Analysts in the UK don’t always publish earnings previews for quarterly or half-year periods. Therefore, the upcoming figures can only serve as an indication as to whether the companies’ full-year forecasts can be met.

Entain (Q3 trading update)

Entain (LSE: ENT) is an international sports betting and gambling company. It owns brands such as Bwin, Coral, Ladbrokes, PartyPoker, and Sportingbet. Entain will provide a trading update for its most recent Q3 performance ending September 2022 on 13 October.

The FTSE 100 betting firm expects to report growth in revenue after a busy summer. However, City analysts are cautious about the outlook the company will provide after it cut its growth outlook in its last earnings report. With inflation continuing to run rampant, the cost-of-living crisis is expected to dampen the number of bets being placed.

While investors won’t be too excited about Entain’s flat online revenue growth this year, there will be plenty of attention on its US joint venture (JV) with MGM, and whether that is making good progress towards profitability.

Entain doesn’t disclose revenue or earnings figures for its quarterly updates, so a direct comparison can’t be drawn this October. Rather, the company discloses metrics such as net gaming revenue and updates on its JV, which are useful indicators too. These can serve as an earnings preview for investors to determine whether the firm is on track to hit analysts’ estimates by the end of the year.

Hays (Q1 trading update)

Hays (LSE: HAS) is a multinational company that provides recruitment and human resources services to companies across 33 countries globally. The FTSE 250 firm is expected to release a brief trading update for its most recent Q1 performance ending September 2022 on 13 October.

Updates are also expected from Hays’s peers Robert Walters and PageGroup, which will provide a clearer picture of whether the industry’s robust performance have continued into the later part of this year. Investors will be keeping a close eye on headcount as well as skills shortages, and how the current macroeconomic environment has and may impact earnings moving forward.

Only slightly over a month ago, Hays disclosed impressive bottom line growth of 128%, while declaring a £121m special dividend. In doing so, it also affirmed to investors that it was well equipped to face the macroeconomic headwinds. Whether this will carry into Q1 and the rest of its financial year remains to be seen.

Like Entain, Hays doesn’t disclose specific revenue or earnings figures for its quarterly updates. Therefore, investors will have to make direct comparisons using growth rates disclosed in the update. These can serve as an earnings preview for investors to determine whether the recruiter is able to continue its strong showing.

YouGov (FY22 Earnings)

YouGov (LSE: YOU) is a British internet-based market research and data analytics firm. It also operates in Europe, North America, the Middle East, and Asia-Pacific. The company will be reporting its FY22 results ending July 2022 on 11 October.

After a pretty strong year in FY21, investors will be keen to see what the analytical company reports on Tuesday. Given its growth attributes, analysts have high expectations for both YouGov’s top and bottom lines, as well as the outlook for its new financial year. With the stock down 45% this year, investors will be hoping for a good report.

The volatility, and correction, have been engendered by the new government’s exuberant fiscal policy. A little over a week ago, the chancellor promised to lower taxes and incentivise economic activity.

However, while tax cuts may sound great, the concern is that our fiscal policy and monetary policy are working at odds. While the Bank of England (BoE) is attempting to bring inflation down through rate rises, central government is committing to policies that are highly likely to cause more inflationary pressure.

So, here are two discounted stocks I’m looking to buy for my portfolio.

Barclays

Barclays (LSE:BARC) is among the biggest banks in the world and the top three in the UK. However, it hasn’t performed quite as well as its peers this year, and that’s primarily due to a massive impairment on securities sold in error.

In July, Barclays reported a fall in pre-tax profits due to a £1.9bn charge to cover the cost of buying back securities it sold in error and a £300m impairment provision for bad debts. Pre-tax profits fell 24% to £3.7bn. As a result, the stock is down 22% over the year.

However, Barclays shares are also down 13% over the past week. The stock, like other banks and financial institutions, sank following the mini-budget. Things got worse amid reports that the government was planning to introduce quantitative easing to avoid paying £10bn a year in repayments to banks.

However, there is one big plus. And that’s the impact of higher interest rates on margins. Banks have already seen margins increase, but with BoE rates set to near 6% next year, net interest margins (NIMs) will soar. Recessions aren’t good for credit quality, but higher NIMs will more than make up for it.

Hays

Recruitment firm Hays (LSE:HAS) is down 13% over the past week, and is now down 41% over the course of the past year. However, the business has performed well over the past 12 months.

In August, Hays reported a jump in full-year profit thanks to an “excellent” fee performance across all regions amid a recovery from the pandemic. In the year to 30 June, operating profit rose to £210.1m from £95.1m a year earlier.

However, I, like many other investors, am trying to anticipate how companies will be performing in 6-12 months time. And the problem is, there are concerns that the UK labour market might be cooling.

As a result, Hays is currently trading at a discount. In fact, it is near its lowest point in 10 years. But personally, I think that’s overdoing it.

Yes, we have recession forecasts in UK, and elsewhere in Europe where Hays operates, but we’re not looking at deep Covid-like recessions. After all, in the UK, we’re actually seeing a lot of emphasis on enhancing economic activity.

Recruitment

Shares in recruitment specialist Hayes (LSE: HAS) have faded over the past 12 months. I’m not surprised, with such a gloomy economic outlook.

But results released Thursday were anything but disappointing. For the year to 30 June, net fees rose by 30%. And operating profit soared by 121%.

The company more than doubled its ordinary dividend, to 2.85p per share. That’s only a 2.4% yield. But thanks to strong cash generation, it added a special dividend of 7.34p and lifted its share buyback programme to £75m.

Chief executive Alistair Cox spoke of “long-term structural opportunities, acute skill shortages and strong markets.” It seems there’s some significant upside when we’re in times of economic turmoil. And Hayes might be just the kind of investment to profit from a recovery.

We’re looking at a modest trailing price-to-earnings (P/E) ratio of around 13.

Biopharma

PureTech Health (LSE: PRTC) recorded a loss in 2021. And, at the halfway stage in 2022, it’s still very much a biotechnology company working towards sustainable future profits.

The share price has been picking up in the past couple of months, and barely moved on results day.

The year so far has all been about clinical development. In the words of chief executive Daphne Zohar, “the first half of 2022 has been an exceedingly strong period for PureTech.”

Phase 3 trials of schizophrenia treatment KarXT appears to have gone very well, without the serious side effects that apparently come with existing treatments. Zohar adds: “It is now poised to potentially be the first new class of medicine in over 50 years for patients living with schizophrenia.“

The balance between long-term potential and current liquidity is key. Though PureTech recorded a loss again, it had $341m cash and equivalents at 30 June. That looks good enough to me.

Building

CRH (LSE: CRH) is my final pick of companies reporting Thursday. And its share price gained a few percent in response to interim results.

Chief executive Albert Manifold said: “CRH has delivered another strong performance with further growth in sales, EBITDA and margin despite a challenging and volatile cost environment.“

The firm reported a 14% rise in sales and a 21% jump in EBITDA. What’s more, the EBITDA margin improved, and bottom-line earnings per share increased by 36%

The company lifted its interim dividend by 4%, and it’s now set for a new tranche in its share buyback programme.

The one thing that concerns me is net debt of $4.3bn. That is down by $1.7bn, though, and looks easily manageable.

Thoughts

This is my first look at a single day’s reporting from these companies. I see attractions in all of them, but they all have their own individual risks too.

I’d never buy a stock based on just one update. But I’ve seen enough here to want to investigate all three further.

This morning, I saw a forecast from Citi analysts that suggested inflation would hit 18% in the UK. That’s pretty shocking and some way above the Bank of England’s projections. This will likely have a profound impact on disposal income in the UK and will only exacerbate the cost-of-living crisis.

But one sector that could benefit from inflation is recruitment. Let’s take a closer look at why and my top stock in this sector.

Impact of inflation on recruitment

There are a number of ways to assess the impact of inflation of employment and recruitment. Firstly, inflation pushes up the cost of goods and puts pressure on both the employed and unemployed to enhance their income.

Employed people may seek a wage increase or even strike like we’re seeing at Felixstowe docks. Others may look for a new job.

But the unemployed are likely to feel the pain too, probably even more so. Not everyone can generate passive income and some may be living off unemployment benefits or, if they’re older, their pension.

In act, the Daily Mail, recently reported that a record number of pensioners had joined the workforce in the three months to June 30. If people are feeling the pinch now, just imagine how it will feel come autumn.

And finally, as economically inactive people may also be tempted back into work by wage inflation. With salaries being pushed upwards, working may look more attractive than it had done so before.

Can Hays benefit?

Hays (LSE:HAS) is one of the UK’s largest recruitment groups. In July, the business highlighted a record end to the year. In the three months to 30 June, the white collar specialist said fees had risen 23% during the fourth quarter on a like-for-like basis, or by 24% in total.

Group operating profit is now expected to come in around £210m, at the top end of guidance. In fact, if it wasn’t for the impact of exiting the Russian market, the company’s earnings would be coming in way above initial guidance.

So can Hays prosper as inflation rises further? I definitely think there is a good chance it could for all the reasons mentioned above. I don’t think the case for getting into work, getting a better paying job, or a raise, has ever been stronger.

One issue is the economy’s eventual slowdown. The UK is predicted to go into recession and shedding jobs is a characteristic of that. Ironically, a tight labour market is driving up inflation which will likely push us into recession (I actually wrote about this in an editorial last year).

But the recession isn’t forecast to be particularly deep, so I’m not expecting unemployment figures to rise considerably. Instead, I believe Hays should benefit from the current situation.

It also earns money overseas, which could provide additional benefit as the pound gets weaker.

I already own Hays shares, but I would buy more at the current price. I really do see Hays prospering as more people get back into the jobs market.

The three companies I’m looking at today are recruiter Hays (LSE:HAS), high-end fashion brand Burberry (LSE:BRBY) and investment platform Hargreaves Lansdown (LSE:HL).

Hays

The recruitment firm has fallen from a year high of 181p to 117p at the time of writing. This comes despite a very strong UK labour market, which is a core operating location for Hays. Job vacancies in the British economy recently hit a record high with 1,318,000 positions advertised. 

However, recruitment firms are very sensitive to fluctuations in the economy. It appears that inflationary pressure and unfavourable economic forecasts have weighed on this stock’s share price.

Hays raised its profit guidance following a solid first half in February. Pre-tax profits in the six months to the end of December surged 363% to £97.7m. Full-year profits are expected to be between £210m and £215m, in line with pre-pandemic performance.

I’m also confident that pent-up demand for its services will drive future growth. Millions had delayed job moves during the pandemic.

Burberry

Despite inflationary pressure and the increasing negative economic outlook, I think demand for Burberry’s products are fairly immune to price rise issues. Consumers, particularly wealthy individuals, are often willing to pay whatever’s asked to get what they want. 

Burberry’s share price has also been impacted by its decision to close shops in Russia after the invasion of Ukraine. China’s economic turmoil has also weighed on the share price. As I write, it is trading at £16.08 a share, down from a year high of £22.67.

Burberry posted solid financials in 2021, with pre-tax profit in excess of pre-pandemic results. It reflected an increase in consumer and business activity following the lockdowns of the previous year. One concern is geopolitical risk. China is one of Burberry’s largest markets and Chinese customers have been known to turn against brands.

I currently don’t hold Burberry stock, but I’m looking to add it to my portfolio.

Hargreaves Lansdown

Hargreaves Lansdown’s investment platform is the market leader in the UK. Despite this, the Bristol-based firm reported a 20% drop in pre-tax profit for the six months ended December, sending its stock sliding. The company had benefited from a trading boom during earlier lockdowns. But profits fell in a calmer 2021.

Hargreaves is currently trading at 1,028p a share, down from a year high of 1,778p. Despite the fall in profits, the company remains profitable and saw sizeable increases in revenue in each of the five years to 2021.

The drop in profit overshadowed the company’s plans for digital transformation. The company intends to spend an extra £175m over the next five years in order to improve its offering to clients. It may be a while before we see the results.

I’ve already bought Hargreaves, but if I were to buy more today, I can expect a respectable 3.7% yield.

Hays

Recruitment firms are hugely sensitive to economic fluctuations and the current inflationary pressure appears to be pushing the Hays share price downwards. It’s currently trading at 120p a share – that’s a third off its year high of 181p.

However, the labour market is currently very strong, particularly in the UK, which is a core market for Hays. Job vacancies in the British economy recently hit a record high with 1,318,000 positions advertised.

A Totaljobs survey also suggested that two in five Britons were considering changing to a better paying job as the cost of living crisis puts pressure on households. It has been reported that 2022 would also see recruiters benefit from pent-up demand for their services as millions of workers delayed job switches during the pandemic.

In February, the firm raised its profit guidance following a stellar six months. In the six months to the end of December, pre-tax profit surged 363% to £97.7m. Hays hailed the “excellent” performance in all regions. It added that it expects full-year profits to be between £210m and £215m. The figures are broadly in line with pre-pandemic performance.

I already hold shares in Hays, but I’ll be adding more at the current price as I think there’s long-term potential here. It’s worth noting that firm’s 1% dividend isn’t overly attractive.

HSBC

HSBC is one of my favourite blue-chip stocks. While the London-headquartered bank is trading at a sizeable discount versus pre-pandemic levels, I think its got great long-term growth potential, which I why I hold this stock.

Today HSBC is trading at 524p a share, down from 567p in February. Despite 24% growth over the past year, the stock is still 17% down over three years, and nearly 20% down over five years. The Russian invasion of Ukraine, inflationary data, and Chinese real estate challenges have all weighed on this FTSE 100 giant over the past year.

However, HSBC’s share price belies some positive performance data. The bank’s pre-tax profits of $18.9bn in 2021 trumped its performance in 2019 and 2017. HSBC’s price-to-earnings ratio currently sits around 11, suggesting the stock could be considered relatively undervalued if recent performance continues.

Following the 2008 financial crash, HSBC consolidated its strategy by focusing on the UK and China. But the bank recently announced that it would be accelerating its ‘pivot to Asia’ plan which will see it increase its operations in higher growth markets.

In the short term, the current economic fallout from Covid in China could hamper progress, but in the long term, I’m confident on HSBC. I hold stocks in HSBC and will be buying more at the current prices.

Here are two share prices I think are too low to ignore today.

Too cheap to miss?

The global economy remains shrouded with danger as runaway inflation picks up speed (US consumer price inflation hit new 40-year highs in February, figures showed this week). This creates massive risks to economically-sensitive shares like recruitment firms. Yet at the same time, signs have emerged that the inflation boom could be fuelling the jobs market.

For this reason I’m considering buying Hays (LSE: HAS), a UK share which provides hiring services across the globe. The British labour market remains rock solid and recruiter Totaljobs suggests it could remain so. Its latest survey shows that around two in five Britons are considering better-paid jobs as the cost of living crisis worsens. This is a theme that is likely to be replicated in other countries too.

Indeed, strong trading across all its territories encouraged Hays to lift its full-year earnings forecasts in February. Then it advised that “conditions in all [our] markets are strong, driven by high levels of business confidence, significant job churn and clear evidence of wage inflation”.

Hays is one of many top stocks whose share prices today don’t reflect their bright earnings outlook. City analysts think earnings here will soar 128% in the financial year to June. They believe that profits will advance an extra 23% next year too.

Consequently, the recruitment giant trades on a forward price-to-earnings growth (PEG) ratio of just 0.1. Any reading below 1 suggests that a stock could be undervalued.

Another low share price today

And being undervalued is a characteristic Hays shares with logistics business Wincanton (LSE: WIN). Current forecasts suggest Wincanton’s earnings will rise 17% in the financial year ending March. This means that following recent share price weakness the company trades on a forward PEG ratio of 0.5.

Wincanton had a strong record of consistent annual earnings growth before Covid-19 struck. And thanks to the steady growth of e-commerce City brokers expect a period of sustained profits growth to emerge again. This is perhaps no surprise given the strength of trading recently. Latest financials showed revenues at Wincanton’s Digital and eFulfilment division jump 22% (excluding recent acquisitions) in the three months to December.

The main problems for Wincanton today are those of rising fuel and labour costs. Diesel prices in the UK struck another fresh record (of 170p a litre). Driver salaries are also rising because of a shortage of available workers.

Still, it’s my opinion that these dangers are baked into Wincanton’s ultra-low share price today. I think the potential rewards of me buying both Wincanton and Hays at their share prices today far outweigh the possible risks.

In particular, I am interested in companies that may be lagging behind the rest of the market in terms of their recovery. I think these stocks could have tremendous potential in 2022 as the world continues to rebuild after the pandemic. 

As such, here are three FTSE 250 shares I would buy for my portfolio in 2022 and beyond. 

Recovery shares to buy

Over the past two years, the travel and tourism sector has experienced one of the harshest environments on record. Unfortunately, it does not look as if the industry will be able to move on from the pandemic anytime soon. 

However, I would like to build some exposure to the sector as a way to invest in the recovery. That is why I would acquire airline Wizz Air (LSE: WIZZ) for my portfolio. 

Of all the companies in the travel and tourism sector, I think this business is best-positioned for the recovery. It entered the crisis with a strong balance sheet stuffed with cash. It also has a relatively low-cost base compared to peers. As other airlines rushed to cut costs and reduce cash outflow during the pandemic, Wizz has had a higher level of financial flexibility. 

These qualities also suggest that the corporation can capitalise on the economic recovery over the next few years. Indeed, management is so optimistic about the outlook for the group the company recently placed a massive order for new planes to expand its fleet significantly. These new planes will help the business meet demand on the new routes it plans to launch.

Passenger demand has already recovered from pandemic lows. According to the group’s latest trading update, in November, Wizz carried 2,172,000 passengers at a load factor of 76.1%. 

Despite the group’s progress, a couple of challenges could hold back its recovery. These include rising fuel costs and competition in its sector. Both of these headwinds could weigh on the company’s bounce back over the next couple of years. 

FTSE 250 challenger

Virgin Money‘s (LSE: VMUK) business model is interesting. The bank is trying to take on the financial sector giants by offering something different. The group focuses on providing a high level of customer service and an engaging electronic offer to attract younger, digital-savvy consumers. 

For example, the group is developing a digital wallet with buy-now-pay-later capability. By spending through the wallet, consumers will also have the potential to earn and utilise ‘Virgin Red’ points. 

This is a consumer reward club operated by the Virgin Group allowing consumers to choose from 150 different experiences they can buy with their points. 

The bank’s ability to leverage other parts of the Virgin empire to attract consumers is also unique. Rivals do not have the reputation or footprint to copy this approach. 

Merger costs 

When it comes to the challenger bank’s finances, the figures are a bit misleading at the moment. After Virgin Money and fellow challenger CYBG merged several years ago, the duo united under the Virgin banner in 2019. Since then, the group has continued to work through the integration process, although this was disrupted by the pandemic.

The combination of the additional costs from the merger as well as rising loan losses in the pandemic pushed the group into the red. 

It looks as if these pressures are now starting to dissipate. This suggests the group’s best days are now ahead. This is the reason why I would buy the stock in 2022. Management plans to reduce costs significantly over the next two years and substantially increase profitability. These developments, coupled with potentially higher interest rates, could help the organisation produce substantial returns for shareholders. 

That said, rising wages could offset some of the company’s cost-cutting initiatives. There is also no guarantee interest rates will increase from current lows, and there is always the threat of additional regulations and taxes, which are the bane of the banking industry. 

FTSE 250 growth play

One of the easiest ways to build exposure to the global economic recovery, in my opinion, is to buy a FTSE 250 recruiter. Hays (LSE: HAS) fits the bill perfectly. And with a large global footprint, it is already riding the coattails of the global economic recovery. 

According to its latest trading update, which covered the period to the end of September, 12 of the regions in which it operates produced record net fees, including the USA and China. 

Overall, fees across the group increased 41% on a like-for-like basis. To meet the rising demand for its services, the company has been investing heavily to recruit and train new staff as well as opening new offices.

The number of staff employed by the company has increased 19%, but despite this growth, the average productivity per consultant remained at record levels in the quarter to the end of September. 

Put simply, it looks as if the need for the group’s services is exploding. And it cannot recruit enough staff to meet this growing demand. That is a great position to be in, especially as the economic recovery is only really just getting started. 

Despite this growth potential, I will be keeping an eye on the economic environment to see if it deteriorates. Recruiters are usually the first to feel the pain in a downturn. Therefore, if the recovery suddenly starts to splutter, Hays may suffer more than most.

#1. Dunelm: sales keep rising

The FTSE 250 homewares retailer Dunelm (LSE: DNLM) just reported an 8% increase in sales compared to the year before for the 13 weeks ending 25 September. Sales growth has corrected significantly from last year, but then that was an exceptional period for the retailer. Compared to the same time in 2019, which is the last pre-pandemic period, the company has actually seen a massive 48% increase. 

I think this is encouraging, but at the same time there are risks to the stock as well. One of them is its already slightly high price-to-earnings ratio of around 21 times. With a softening in sales growth from last year, I am not sure how far this is sustainable, especially when it is facing cost pressures due to freight and driver shortages. I think its share price can potentially rise further, but just to be sure I would wait for its next set of full results before buying the stock (or not).

#2. Dominos: expansion underway

Pizza delivery company Dominos (LSE: DOM) also reported a healthy trading update, with an almost 10% increase in sale for the 13 weeks ending 26 September. It also opened 18 new stores in the UK & Ireland and is also recruiting 8,000 people now. This bodes well, especially since its revenues declined for its full financial year ending 27 June. 

Its challenges are the same as those of Dunelm. The company has just said that it’s facing inflationary pressures, because of the lack of availability of labour as well as rising food costs. At the same time, its P/E is around 19 times, which is not low either. However, I think that going by its long-term share price trend, its established popularity, and its ability to be profitable year after year, I am positive about it. I have already bought the stock. 

#3. Hays: hiring picks up speed

Recruiter Hays (LSE: HAS) is up by almost 3% today after releasing its trading update earlier today. The company reported 41% increase in net fees for the quarter ending 30 September compared to the year before. While the economic recovery has quite likely opened up demand for jobs, it is not just the quantity increase at play here. Hays also reports wage inflation at higher salary levels. 

It expects to continue with strong growth, but there are risks to this recovery stock as well. First, recovery may slow down more. There is already increasing proof of that in the UK’s economy, for instance. Neither high employment nor rising wages are sustainable in a weak economy. And Hays’ P/E ratio has already run up to a huge 45 times. In this instance as well, I would wait for its full set of results to assess how much its share price could rise further.

Staycation winner

The latest trading update from food-on-the-go baker/retailer Greggs (LSE: GRG) will be essential reading for me on 5 October. It’s one of the biggest single company positions in my Stocks and Shares ISA. 

Having likely benefited from UK staycations and high streets getting back to some semblance of normality, I’m confident whatever numbers are released will be encouraging. Recent signs that the company is keen to crack on with store openings over the rest of the year are surely bullish?

Of course, the risk with Greggs is that all of this is already priced in. A valuation of 29 times forecast earnings arguably doesn’t give new investors a massive margin of safety. Perhaps trading has moderated. Perhaps everyone has had their post-lockdown fill of sausage rolls for now.

No matter — I’m focused on the long term. If I do end up getting my call wrong, I’ll still use any dip as an opportunity to increase my holding further. 

Quality FTSE 250 retailer

Shares in homewares retailer Dunelm (LSE: DNLM) are up 74% over the last five years. That may not be as great a performance as that seen elsewhere in the index but it’s still a very decent return. For perspective, it’s well over double that achieved by the FTSE 250 as a whole (32%). 

Next month’s trading update, due on 14 October, could see further positive momentum. Despite its apparent lack of economic moat, a valuation of a little under 21 times earnings seems reasonable for a company that generates consistently great returns on the money it invests in itself. Any move upwards may also be exacerbated by the fact that Dunelm has a low free float. Only 55% or so of the company’s shares are actually traded.

Of course, a significant lurch downwards is also possible. Investors might also argue that Dunelm has already benefitted from the home improvement bug that set in over 2020 and could be about to slow.

Still, the 2.8% dividend yield is higher than the FTSE 250’s 1.8%. It also looks very secure, based on projected profits. 

Recovering strongly

Recruitment company Hays (LSE: HAS) is a third stock whose share price could rise in October. Like Dunelm, it’s down to release a trading update on 14 October.

Only last month, the FTSE 250 member said it now saw “a clear route back to, and then exceeding, pre-pandemic levels of profit” at a faster clip than previously expected. No wonder the share price has been on a roll.

I can’t imagine the outlook has changed for the worse over the last few weeks. Moreover, a PEG (price/earnings-to-growth) ratio of just one suggests investors could still get a lot of bang for their buck from the shares. A net cash position and the recent resumption of dividends further enhance the investment case.

Obviously, a jump in Covid infections could put a stop to this progress. With the colder weather approaching and more people being a little less vigilant than usual, this certainly can’t be dismissed. As always then, I need to ensure I was diversified in other sectors before pulling the trigger here.