With a regular investment in mind, here’s how I’m going to deploy £100 per month.

Surging profit

The first business I’m looking at is National Express (LSE:NEX). The shares are currently trading at 193p. In what has been a difficult period for the travel industry, the coach firm reported that group revenue rose over 33%, to £1.32bn, for the six months to 30 June.

Additionally, operating profit grew nearly 300% during this time to £90.5m. What this tells me is that demand appears to be recovering within this sector, to the benefit of the company.

What’s more, the business is starting to focus again on growth and expansion. It secured 16 new contracts, mainly in North America, that could bring in revenue in excess of £150m annually. 

This is part of the firm’s £2.1bn investment into expanding operations in the UK and North America. 

However, there is the threat posed by inflation. This may increase costs and, ultimately, lead to shrinking profit margins. Further pandemic variants, should they arise, could also dent demand for travel.

Despite this, the business has operating cash flow of £179m. This tells me that it should be able to survive any short-term issues that come to fruition. 

Solid income?

Secondly, I’m interested in Howden Joinery (LSE:HWDN). In 2021, the houseware-fitting services firm paid a dividend of 19.5p per share. That’s equivalent to a dividend yield of 0.79% at the current share price of 567p. 

While this may seem small, it’s good to know that I could derive income from my monthly investment. I’m aware, though, that dividend policies can be subject to change.

The business reported improved results for the six months to 12 June, with group revenue up 16.3%. In addition, pre-tax profit grew 21.6%, coming in at £145m. Another indication of Howden’s financial strength is its cash balance of nearly £250m.

However, the price of raw materials is continuing to climb on account of a tighter market and supply disruptions. This may lead to smaller profit margins.

On the other hand, the firm declared an interim dividend of 4.7p per share. This is a 9.3% increase year on year, and gives me continued confidence that income from this investment could be consistent.

Overall, both of these companies have performed well in challenging environments. To that end, I think they could be good homes for put my money on a regular basis. I’ll therefore add the shares of each business every month with £100.

Helping people travel

As a quick reminder, National Express is a bus, train, light rail, express coach, and airport services travel provider based in the UK. It also has international operations in the US and Australia.

So what’s happening with National Express shares currently? Well, as I write, they’re trading for 186p. At this time last year, the stock was trading for 270p, which is a 31% decline over a 12-month period. It is worth noting that many travel stocks have seen their share prices struggle since the pandemic.

The bull and bear case

Firstly, I believe that National Express has a distinct advantage over many of its competitors in the travel sector. Its large size, coupled with its geographical footprint, is advantageous. Next, due to its profile and presence, it often wins lucrative contracts, which is positive for me as a potential investor. Contractual agreements usually offer stable revenue streams.

When the pandemic struck, National Express shares suffered badly. Demand for public transport dwindled and 2020 performance was reflected in this too. Revenue and profit levels dropped in 2020, after previous years of growth. The good news is that 2021 performance surpassed 2020, which means the business is on the right track once more. I am keen to see 2022 performance but in terms of looking back, I do understand past performance is not a guarantee of the future.

Next, at current levels, National Express shares look good value for money on a price-to-earnings ratio of just six. This tells me they could be excellent value to buy now and hold on to for the long term for growth and eventual returns.

National Express must navigate some serious headwinds currently, however. Soaring inflation, coupled with rising costs have placed real pressure on operations, performance, and returns. Profit margins are being squeezed by rising costs such as for fuel.

Finally, there have been talks of strikes across the travel sector in recent months, especially here in the UK where some have taken place. This could affect performance and returns, as well as investor sentiment for National Express.

My verdict

Overall, I would buy National Express shares for my holdings. I am buoyed by its profile, presence, and its past track record. The shares also look too good to miss on current levels.

I am not concerned by the current headwinds, and don’t foresee these as longer-term issues. In fact, the current cost-of-living crisis could be beneficial for National Express shares. This is because cheaper, low-cost travel options will increase in demand for consumers. This could boost performance and returns upwards.

Book value is calculated by taking away the company’s liabilities from its assets and in theory, if a company stopped trading and sold all its assets, it would be left with its book value. When the book value is higher than the valuation, it’s a sign a stock may be undervalued. It’s not definitive, but it can be a very important metric. After the recent market sell-off, here are two bargain UK shares trading at less than book value I’d add to my portfolio.

Beaten-down travel stock

I’m a fan of National Express (LSE: NEX) and after its 35% fall over the past year, I feel it’s now too cheap for me to miss. At the end of 2021, the group had a book value of £1.45bn, whereas it currently has a market capitalisation of £1.1bn. That means the share price is trading at a 24% discount to its book value and signals that the shares are in deep value territory. 

There are several problems facing the transport operator today. Due to US wage inflation, the group expects its recovery in profitability to lag its revenue growth. Margins are expected to be only around 7% in 2022, lower than the 9% target. Longer term, if oil prices remain high, this could drive company’s costs even higher and would put more pressure on margins. 

However, I remain optimistic about the future for this UK share. For one, with the current cost-of-living crisis, it’s likely that consumers will want to switch to lower-cost transport. National Express could be one of the best options. 

Further, the group is confident it can deliver £1.25bn of free cash flow between 2022 and 2027. This cash will be partly reinvested into growing shareholder returns, and the dividend is expected to be reinstated after the FY2022 results. For these reasons, I’ll continue adding National Express shares to my portfolio.

Heavily-shorted UK stock

ASOS (LSE: ASC) is another company trading at less than book value. As of 28 February, the stock had a book value of £1.05bn, but a market cap of £900m. It means the shares currently trade at a discount of 14% to book value, implying bargain territory. 

The current macroeconomic environment has caused problems for the fast-fashion retailer, however. For example, it recently downgraded earnings expectations from £125m to between £20m and £60m. This saw the share price plunge around 30% on the day. It also explains why ASOS is one of the most shorted UK shares, just after Cineworld. This is another bearish sign.

Despite these worries, I’m still tempted to open a small position in ASOS. For example, as noted by Barclays, there are “green shoots in the US market”, where the company saw 21% year-on-year sales growth. With a customer base of 27m, I also feel like its long-term future is bright, especially when inflationary pressures start to die down. Therefore, I may use the group’s discount to its book value as a sign to buy. 

A beaten-down travel stock 

As consumers were forced to stay at home, the National Express (LSE: NEX) share price plummeted to multi-year lows. The past year has not been any prettier, with the company’s share price sinking 25%, far underperforming other UK shares. This has been due to factors such as rising fuel costs, wage inflation, and a shortage of US drivers. These factors are expected to increase costs, placing additional pressure on profit margins. However, I believe that the sell-off has now been overdone. 

Firstly, the company is recovering well. For example, in 2022, the group expects full-year revenues of around £2.7bn, which is in line with 2019 levels. It is also over 24% higher than 2021 revenues. It also expects to reinstate its dividend in respect of the 2022 results. This is a factor I think could boost the National Express share price. It also shows management’s confidence in the firm’s prospects. 

I am also not overly worried about the recent rise in oil prices. This is because the company has fully hedged oil throughout 2022 and 65% for 2023, which should lead to significant cost savings. With the price of fuel soaring, this may also drive consumers into using more public transport. Therefore, I have recently added more National Express shares to my portfolio and will continue to do so while it is beaten down. 

Top-quality UK share 

Diageo (LSE: DGE) is recognised as one of the most robust UK shares, delivering a return of over 50% in the past five years. However, over the past year, it has stayed broadly flat and in the past six months it has sunk 13%. Yesterday, the Diageo share price sunk further, as Deutsche Bank put a sell rating on the shares. It also gave a price target of 3,230p, implying an 8% downside. In particular, the investment bank noted that consumer spending may be put under pressure. 

However, I remain confident in the future for the group. For one, it owns a drinks portfolio of over 200 brands, including Guinness, Don Julio, and Captain Morgan. These have obtained significant amounts of brand loyalty, meaning that Diageo should continue to possess significant pricing power, helping to offset inflationary pressures. This enabled the group to increase reported FY2022 profits by 22.5% to £2.7bn. 

Therefore, I am willing to ignore the recent sell rating by Deutsche and buy more Diageo shares. The company’s quality is far too great for me to ignore and has many defensive qualities, which is ideal in the case of a recession. 

Recent updates

As the lockdowns prevented the population from travelling, National Express was one of the big sufferers. In fact, in 2020 the coach operator reported a loss of around £380m. Last year, although the performance considerably improved, operating losses still totalled over £36m. It has been a very difficult couple of years for the group, and the National Express share price has sunk nearly 50% since before the pandemic. In the past year, it has also fallen around 17%, thus underperforming the wider FTSE 250 index. 

However, there are several signs that the group is recovering. For example, in 2022, the company expects revenues of £2.7bn, which is equal to 2019 levels. This has been driven by the performance of the group’s international operations. Firstly, ALSA, which operates in Spain and Morocco, is already recording revenues around 15% higher than before the pandemic. Secondly, German rail revenue is nearly four times pre-pandemic levels. Finally, in the US, shuttle revenues currently equal around 90% of pre-pandemic levels.

The UK operations are also progressing nicely. For example, passenger numbers now total around 85% of pre-pandemic levels and there have been noticeable signs of recovery in airport travel volumes. For the long term, I am also impressed in the group’s continued decarbonisation of vehicles. In an ever-increasing climate-conscious society, I believe that this may help differentiate National Express from other coach operators. 

What about the future? 

Unfortunately, there are many current risks for the company. For example, in the US there are driver shortages, which has resulted in around 10% of the contracted routes not currently being run. This has also caused wage inflation, a factor that is straining profit margins. Therefore, the company’s recovery in profitability is expected to lag revenue recovery. 

However, this does not take away from a very promising future for the firm. Between 2022 and 2027, it expects to deliver at least £1.25bn in free cash flow. This will be used for investment into the firm, balance sheet deleveraging and growing returns to shareholders. The firm also expects to reinstate its dividend after the full-year 2022 results, highlighting the strong recovery that has been made. 

What am I doing with this FTSE 250 stock? 

I bought National Express shares near the start of the pandemic and have continued to buy throughout. Right now, I am also confident about the company’s long-term future. In particular, amid the high cost of living, National Express offers a far cheaper way for the population to travel. This will hopefully continue to boost demand and raise revenues. Therefore, I’m tempted to add more National Express shares to my portfolio. 

While the UK is expected to return to its pre-pandemic GDP levels in mid-2022, some analysts are also forecasting a recession. There are several factors that could plunge the UK into a recession, including soaring inflation, and interest rate rises.

So here are three stocks I’ve recently bought or am looking at to help safeguard my portfolio against an economic downturn in the UK.

Bank of Georgia

Naturally, the Bank of Georgia‘s (LSE:BGEO) performance is closely aligned to economic data in Georgia and not the UK. The bank’s performance was good in 2021, buoyed by strong economic data. The economy grew by 14.6% year-on-year and the Bank of Georgia in turn posted a pre-tax profit of £192m, more than any year in the last five. 

The Tbilisi-based bank’s share price fell following Russia’s invasion of Ukraine — both countries are major trading partners.

But I see BGEO as a good buy because I think the economic fallout from the war has been too heavily factored into the share price. For me, the Bank of Georgia looks very cheap with a price-to-earnings (P/E) ratio of just 3.4. The Georgian economy is still expected to grow this year, by 2.5% and in the long run, I see Georgia as a high-growth market.

Spire Healthcare

Historically, the healthcare sector, notably in the US, has been called recession-proof. However, that doesn’t always hold true as recessions cause job losses and people lose their private healthcare benefits.

But right now in the UK, there’s a massive backlog of patients waiting on elective treatments. I think Spire Healthcare (LSE:SPI) is in a good position to benefit from record waiting lists in the UK. In England alone, there are now more than 6.1 million people waiting on elective procedures and there’s political will to reduce this.

In March, Spire announced a big rise in annual profit, driven by “significant” demand for private treatment. Revenue also climbed above £1bn for the first time. Moreover, the pandemic seemingly drove more people to purchase private health insurance or pay for treatment as the NHS struggled, according to new research from the Institute for Public Policy Research.

National Express

National Express (LSE:NEX) has to be one of the cheapest ways to travel in the UK and that’s why I see it as a stock that will do well if the economy changes direction. From my own experience, the coach operator can get you from London to Bristol on a Friday evening for 10% of the price of a train. As fuel prices increase, it seems likely that some people will swap car journeys for the coach. 

The firm struggled during the pandemic but appears to be through the worst. I also think it will benefit from the move towards greener options as people ditch car journeys. The UK Climate Change Committee actually predicts that between 9% and 12% of car journeys will switch to bus journeys by 2030.

National Express hedges fuel, so the current spike shouldn’t impact margins too heavily. Although a resurgent Covid could hurt demand.

Growth stock #1: A FTSE 250 silver miner

Hochschild Mining is a company specialising in the mining and production of silver and gold. It operates across Argentina, Chile, and Peru in South America. Currently trading at 118.8p, it is down nearly 40% in the past year.

Between 2017 and 2021, the firm’s revenue increased from $722m to $811m. What’s more, profit before tax grew markedly from $64m to $137m. It is encouraging that this business is performing for its shareholders year in, year out.

It should be noted, however, that past performance is not necessarily indicative of future performance.

The company is also currently benefiting from higher precious metals prices, driven by global market instability.

However, production fell for the three months to 31 March from 7.3m silver equivalent ounces to 5.8m. This was mainly caused by pandemic-related absences and I think this problem could subside in the near future. Despite this, the firm maintained its annual guidance.

Investment bank Berenberg also increased its price target for Hockschild shares from 130p to 160p, because the stock provides exposure to the strong performance of precious metals.

Growth stock #2: National Express

The second company is National Express, a public transport business operating across the UK, Europe, North America, North Africa, and the Middle East. It currently trades at 250p.

The firm rebounded very strongly from the pandemic. In 2020, it slumped to a £444m loss before tax. By the end of 2021, however, this had narrowed to a £84m loss before tax.

What’s more, revenue climbed from £1.9bn to £2.1bn over the same period.

For the three months to 31 March, the company reported that revenue had hit pre-pandemic levels once again, a 30% increase year on year. 

It should be noted, however, that any future Covid variant could have a negative impact on the share price.

Additionally, it stated that fuel was 100% hedged for 2022, with 69% and 33% hedging rates for 2023 and 2024, respectively. This could mean that National Express largely avoids the higher fuel costs that have arisen from surging oil prices.

Despite this, Berenberg lowered its price target from 340p to 300p, because profit margins were difficult to define in advance of National Express’ potential acquisition of Stagecoach.

Overall, these two businesses have worked hard to continue growing. They could be strong additions to my portfolio over the long term and I will buying shares in both this month.

A luxury fashion brand 

Burberry (LSE: BRBY) has been significantly impacted by rising coronavirus cases in China. This is due to the strong presence the luxury fashion house has in Asia, where it recorded nearly half of its profits in the first half of the current financial year. Therefore, the recent surge of cases in Asia, and the lockdown in Shanghai, is likely to see reduced demand and sales. These lockdowns have already had major impacts on other luxury fashion houses. For example, in the Q1 trading update by Kering (owner of Gucci and Saint Laurent), the CFO stated that the recent lockdowns were tougher than last summer’s disruptions and noted impacts on consumer sentiment. Similar problems are likely to exist for Burberry. 

However, I take a long-term viewpoint, meaning that now may be a good time to buy. For example, Burberry is not entirely reliant on Asia, with its highest growth this year coming from the US and Europe. Further, I feel that the current Covid situation in China is short term, especially as governments are now more experienced in dealing with the situation.

In addition, its recent results impressed me. For instance, in the half-year report, Burberry managed operating profits of £207m, up from £88m the year before. Free cash flow also reached £104m, allowing an interim dividend of 11.6p and a share buyback programme of £150m. This shows significant confidence at the group. As such, after falling over 25% in the past 12 months, while also showing great promise for the future, Burberry is a UK share I’d happily add to my portfolio in May. 

A far smaller UK share 

National Express (LSE: NEX) is around a quarter of the market cap of Burberry, yet it’s another UK share I’m very keen on, especially after it’s fallen nearly 25% in the past year. I feel that this drop has been very unfair. 

Firstly, NEX has fallen due to the rising price of oil. However, it has hedged oil fully throughout 2022, and 69% for 2023, which should mitigate its impact. It may also help boost demand, as consumers look for cheaper ways to travel. 

In addition, the group managed to return to some profitability last year, reporting underlying profit before tax of nearly £40m, compared to a £106m loss the year before. Free cash flow of over £123m means that I’m confident the dividend is close to returning. In addition, Q1 group revenue was back to 2019 levels, exceeding these levels in March. 

Therefore, although I worry slightly about wage inflation, and the effect this may have on profit margins, I believe National Express is a great recovery stock. Therefore, I may buy more of this UK share in May. 

It’s worth noting that growth stocks are not the core part of my portfolio. I favour passive income stocks and there are several reasons for this. High dividends can negate the current inflationary pressures. But also, inflation-related uncertainty and higher interest rates can undermine the potential of growth stocks. In other words, it-s a play-off between uncertain long-term growth or stocks promising (but not guaranteeing) a dividend now.

I’ve chosen these two stocks because I feel that they’ll benefit from market conditions and grow.

Spire Healthcare

The Spire Healthcare Group (LSE:SPI) is in a good position to benefit from record waiting lists in the UK. This FTSE 250 stock operates dozens of private hospitals and clinics across the country and demand for its services is rising. In England alone, there are now more than 6.1 million people waiting on elective procedures. There’s considerable political will to reduce the waiting list and I think private healthcare providers stand to profit. 

Research by the Institute for Public Policy Research suggests that the pandemic prompted more people to purchase private health insurance or pay for treatment as the NHS struggled to keep up with demand.

In March, it announced  a strong rise in annual profit, driven by “significant” demand for private treatment. Revenue for the year climbed above £1bn for the first time, with 20.3% growth year-on-year. Spire also said there may be further upside if Covid-19 prevalence reduces, leading to fewer cancellations and staff absences.

However, a resurgent virus could severely hamper operations and the company’s revenue.

The stock is currently trading at 226p a share, that’s up over the last two years, but considerably down on where it was two years ago.

National Express

National Express (LSE:NEX) has plenty of upside potential having suffered during the pandemic and in its aftermath. The stock is currently trading just above 232p a share. That’s considerably down on its year high of 337p per share and less than half of its pre-pandemic peak. 

While National Express has demonstrated its resilience in coming through the pandemic, I believe it will grow amid inflationary pressure on consumers and the long-term impact of the green agenda. With current inflation levels, National Express represents a cost-efficient travel option. From my own experience, the coach operator can get you from London to Bristol on a Friday evening for 10% of the price of a train. As fuel prices increase, it seems likely that some people will swap car journeys for the coach.

I also think the firm will benefit from the move towards greener options as people ditch car journeys. The UK Climate Change Committee actually predicts that between 9% and 12% of car journeys will switch to bus journeys by 2030. Soaring fuel prices may accelerate this transition.

While it hedges fuel, high prices for the long term could impact margins. Meanwhile a resurgent Covid-19 could dent demand. I stopped using National Express when Covid hit Britain in 2020.

I’ve recently bought both of these stocks for my portfolio.

My portfolio is largely filled with dividend-paying stocks that help to counter the current inflationary pressures. But I’m also on the lookout for stocks with great long-term potential, even if they’re not offering passive income at the moment. That’s where National Express fits, although it has indicated that it will pay a dividend in 2022.

Discounted share price

National Express is currently trading just above 230p a share. That’s considerably down on its year high of 337p per share and less than half of its pre-pandemic peak.

The intercity and inter-regional bus and coach operator saw its share price nosedive when the pandemic hit. Two years of Covid-induced underperformance have been compounded by soaring fuel prices following Russia’s invasion of Ukraine. The National Express share price briefly dipped under 200p a share in early March before quickly recovering.

Growth prospects

Evidence suggests that National Express has weathered the worst of the pandemic already. In 2021, the coach operator managed to report an underlying operating profit of £87m, representing a considerable improvement from the £50m loss recorded in 2020.

The Birmingham-headquartered firm has said that it intends to resume dividend payouts in 2022 as forecasts indicate that revenue will near pre-pandemic levels during the year.

But while Covid will continue to impact demand for their services in the short term, I believe the coach operator has great long-term prospects. I think the firm will benefit from the green agenda as people swap car journeys for other forms of transportation.

In fact, the UK Climate Change Committee predicts that between 9% and 12% of car journeys will switch to journeys made by bus by 2030. Such a transition could be accelerated by the soaring fuel prices we’re seeing right now.

Headwinds

Covid is still dampening demand for travel and National Express’s bus business continues to receive state aid. But like any company, it will face challenges beyond the pandemic. Wage inflation and rising fuel prices are two of those.

In the short term, high fuel prices caused by the Ukraine crisis are unlikely to have much impact on the business. National Express is fully hedged on fuel through to 2023, reducing its exposure to the current high prices.

It’s also worth noting that future waves of Covid-19 infection and new variants may cause temporary reductions in demand.

The company also recently received a setback after a planned buyout of rival Stagecoach faltered. However, National Express has insisted it doesn’t need the deal in order to deliver its growth objectives.

I’ve been watching the National Express share price for some time, but now I think the only way is up for this stock. That’s why I’ll be adding it to my portfolio soon.