Recruitment business

Pagegroup is an international recruitment business with over 8,000 employees spread across 37 countries. Formed in 1976, it has grown into an industry leader and continues to target expansion. It is split into four core brands and recruits across 25 main disciplines including technology, finance, legal, and HR.

So what’s happening with Pagegroup shares currently? Well, as I write, they’re trading for 375p. At this time last year, the stock was trading for 635p, which is a 40% drop over a 12-month period.

To buy or not to buy?

Let’s take a look at some pros and cons of me buying Pagegroup shares.

FOR: I’m buoyed by Pagegroup’s recent performance. I am aware that past performance is not a guarantee of the future. However, looking back, it has recorded consistent revenue and profit for the past four years. More recently, it released a half-year report last week for the period ended 30 June 2022. I noticed that revenue and profit increased by 27% and 33% respectively compared to the same period last year. The interim dividend was higher than last year. Furthermore, Pagegroup announced a special dividend to reward shareholders. At present, the shares’ dividend yield stands at a mighty 11%. I do understand that dividends can be cancelled, however.

AGAINST: Due to current economic volatility and soaring inflation, confidence in business is falling. Businesses may need to cut costs, which could include hiring freezes. This could impact demand for Pagegroup’s services, and hinder performance and returns.

FOR: On the other side of the coin from potential hiring freezes due to volatility, there is a general shortage of candidates for relevant roles across many sectors throughout the world, especially in developed economies like the UK. This could see Pagegroup experience a rise in demand for its services, and boost performance. In addition to this, the shares look good value for money right now on a price-to-earnings ratio of just seven.

AGAINST: Recruitment is a saturated marketplace. Many firms, of all shapes, sizes, and profiles are vying to fill the same roles and have the best candidates on their books. I will keep an eye on competitors to see how they are performing against Pagegroup.

A passive income stock I will continue to monitor

Taking everything into account, I like the look of Pagegroup shares. It is a global business with a great track record as well as good recent performance. The shares also look good value for money.

What’s putting me off is the current economic volatility and the uncertainty that comes with it. This is the reason I will keep Pagegroup shares on my watch list for now and monitor developments.

Rising interest rates

NatWest (LSE:NWG) shares are currently trading at 258p and they’re up 25% in the last three months.

The banking firm declared a total dividend of 16.8p on 29 July. At the time of writing, this results in a dividend yield of around 6.42%.

The company is currently benefiting from rising interest rates in the UK that are now set at 1.75%. These may only move higher, as the Bank of England seeks to control inflation, which is over 10%.

Rising interest rates generally mean that banks can charge more for loans and mortgages, so that could be good news for NatWest. 

This was visible in its results for the six months to 30 June, when the business reported higher-than-expected pre-tax profits of £2.6bn. The consensus was £2.2bn and the result for the same period in 2021 was £2.3bn.

On the flip side, rising rates may be a deterrent for future customers who don’t wish to take on more debt amid the cost-of-living crisis.

Overall though, NatWest expects full-year revenue to grow 25% compared to last year.

A return to shopping centres

Second, Hammerson (LSE:HMSO) recently declared an interim dividend of 2p per share. At the current share price of 24p, this results in a dividend yield of about 7.62%.

It’s worth noting though, that dividend policies can be subject to change in the future.

The shopping centre and real estate investment firm was battered during the pandemic and the share price slumped to just over 4p.   

For the six months to 30 June however, earnings rose by 154% to £51m. Furthermore, there was a 25% fall in net finance costs, which should place the company on a better financial footing. 

Despite this, there’s always the threat that further pandemic variants have a detrimental impact on Hammerson’s operations. In addition, online shopping may negatively affect the business.

Overall though, the group’s portfolio value increased to £5.3bn, with an annual return of 2.1%. 

Greater hiring

Finally, PageGroup (LSE:PAGE) declared an interim dividend of 31.62p per share, which equates to a dividend yield of 7.01%. At the time of writing, the shares are trading at 446p.

The recruitment consultancy firm has reported solid pre-tax profits for the past five years, while reporting a £114.5m pre-tax profit for the six months to 30 June. This was an 80% increase year on year.

Furthermore, revenue grew to £977m. These financial results give me confidence as a potential investor, but I’m always aware that past growth doesn’t necessarily indicate future growth. 

However, it cautioned about a new trend of slowing recruitment by companies as many have reduced their hiring capacity due to economic conditions. 

Despite this, the business stated that it had benefited from wage inflation, because it had received greater fees per hire on average. 

Overall, these three big dividend companies may provide interesting opportunities for income. As such, I’ll add all three to my portfolio soon.

Vistry Group (8.1% dividend yield)

Demand for homes is beginning to slip as the Bank of England hikes interest rates. According to the Royal Institution of Chartered Surveyors (RICS), 25% of estate agencies saw fewer enquiries in July.

But, pleasingly for housebuilders like Vistry Group (LSE: VTY), property values continue to soar. The same RICS survey showed that 63% of agents saw prices rise, well above the long-term average of 13%.

And the consensus among respondents was that home prices will be higher a year from now too.

Rising interest rates pose a threat to the likes of Vistry. But, so far, businesses like this continue to trade robustly. This is because of a huge shortage of housing stock that I’m confident will remain in place for years to come. And in particular it should support robust demand for new-build homes.

Vistry enjoyed an 11% improvement in its average weekly private sales rate between January and June. I think the company’s big forward dividend yield and P/E ratio of 6.2 times make it a top value stock to buy.

PageGroup (8% dividend yield)

PageGroup (LSE: PAGE) is another FTSE 250 stock whose ordinary dividend yield smashes the 2.7% index average.

Business confidence is tanking across the globe as inflationary pressures rise. This, in turn, poses a significant danger to recruiters such as this. But this is a threat I think is priced into PageGroup’s current price. Like Vistry, it trades on a sub-10 P/E ratio, at 9.7 times.

Extreme candidate shortages mean the recruitment sector actually continues to thrive. PageGroup announced this week that revenues and pre-tax profits soared 28% and 80% respectively during the January-June period.

Trading is so strong that the business hiked the interim dividend and announced plans for a special dividend earlier this week. I’m very tempted to buy this bargain today.

ITV (6.9% dividend yield)

My final high-dividend stock today is ITV (LSE: ITV). The broadcaster’s fallen a long way in 2022 after exiting the FTSE 100 last September. But I think it’s a top buy despite the threat that a weakening advertising industry poses to profits.

On top of that massive dividend yield, ITV trades on a rock-bottom P/E ratio of 5.5 times. As a long-term investor, I find this value hard to ignore.

You see, I’m expecting the huge investment the FTSE 250 new boy is making across the business to deliver massive returns. It is splashing the cash on its ITV Studios arm to turn it into a global production powerhouse. And it is building its position in the lucrative streaming market with initiatives like its soon-to-be-launched ITV X platform.

Here are three dividend stocks I’m thinking of investing in today.

Warehouse REIT

Dividend yield: 4.4%

Real estate investment trusts (or REITS) are popular income stocks because of the rules governing dividends. Such firms are required to distribute a minimum of 90% of annual profits by way of shareholder payouts.

I like Warehouse REIT (LSE: WHR) in particular. This is because it operates large warehouses across the UK. Demand for properties like this is soaring as e-commerce goes from strength to strength.

Amazon announced on Friday plans to create an extra 4,000 jobs in Britain this year alone. This illustrates the additional growth potential for online shopping, and by extension underlines the bright outlook for firms like Warehouse REIT. Interestingly hiring for warehousing staff will be an area of focus for Amazon too.

The investment trust could suffer if current economic pressures hamper its tenants’ ability to pay rent. But from a long-term perspective I still think Warehouse REIT is a top-class buy.

Pagegroup

Dividend yield: 8.5%

Recruitment businesses like Pagegroup (LSE: PAGE) are also vulnerable to worsening economic conditions. They could also suffer if labour shortages worsen and they struggle to fill posts.

But currently, the recruiters continue to report exceptional trading as staff shortfalls push up fees. Pagegroup itself said last week that gross profits soared to a record £280.9m in the second quarter, up 25.5% year-on-year.

Research from McKinsey & Company suggests that market conditions could remain white-hot too. It reports that 40% of people it surveyed are seeking to leave their job in the next three to six months. Workers continue to search for new jobs in huge numbers as they seek better pay and improved work/life balances following pandemic lockdowns.

I particularly like Pagegroup because of its huge dividend yield. But I’m also a fan due to its rock-bottom earnings multiple. A forward P/E ratio of 9.4 times fails to reflect its excellent momentum.

Rio Tinto

Dividend yield: 14.4%

The Rio Tinto (LSE: RIO) share price has fallen sharply as recession worries have hit commodity prices. On Friday, for instance, copper plunged below $7,000 a tonne for the first time since late 2020.

Raw materials prices could keep slumping in the near term too. And particularly if key data from major commodities consumer China continues to shock.

However, I recently bought Rio Tinto shares despite this risk. And I’m tempted to buy more following further share price weakness. As well as that 14%+ dividend yield, the mining stock trades on a forward P/E ratio of just 5 times.

I expect Rio Tinto’s share price to soar from current levels over the long term. Demand for its iron ore will rise as construction activity recovers, for instance. Meanwhile, sales of its aluminium will grow strongly as carbuilding gradually picks up.

In the meantime, the company’s strong balance sheet should give it the financial firepower to pay big dividends even if earnings disappoint. Rio Tinto is one of my favourite cheap dividend stocks right now.

The FTSE 250’s weak performance is quite unusual. The mid-cap index has outperformed the FTSE 100 by 250% since 2002. Although past performance is not an indicator of future returns, I think there’s plenty of value in the FTSE 250 today. Here are five FTSE 250 shares that are on my buy list for May.

A contrarian buy?

My first pick is chemicals group Synthomer (LSE: SYNT). This business has been through a lot of change over the last couple of years.

In 2020 and 2021, demand for latex globes surged due to the pandemic. Latex sales are now returning to normal, but the group has recently completed a major acquisition in the US. This has created a new adhesives division within the group.

It’s a complicated picture and Synthomer’s share price has suffered as a result of the uncertain outlook .

With so many changes – and a new chief executive – I can certainly see some risk of further setbacks. However, I think I’m now starting to see some clarity.

Synthomer’s latest trading update reported an “encouraging start to the year”. Meanwhile, broker forecasts suggest that the group’s 2022 earnings and dividend will stabilise well above 2019 levels.

These City estimates price the stock on just seven times forecast earnings, with a dividend yield of 5.8%. That seems cheap to me for a business that’s been quite profitable in the past. Synthomer is on my list as a potential buy for my portfolio in May.

A whopping 9% yield

My next pick is well-known UK insurer Direct Line Insurance (LSE: DLG). This FTSE 250 business is best known for its home and motor policies, which are sold under brands including Direct Line, Churchill and Privilege.

Direct Line shares currently offer a forecast dividend yield of 9.5%. This very high yield is more than double the FTSE 100 average of around 4%. High yields can indicate some extra risk.

In this case, I think the problem is that Direct Line’s profits have been falling in recent years. The group’s 2021 results showed pre-tax profit of £446m. That compares to a figure of £581m in 2018.

My analysis suggests Direct Line’s dividend will be affordable. But this view does depend on the company’s profits starting to recover, following significant investment in new IT.

The company says these changes are already starting to deliver improved profitability. CEO Penny James also says that Direct Line is starting to see stronger market conditions in motor insurance this year, allowing the group to increase its pricing.

I already hold Direct Line shares and have no plans to sell. I think the evidence so far supports a recovery. In my view, these shares are probably too cheap.

A FTSE 250 bargain?

Shares in my next company have fallen by nearly 30% since hitting a record high in November. The company concerned is Pagegroup (LSE: PAGE), which is one of the FTSE 250’s largest recruitment groups.

My guess is that the market is pricing in the risk of a recession. This could lead to a slowdown in new hiring, hitting Pagegroup’s profits.

However, there’s not much evidence of this yet in the company’s performance. Pagegroup saw gross profits rise by 43% to £258m during the first quarter of this year. The company reported a “record performance in March”, which was the first month ever to generate a £100m gross profit.

I was also reassured to see growth spread quite evenly across the regions where the group operates. Gross profit rose by 41% in EMEA, 36% in Asia Pacific, 43% in the UK, and 57% in the Americas.

Pagegroup’s share slump has left the stock trading on 10 times forecast earnings, with a 4% dividend yield. On balance, I think this is probably too cheap. Pagegroup is on my list as a potential buy.

A founder-led business

One thing I often look for are companies where senior management have a significant ownership stake. I feel this makes it more likely that they will run the business with shareholders in mind.

One possible bargain share that fits this description is financial trading group CMC Markets (LSE: CMCX). CMC is led by CEO Lord Cruddas. He founded the business in 1989 and still owns 57%.

CMC’s profits boomed during lockdown, but have cooled (as expected) since then. The market has punished the stock quite severely in my view, and CMC’s share price has fallen by over 40% since April 2021.

One risk here is that profits can be unpredictable, as many traders rely on volatile markets to find trading opportunities. Quieter markets generally mean lower profits.

However, CMC is also taking steps to diversify by expanding its stockbroking business. This should provide more stable earnings and create some new growth opportunities.

As I write, CMC shares are trading on 12 times forecast earnings, with a dividend yield of 4.3%. I think this FTSE 250 share could be a bargain and would be happy to add it to my portfolio.

A quality retailer

I want to wrap up with a look at FTSE 250 homewares retailer Dunelm (LSE: DNLM). This is another family-controlled business with a track record of strong profitability.

Dunelm’s sales boomed during the pandemic, as we all spent more time at home. However, over the last year, the group’s share price has fallen by 30%, even though sales have continued to rise.

This FTSE 250 retailer’s latest trading update showed sales up by 25% during the nine months to 26 March. During the first three months of 2022, sales were 69% higher than at the same time last year.

City analysts expect the company’s earnings to rise by 27% to 80p per share this year. That prices Dunelm stock on 12 times earnings, with a possible 5.8% dividend yield.

There’s a risk that the rising cost of living and the return of summer holidays could hit Dunelm’s sales later this year. But this is one of the most profitable big retailers in the UK. I think the sell-off has gone far enough. I’ve been buying Dunelm shares for my portfolio.

Why I think these are 3 UK shares to buy now

International recruitment consultancy Pagegroup (LSE: PAGE) delivered an upbeat half-year report at the beginning of August. Among the highlights, the company declared an interim dividend worth 4.7p per share and a special dividend of almost 27p per share. The directors had temporarily suspended dividends in 2020 because of the pandemic.

But Pagegroup upgraded its outlook in July. And operating profit for 2021 will likely come in between £125m and £135m, which compares well to the 2019 pre-pandemic outcome of £147m. It seems the business is on course to shrug off the effects of the coronavirus crisis.

Chief executive Steve Ingham said in the report the company is the “clear leader” in many of its markets. He thinks the business is well-placed to “grow and improve.”

With the stock near 628p, the forward-looking earnings multiple is just below 18 for 2022. That’s not cheap. But I’m encouraged by the cash-generating and quality credentials of the enterprise and would add it to my ISA.

Further strong growth ahead

Meanwhile, Mortgage Advice Bureau (LSE: MAB1) has a multi-year record of impressive rises in revenue, earnings and shareholder dividends. The shares have increased greatly to reflect the progress. However, I’m encouraged by the firm’s strong balance sheet and robust quality metrics. And City analysts expect further double-digit percentage gains in earnings ahead.

With the stock near 1,440p, the forward-looking earnings multiple is near 32 for 2022. So it’s not a cheap buy. But Mortgage Advice Bureau could prove to be decent value in the end if operational progress continues in the years ahead.

In an update delivered in July, chief executive Peter Brodnicki said he’s “confident” recent developments in lead generation and ongoing enhancements to the technology platform will “accelerate” the pace of growth. That’s an enthusiastic assessment and it gives me the courage to buy the stock now for the long term.

Cyclical but growing

Somero Enterprises (LSE: SOM) manufactures laser-guided equipment for automating the process of spreading and levelling concrete for commercial flooring and other horizontal surfaces.  The company reckons it supplies equipment, training, education and support to customers in more than 90 countries.

Earnings and the share price have been up and down a bit over the past few years. And I reckon that reflects the inherent cyclicality in the industry. However, there’s no mistaking the longer-term trend for the business and its stock – up! Indeed, the company appears to be succeeding and expanding.

And with the share price near 479p, the earnings multiple for 2022 is just over 13. I think that lower rating accommodates the cyclical uncertainty ahead. But Somero has a strong balance sheet, impressive quality indicators, and a chunky dividend for shareholders to collect.

In July, the company raised its earnings guidance because of “stronger than anticipated trading in the US.”  And, looking ahead, the business has a pipeline of new products targeted to expand the addressable market. I like what I’m seeing here and would add the stock to my ISA.

A positive outcome isn’t certain. And I could lose money on these stocks if they fail to meet earnings expectations. But I’m prepared to embrace the risks with a multi-year holding period in mind.

Lockdown easing boosts sales

Food-to-go specialist Greencore Group (LSE: GNC) isn’t out of the woods just get as the Covid-19 crisis continues. But as things stand, trading conditions are improving rapidly at the food producer as people slowly get mobile again. Food on the move revenues at the firm were up 123% in the seven weeks from March 26, latest financials showed, and down just 14% from the same period in 2019.

Analysts at Lumina reckon the food-to-go segment will grow by 32% year-on-year in 2021 as the industry resumes its striking pre-coronavirus growth rates. And Greencore plans to invest £30m at three manufacturing sites over the next two years to meet customer demand. I think this makes it one of the best UK shares to buy for this market, despite its challenges. It is also investing heavily in automation to boost profits by bringing down costs.

On the right page

A stream of positive news on the jobs market bodes well for recruiters like PageGroup (LSE: PAGE). Latest data from the Office for National Statistics, for instance, showed that there were 862,000 vacancies in the UK between April and June. This was the highest level for 15 months. Conditions are steadily recovering in labour markets across the globe too.

PageGroup itself delivered record results in 17 of its markets during the second quarter, it announced recently. The UK support share upgraded its full-year profits expectations as a result. I’m expecting another blowout set of numbers when half-year results come out on Monday, 9 August, making now a great time to buy the business. Remember though, that fierce competition could damage the company’s ability to capitalise on improving market conditions.

One of the best UK tech stocks to buy

I also think Kape Technologies (LSE: KAPE) is a great UK tech share to buy this August. The problem of cybercrime has exploded in recent years as the internet has steadily taken over our lives. The outbreak of Covid-19 made the issue worse amid the e-commerce boom and the rise of remote working. Take hacking as an example. Office for National Statistics data showed a 55% year-on-year rise in the number of hack attacks in Britain during the 12 months to March 2021.

A quick Google search will show that hackers are causing carnage all over the globe too. This is where Kape comes in as a creator of security software that protects users’ privacy. Revenues at the business rocketed 60% in the first six months of 2021. I think it’s a great buy despite the threat of a potential high-profile product failure that might damage demand for its software. And I like the company’s transformative acquisition of Webselenese in March. It significantly boosts the company’s online presence and gives it a chance to supercharge organic sales.

One of my FTSE 250 faves

I think FTSE 250 food production and retail giant Associated British Foods (LSE: ABF) could be a great buy before the start of July. Fresh financials are due on 1 July, and I’m expecting to hear that sales have kept soaring.

The ABF share price sank last time the firm updated the market in April. Then investors took fright on news that pre-tax profits halved in the six months to February as revenues slipped. However, sales have taken off since Covid-19 rules have been relaxed, and the business enjoyed “record” revenues in its English and Welsh stores in the first week of reopening.

I reckon latest financials will reveal that turnover has kept rocketing, too. Indeed, the sunny long-term outlook for the ‘fast fashion’ industry means that ABF is a UK share I’d look to own for years to come. However, the rise of Covid-19 infection rates in its core UK territory could harm its recent sales recovery if lockdowns continue or perhaps become stricter.

Another top UK share for July

I’m also expecting good news when PageGroup (LSE: PAGE) unpacks second-quarter numbers on 14 July. The FTSE 250 recruiter’s most recent update in April showed that trading continued to improve month-on-month, a trend that stretches all the way back to last spring. Indeed, in its most recent reported month of March, gross profits leapt 31% from the same month in 2020.

Research from staffing and workplace advisors Staffing Industry Analysts (or SIA) illustrates how strongly recruitment industry conditions have rebounded. They recently upgraded their forecasts for the staffing industry and now predict a 12% rise in 2021. Revenues are expected to grow a solid 8% in 2022 too, the report shows.

There is reason for caution, however. At current prices PageGroup trades on a forward price-to-earnings (P/E) ratio of around 28 times. Shares that trade on elevated readings like this are in extra danger of slumping in price if trading performance starts to lag.

A British stock I already own

As an owner of CVS Group (LSE: CVSG) shares myself I’ll be interested to see that the veterinary care provider’s next update on 20 July will reveal. The UK healthcare share’s most recent update in late April certainly pleased investors as it upgraded its estimates for the full year.

Demand for CVS’s services has benefitted hugely from the spike in pet adoption rates during the pandemic. But don’t think the roaring trade that the animalcare specialist is currently enjoying is a fad. Studies show that the amount people spend on taking care of their animals was ballooning long before the Covid-19 crisis.

A chronic shortage of veterinary workers could throw a spanner in the works of CVS Group’s growth prospects. But I’m still confident it should deliver spectacular long-term growth and am thinking of increasing my holdings.

Jobs giant

I’d very happily buy PageGroup (LSE: PAGE) shares before its next financials come out on Monday, 14 July. The recruiter’s share price has risen 50% over the past 12 months as signs of recovery in employment markets have improved. Indeed, the UK share soared in value last time it updated the market in April. I’m hopeful of another sunny release next month as industry healing continues.

PageGroup saw gross profits move back into growth in the first quarter, those most recent trading numbers showed. And it enjoyed a record month in some of its European and Asian markets. Research suggests that the upswing in the recruitment sector could continue, too. A survey by Manpower showed that 77% of employers expect hiring to return to pre-coronavirus levels by the end of 2021 amid a pick-up in corporate optimism.

Of course PageGroup could encounter difficulties if it fails to find skilled candidates for positions. This could be even more difficult than usual in a post-pandemic world. As another recruitment colossus, Monster, has commented: “the past year of working virtually and pandemic worries has set off a global trend of job-related anxiety” for workers. It may be difficult to match employees and employers in a landscape of changing employee expectations and needs.

Another top UK share on my radar

I think that buying Michelmersh Brick Holdings (LSE: MBH) might prove a clever idea before Thursday, 3 June when it holds its annual general meeting. I’m expecting its latest financial update to confirm that trading has remained strong thanks to fizzy home construction rates in the UK.

Strong updates from some of its industry rivals make me believe that a bubbly update is coming. In late April, Ibstock (a UK share I already own in my Stocks and Shares ISA) said that it was “trading modestly ahead of expectations” so far in 2021. In particular it described brick demand from the new build housing and repairs, maintenance & improvement (RMI) markets as “robust”. And Forterra announced “better than expected trading” last week, with revenues in the first four months of 2021 coming in at around 95% of those in the corresponding period two years ago.

The Michelmersh share price has trended lower in recent weeks despite this bright industry news. I think this gives investors like me a chance to nip in before the market wises up next week. Any policy changes to schemes like Help to Buy, along with a sharp downturn in economic conditions, could significantly hamper demand for its construction products should homebuyer activity subsequently dip. But I still think this UK share, like Ibstock, is a top buy for my ISA right now.

Recruitment specialist PageGroup (LSE: PAGE) has weathered the pandemic in good shape, given the impact on the jobs market. The stock lost half its value in last year’s March crash, but has been a strong recovery play since.

The PageGroup share price is up 44% over a year, although it still trades around 7% lower than three years ago. However, the top FTSE 250 stock is up a thumping 9.99% this morning, after CEO Steve Ingham reported “increased confidence in our outlook for the year” and predicted full-year operating profit of between £90m and £100m.

The PageGroup share price tempts me

PageGroup has demonstrated the importance of geographical diversification, as gross profits in the Asia-Pacific region raced ahead of Europe and the US, growing 15.3% and by a thumping 45% in China. By contrast, US profits fell 9% and UK profits 11%.

March was a record month in Germany, Italy, Spain and South East Asia, despite continued and increasing Covid restrictions. PageGroup looks solid with net cash of £136m, up from £83m in Q1 last year.

I can see why this is the top performing FTSE 250 stock this morning. Assuming the global economy recovers this year, PageGroup looks a good way to play it.

My biggest concern is that the recovery is priced in after strong share price growth, while lockdowns have returned in a number of the group’s markets. Today’s jump could be premature. Gross profit may be up 31% on a year ago but it is still down 2% on 2019. However, I remain optimistic.

I’m not so sure about the travel industry though. I’ve been wary about taking a punt on this ravaged sector, although some bargain hunters have benefited. Vaccine hopes have driven the sector higher in the last six months.

I’m not buying this top FTSE 250 stock

Europe’s largest travel company TUI (LSE: TUI) is up 108% in the last six months. However, investors are running for cover today.

The TUI share price is down almost 7% after the Anglo-German travel group announced it will issue up to £350m of convertible bonds to boost liquidity as Covid travel restrictions drag on. The bonds will pay between 4.5% and 5% a year, until April 2028. 

This is TUI’s second fundraising of the year. In January, it raised €545m from shareholders in a €1.8bn financing package agreed with the German government, banks and its biggest shareholder, Alexey Mordashov.

While TUI is among the top performing FTSE 250 stocks in the last six months, I’m staying grounded. The group expects peak summer capacity to be 75% of 2019 levels this year, but that looks optimistic given continuing restrictions.

I could be unduly pessimistic. There is massive pent-up demand for travel, and bookings will go crazy when restrictions ease. Recent investors have been rewarded for their bravery, while this year’s fundraising should help TUI weather short-term storms. I still think PageGroup is the safer recovery play.