has caught my eye is Premier African Minerals (LSE:PREM). The stock has jumped almost 8% today, trading close to the 52-week high. So what’s driving this move in the Premier African Minerals share price?

A business snapshot

The company talks about a “long history of project discovery, acquisition and development across Africa” as part of the business biography. It has two main projects at the moment, namely the RHA Tungsten mine and the Zulu Lithium and Tantalum area.

Like most exploratory and mining businesses, revenue is hard to come by until the firm strikes ‘gold’ and manages to extract and sell a precious metal or other form of commodity. This is true with Premier African Minerals. The half-year results released at the end of September show $0 in revenue, matching the $0 from the same period in 2021.

With sizeable operating expenses, it posted a loss of $4.89m for the six-month period. Due to robust cash balances of over $10m, the company does have a good net asset position. This is one factor that enables it to continue to trade and supports the share price valuation. The market capitalisation is currently $123.05m.

Strong rally in the Premier African Minerals share price

Given the nature of the firm, share price movements are often based on speculation that the business is close to having a major breakthrough. Given the fact that the jump today pushes the one-month return to 37% and the one-year return to 144%, it’s clear that momentum is building.

Part of this is due to the success of the lithium project. An update released just a couple of weeks ago highlighted that “all indications point to the mineralisation being almost exclusively spodumene with little to no petalite and equally low contained micaceous mineralisation carrying any lithium.”

I’m no expert here, but spodumene is a mineral that is a key source of lithium. So the upbeat message from the pilot plant results is that the mineralisation samples are positive. The share price move higher in recent weeks suggests to me that investors are buying quickly ahead of further positive updates.

Another reason why I think the stock has performed well in 2022 is the rising demand for lithium. The push towards electric vehicles will drive demand for lithium, not just right now, but for years to come. Lithium carbonate prices in China have over tripled in the past year. Therefore, there’s a natural correlation to the value of what Premier African Minerals is hoping to extract.

The big dilemma is whether or not I should invest now. I’ll be honest, I’ve seen many companies like this over my years of investing. It’s a binary outcome. If the project yields rich results, I’d generate some serious returns. Yet if nothing materialises, I’d be stuck holding shares in a business with $0 in revenue.

I acknowledge that this stock has the potential to rocket higher over the next year. Yet it’s just too high-risk for me to consider at the moment.

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Jon Smith 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.

When I’m focusing on the dividend part of my portfolio, I have two key points in mind. Primarily, I want to pick the best income stocks possible that can offer me a generous but sustainable payment now and in the future. Yet the other point I try to model is how much passive income I could generate overall, to hopefully hit my goals. From my calculations, I think I could end up making £1,000 a month from the below six stocks.

The best dividend shares for me

Let’s run through the specific stocks to begin with. Half a dozen companies give me a nice sweet spot between feeling the benefit from one doing well, but also not being completely punched in the face if one decides to cut a dividend. It’s diversified, but without me having to go through the hassle of picking a hundred stocks to invest in.

I’m keen to pick up stocks from sectors including alcohol and tobacco. I have a positive outlook on both areas. These goods have low price elasticity of demand. What this means is that if the price increases slightly, demand doesn’t really change. During a period of high inflation, this is good. This isn’t just theory either. I know myself that if a pint increases from £4.50 to £4.95, I’ll still order a pint! Yet that’s a 10% increase to factor in.

To this end, I’d buy Diageo (2.11%), Coca Cola HBC (3.22%), British American Tobacco (6.44%) and Imperial Brands (6.71%). Those are the current dividend yields in brackets.

I’d pick my final two stocks from major banks. I think this area is one of the hottest for 2023. Interest rates are going to continue to rise in the UK and US next year. This will help banks to increase revenue made from the net interest margin. This margin grows as the interest rate increases. It allows the firms to charge more on loans while only marginally increasing the amount paid on deposits.

The two stocks that I think I’ll buy are HSBC (5.04%) and Lloyds Banking Group (5.01%).

Passive income potential

The average dividend yield from the six stocks on my watchlist is 4.75%. I’m going to assume that this stays the same going forward and that I can reinvest my dividend income back at the same yield. This might not be the case in practice, and each of the stocks has its own specific risks. But it’s an assumption I have to make. I need to be aware that I might need to sell a stock if it stops paying a dividend.

I’m also going to assume that I can invest £500 a month. Using my yield and my funds, I can grow my portfolio over time to reach my goal. By my calculations, if I do this for the next 23 years, I’ll be able to enjoy £1,000 a month in passive income from then on.

OK, that sounds like a long time to wait! But this doesn’t have to be the only pot of funds I’m building up. I can also allocate some money to top growth stocks, that could yield me sizeable capital gains in the space of only a few years.

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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco, Diageo, HSBC Holdings, Imperial Brands, and Lloyds Banking Group. 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.

Despite posting an impressive set of Q3 results, Woodbois (LSE:WBI) shares fell 17% last week. To some extent, I’m not surprised. This stock first came on my radar earlier this year because it doubled in price in the space of a month. Erratic jumps and falls seem to be par for the course. With the stock down 29% over the past year, I think there are a few important points to note about the Woodbois share price.

Q3 results maybe weren’t that great

On Monday, we got the Q3 trading update that was flush with proud statements from the management team. It spoke of both a record quarter for revenue and also a record nine months (year-to-date) of revenue. Production levels for sawmill and veneer were also up significantly on the quarterly average from last year. For example, sawmill production was up 78%.

These are all points that should help to drive the business forward. As a growth stock, the company wants to capitalise on this top-line growth as much as possible, with the aim of it filtering down to the bottom-line (net profit).

However, that brings me to the first reason why I think the Woodbois share price reacted negatively last week. The business didn’t report the size of the profit/loss for the period. This leads me to conclude that it wasn’t a good quarter when it came to the loss after tax. In the half-year results, the loss for the period was $533k. In H1 2021, the loss was $934k. So, unless something magical happened in Q3, I’m guessing it lost money again.

Further, I think some investors were looking for more evidence of how total borrowings might be reduced. The figure is $12.3m, virtually unchanged from $12.4m last quarter. It’s quite high, especially when total revenue year to date is $17.1m and the cash balance is only $1.4m. When I consider it in relation to those other numbers, I’d like to see some active strategy for bringing it down.

Erratic moves in the share price

Yet even with fundamental concerns about the report, I don’t think a 17% fall in a week is completely justified. But then again, there weren’t that many company-specific catalysts that led to the share price doubling back in the spring.

I think some of this move in October relates to something I flagged up earlier this year. The stock is small, with a market capitalisation of £66m. This means that it only takes a relatively small amount of buying or selling activity in order to move the price.

When the share price was flying, I put it down to speculative investors who were buying in the hope of making a quick profit. For those who didn’t sell as the price came crashing back down, the results last week (or the fact that we’re coming to the end of the year) might have triggered some to throw in the towel and sell.

The volume associated with selling could easily have magnified the share price fall. Given the fact that I think this small-cap stock will continue to be volatile, I think I can find better investment options elsewhere.

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Jon Smith 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.

It’s been a wild roller coaster ride for Netflix (NASDAQ:NFLX) in 2022. After spooking investors with concerns around falling subscribers and a lower growth outlook, the stock has been in the doldrums. Yet thanks to better-than-expected Q3 results, Netflix shares shot higher and managed to finish the week strongly. Should I jump on the bandwagon and buy?

Digging into the results

The Q3 results were ahead of expectations across key metrics including revenue, operating income and membership numbers. The main one that impressed me was the 4.5% year-on-year growth in paid subscribers.

Why is this important? Much of the 56% fall in the share price over the last year came from the poor Q3 2021 results where subscriber numbers dropped to 213m from 220m the previous quarter. Concerns around whether people were cutting back on Netflix, or simply switching to competitors, caused the share price to fall sharply.

Therefore, the fact that we’re seeing the numbers increase again is a good sign that the company is back on track.

Another part of the results that I think was a smart move was the announcement regarding a cheaper ad-supported plan. Not only should this attract new users with the lower price point, but it should also increase revenue via the companies that pay to advertise.

A lot of potential upside for Netflix shares

Even with the 21% rally last week, the growth stock is still a long way away from the highs of the past year. It closed Friday at $291, with the year high at $700.

From that angle, it’s clear that there’s plenty of room to run higher in the coming year. I think what will be critical in achieving this is how the next quarter goes. If the business can beat expectations again, it’ll prove that this wasn’t just a flash-in-the-pan period.

There was a lot of concern around the falling membership numbers before the Q3 results and so investors are understandably wary about the future. Another solid quarter of earnings should mean this concern is quashed, with investors then starting to pile in.

One issue I do have relates to the impact of foreign exchange movements. The US dollar has strengthened significantly this year (circa 20%), with the euro and British pound weakening. Netflix has to repatriate earnings from these regions back to dollars. But as the home currency is strong while the others are weak, it has a negative impact. In fact, the results had an entire page detailing this, concluding that it will negatively impact revenue by $1bn!

The business clearly needs to better manage the treasury operations to mitigate or hedge some of this risk.

Although I do like the Netflix business model, I think it’s a little too soon for me to get excited and buy the stock. Rather, I’m going to wait until the next trading update to see if the membership base is still showing signs of growth.

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Jon Smith 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.

The FTSE 100 spent most of last week below 7,000 points. This isn’t that far off the lows of the past year. Given that the index is made up of different companies, it’s logical to conclude that if the index is down, individual stocks will also have fallen. As a result, there are some good opportunities that I can find based on the recent movements, especially if the stock market recovers.

Overly fearful sentiment in property

Rightmove (LSE:RMV) is one company that has been caught up in the recent sell-off. The stock is down almost 20% in the past month and 33% in the past year.

The property marketplace generates revenue from the advertisers and estate agents that list on the site. In this way, it can make money regardless of whether properties are listed for sale or to rent. One of the largest positives for the business is driving customers to the website, generating hits in the process.

I understand that people could be selling the stock due to concerns around the property market. Rising interest rates will make buying a home more expensive. Yet I don’t think this fundamentally ruins the Rightmove business model. After all, if people can’t afford to buy, they will still visit Rightmove and look for properties to rent.

On that basis, I think the 20% fall more than compensates for any fears around the market in general. I think it looks like a great level to be buying the share. It’s on my watchlist to purchase in the coming month.

A FTSE 100 stalwart

The drop in the FTSE 100 has also dragged down Scottish Mortgage Investment Trust (LSE:SMT). It might surprise some, given that the fund only holds 1.9% of invested money in UK assets. However, the stock market stumble has been evident worldwide. The US stock market has also had a tough time recently. So, the 33.56% of allocation to the US has also been negatively impacted.

In the past year, the share price is down 48.4%. However, one point worth noting is the difference between the share price and the net asset value. In theory, these should be the same. If the trust owns 75 stocks, the value of these stocks combined should correlate to the price of the trust. It’s hard to accurately price this in real time, but the latest valuation shows that the share price is 10.18% lower than the net asset value.

This is one reason why I think it should be a stock on my watchlist now. Within the space of the next year, I’d expect the discount to return to a fair value.

Another reason why I like the stock is because I’m optimistic about the outlook for two of the largest areas the trust is invested in. These are healthcare and technology, comprising just under a third of the portfolio. By purchasing shares in the trust, I get exposure to these sectors, leaving the individual stock selection to the professionals.

Thanks to the fall in the FTSE 100, I’m considering buying both of the above stocks before the market rallies back.

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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Rightmove. 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.

Passive income generation has been a key aim for me this year. I can’t afford to have spare cash sitting around being eroded by high inflation. Investing in a dividend stock that can pay me income helps me to make my money work harder. Lloyds Banking Group (LSE:LLOY) wasn’t a stock I looked to for income during the pandemic. Yet with Lloyds shares offering a 5% yield currently, my view is starting to change.

History with dividend payments

Lloyds has had an unsteady relationship with dividend payments over the past decade. From 2016 to early 2020, the stock had a yield that ranged from 1% to briefly spiking above 10%. In 2020, pressure from the banking regulators meant that most financial stocks stopped paying dividends in order to protect the balance sheets.

The impact of the pandemic increased the potential for loan defaults and write-downs on other liabilities. However, this pressure eased over the course of the following year, allowing Lloyds to resume payments in 2021. It’s now back to paying an interim and final dividend, with the stated aim in half-year results being to continue to grow the dividend per share.

This has helped to increase the dividend yield. The other element that has been boosting this is that the share price is down 13.2% over the past year. When I calculate the dividend yield, if the share price is falling, the yield will rise automatically.

Putting this all together, I think that a 5% yield could grow over the next year. If the dividend per share continues to rise and the share price is stagnant, it could sit in the 6%-8% range in 2023.

Lloyds shares are falling, but I’m not concerned

The risk to my view is the fact that the share price has fallen by double-digits over the past year. Some would flag this up and say that investors aren’t confident in holding the stock. If the bank struggles to maintain investor confidence, it could be because the company isn’t sound.

Yet even though 2022 half-year profit after tax was £2.8bn versus £3.9bn in 2021, this was largely down to the “non-repeat of the significant impairment release and the deferred tax credit in the first half of 2021”. Therefore, it wasn’t a reflection on the core running of the business in 2022.

Net income was up 12%, to £8.5bn. Higher interest rates from the Bank of England helped to boost this, with the outlook being for a further increase in the net interest margin. Deposits also grew by £1.9bn, further allowing the bank to benefit from income made from deposits.

With that in mind, I think the bank is in a strong enough position to continue to pay out dividends going forward. I think the fall in the share price is more reflective of the general poor market sentiment around the UK economy, rather than something specific relating to Lloyds.

I’ve put the bank on my watchlist to purchase when I have some free cash.

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Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

Even though I spend a lot of time trying to plan out my personal finances, things don’t always go to plan. I’m hoping to get to 50 with a plump savings account that I can build on until I reach retirement age in my mid-60s. However, if some unplanned expenses crop up along the way and I reach 50 without savings, I’m not going to panic. Rather, I’d look to build up some passive income to help me out.

Using my income to set aside funds

My current state pension age is 67. If I reach 50 without savings, I’ve got a time horizon of 17 years for me to build a decent pot. In theory, at this stage in my life I should still be earning, but my expenses should start to decrease. For example, I should have less to pay on my mortgage.

To begin with, I need to calculate how much of my income I can put aside each month. I’m going to make the assumption of £250 a time, with some frugal spending. So I’ll take this amount and invest it in dividend stocks.

My savings will start to build in two ways. I’ll own stocks that have a market value at any point in time. On top of this, I’ll start to receive income from the dividends that get paid out each year. If I build up a portfolio of different shares, I’d expect to receive some form of payment on a monthly basis.

Picking the right type of dividend stocks

Given that my time horizon is 17 years, I’m not that interested in picking high-dividend-yield stocks today. These are often flash-in-the-pan stocks that might not be sustainable as far as paying out income in a decade or beyond is concerned.

Rather, I’d focus on lower-yielding options, but with a strong history of paying out. I’d also be happy to take on some companies that might not pay a generous dividend at the moment. But if they reach maturity in coming years, higher income payments would be a key way to keep investors interested.

For example, Virgin Money (2.68%) and Greggs (3.06%) both have dividend yields below the FTSE 250 average. Yet I’d want to buy both stocks. Over time I think they could grow their dividend-per-share payouts.

Potential passive income figures

All of my figures are based on the fact that the stocks I hold will continue to pay me income for many years. This might not hold true though, and I might need to buy and sell over this period to manage this risk.

If I started today with £250 a month, I could grow my pot to a very respectable size. If I assume an average dividend yield of 5%, at the end of 17 years I’d have a portfolio worth £80,715. The growth would be fuelled by my reinvestment of the dividend payments during this period.

From then on, I could enjoy the 5% dividend (£4,035 a year) that would more than cover my golf green fees!

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Jon Smith 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.

For most of this year, it has been tough to pick a good price at which to buy Rolls-Royce (LSE:RR) shares. I’ll admit I was close to buying some of them at 100p earlier this year. Yet as the share price was in a downward spiral at the time, I waited, and it has unfortunately continued to drop.

Now at 71p, it means it’s down 51% over the past year. So rather than try and find the right price, I’m now waiting for certain events to happen.

New areas to offset Civil Aerospace

The Civil Aerospace division was (and still is) the largest part of Rolls-Royce. However, it has been trimmed substantially over the past year. This is largely due to the huge losses posted during the pandemic as flying hours dipped and servicing requirements fell.

With the division’s restructure ongoing, it’s clear this part of the business is unlikely to be smashing targets anytime soon. Therefore, I want to see new areas start to show good results in order to get me excited to invest.

The company spends a large amount on research and development (£371m, according to its half-year results). New divisions include Rolls-Royce Electrical and Rolls-Royce SMR that were presented at its investment day back in September.

If these areas can start to yield results, I’d be more confident that the gap left by Civil Aerospace can be filled.

Debt reduction

As of the end of H1 2022, net debt stood at £5.1bn. This figure bulged over the course of the pandemic in order to keep the business operating. It has since benefitted to the tune of £2bn from the sale of ITP Aero, with £1.7bn going towards paying back its UK Export Finance loan.

With interest rates rapidly rising, any new debt issued is going to be expensive. The financing costs via interest payments will be high. So I want to see existing debt paid down quickly and better cash flow management. If cash management improves, the need to issue new debt should be reduced somewhat.

If this can be brought back under control, it would give me confidence to invest, reducing concerns about the problems high liabilities can cause for a company.

Sitting tight

For the moment, I’m sitting on my hands and not investing. It’s not that I think the business isn’t good value at 71p. But until we get some tangible improvements in the areas mentioned above, I don’t see the share price materially rallying.

A trading update is due out at the start of November. I’ve marked this in my calendar, and might get the answers to my questions. From there, I can assess whether it’s the right time to buy.

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Jon Smith 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.