Newspaper publisher Reach (LSE: RCH) is one UK dividend share on my radar today. Its sinking share price has driven its dividend yield through the roof and means it trades on a rock-bottom valuation.

Profits pain

Reach’s share price has slumped 68% in 2022 as worries over advertising revenues have grown. These concerns have proved bang on target, too, with the company’s latest financials showing group revenues down 1.6% in the six months to June.

Falling ad sales aren’t the firm’s only problem, either. Soaring paper and energy prices are also pushing newsprint costs to all-time highs.

Collectively these issues caused Reach’s operating profits to tank 31.5% in the first half. And more pain could be in store as economic growth cools and power costs balloon.

Yet even as profits crumbled, Reach chose to raise the interim dividend. It raised the payout 4.7% year on year, to 2.88p per share. The business remains committed to growing dividends and can do this through its solid cash flows.

Too cheap to miss?

I’d argue that Reach is a top value stock to buy following its recent decline. The business trades on a forward price-to-earnings (P/E) ratio of 2.8 times. It also boasts a huge 8.3% dividend yield.

The publisher looks in great shape to make this year’s anticipated dividend payment, too. The estimated reward of 7.5p per share is covered 4.2 times by expected earnings, more than double the benchmark of two times that provides a good margin for error.

Reach’s dividend forecast gets even better for 2023 as well. A predicted payout of 7.8p per share drives the yield to an even-better 8.6%. Dividend cover also remains unchanged at this year’s levels.

Read all about it!

Given its startling cheapness, I’d expect Reach’s share price to soar during any stock market recovery. This is an income share I’d look to hold for the long haul, too.

I like the range of titles it has in its locker like The Daily Mirror, The Daily Express and Manchester Evening News. In this era of ‘fake news’, owning established titles that are well trusted like these is worth its weight in gold. This explains why the group’s audience continues to outperform the broader publishing sector.

What’s more, I like the huge success Reach is enjoying to in the lucrative digital publishing arena. The company has invested heavily in its online operation and the number of registered digital users has more than doubled between December 2020 and today, to 11m.

City analysts think Reach will record a 12% earnings decline in 2022. But they also believe the business will bounce straight back into growth with a modest 1% rise next year. I’d buy the dividend stock today in anticipation of a solid and sustained recovery.

Paper to pageviews

First is media group Reach (LSE: RCH). It is probably best known for its ownership of the tabloid Mirror newspaper. But it owns a range of media properties, including regional newspapers and websites.

Newspapers continue to fall in popularity. But Reach’s strategy to deal with that is to try and spread its journalistic expertise over both print and media assets. That way, it hopes to continue to make what profits it can from the once highly lucrative newspaper business, while also building revenue streams in digital areas.

I think that strategy makes a lot of sense and so far it seems to be working. The company continues to lose readers in its newspaper division. But double-digit percentage growth in digital mean that it is eking out modest revenue growth. In its most recent trading update, the company said that revenue in its financial year to date had grown 2% compared to the same period the year before, driven by a 29.2% increase in digital revenue.

Over time, as it becomes more focussed on digital channels, I think the company could improve its rates of revenue growth. One risk is profit margins, which tend to be lower in digital than the company has been used to in newspapers.

Ready for takeoff

Another share I am considering is aircraft engineer Rolls-Royce (LSE: RR). The fundamentals of its business are attractive to me. Engines have a high price tag. As reliability is crucial, customers are willing to pay for quality. Only a few companies have the engineering know how to compete in this area, which helps keep prices high. Once an airline buys an engine, it needs to maintain it. Commonly it pays the manufacturer to help do that.

That adds up to a strong business model over the long term. But as the pandemic saw civil aviation demand fall sharply, Rolls’ fortunes followed. It diluted shareholders to boost liquidity with a rights issue. The risk that it would do so again has kept me out of the shares, as it was bleeding cash. But it has now turned the corner and is generating free cash flow once more. I see that as a key step on the company’s road to revival, as it reduces liquidity risks. The company has also gone back into the black after some massive losses in the past couple of years.

I am hopeful that the worst days for Rolls-Royce are behind it and would consider adding it to my portfolio in March.

UK shares to buy in March

Both of these companies sell into large markets. Both have established businesses and brands that help set them apart from competition. That could help build revenues and profits in the years to come. I would consider adding them both to my holdings in the coming month.

I have been looking for high-quality corporations with the potential to expand rapidly over the next couple of years. Here are three companies that I think meet my criteria. 

Undervalued growth stocks

International Personal Finance (LSE: IPF) provides credit services to consumers in the UK and internationally. The firm’s profits slumped during the pandemic as it was forced to write off some loans to customers. However, growth may return over the next two years.

Based on current City estimates, the stock is trading at a forward price-to-earnings (P/E) ratio of just 5.8. Further, earnings per share could grow by 26% this year. Based on these numbers, the stock looks cheap compared to its growth potential. 

Still, the last two years are a warning for investors. A sudden spike in loan losses could decimate the corporation’s bottom line. Shareholders may have to foot the bill if it needs to raise more capital to strengthen the balance sheet.

As such, while I would buy this company for my Stocks and Shares ISA as an undervalued growth investment, I will be keeping an eye on the potential challenges it faces going forward. 

Aside from these risks, analysts also believe that the corporation can pay out a 6.2% dividend yield for its 2022 financial year. So not only does the company appear cheap compared to its growth potential, but it also has strong income credentials. 

Stocks and Shares ISA buy 

Another undervalued growth stock I would buy for my portfolio is the news publisher Reach (LSE: RCH). Over the past couple of years, this business has been moving away from its legacy print news business towards online journalism. The transition is just starting to yield results. 

After a mixed couple of years, the firm is expected to report a net profit of £116m for its 2021 financial year and £117m for fiscal 2022. Based on these estimates, the stock is trading at a forward P/E multiple of 6.4.

I think this figure looks incredibly cheap compared to the company’s growth potential over the next few years. Analysts also reckon the enterprise has the potential to pay a dividend yield of 3.1% in the current year.

Despite these optimistic forecasts, Reach does face some challenges. The online news business is incredibly competitive. Its revenue is also dependent on advertising income from the tech giants, which could disappear at a moment’s notice. If this vital revenue stream is closed down, the firm may struggle to survive. 

Nevertheless, considering Reach’s current valuation, I believe the stock could make a great addition to my Stocks and Shares ISA as an income and growth stock. If the company continues to reinvest in its operations and build an increasing readership base, I reckon profits will continue to grow. 

Overlooked tech share?

The first on my list is the payment group PayPoint (LSE: PAY). I think this is an overlooked UK tech champion. The organisation offers installed payment services for customers and retailers, such as card machines. It also provides services for consumers who want to pay bills using cash or credit cards. 

I think the business fulfils an essential part of the e-commerce and digital payments infrastructure, bridging the gap between digital payments and brick-and-mortar retailers. 

However, unlike other companies in the sector, shares in the firm seem to be relatively ignored. They are trading at a forward price-to-earnings (P/E) multiple of just 12.3. On top of this, the stock offers a dividend yield of 5.8%. 

Based on this valuation, and for the reasons outlined above, I would buy PayPoint for my portfolio of UK shares. Key risks the company may face going forward include competition and regulatory factors, which could impact growth. 

Top shares to buy now

Another dirt-cheap UK share, which is a leader in its respective market, is the financial services group Plus500 (LSE: PLUS). In the past, I have avoided this company because of its complex business model. I did not really understand how the group made money and if profitability was sustainable. 

Over the past couple of years, I have got to know Plus a little better, and it has consistently proven itself to the market. Net profit has risen threefold since 2015, and the company is highly cash generative. Its balance sheet has a net cash balance of $714m, and the stock yields 5.7%. Management has also been returning cash with share repurchases. 

Considering these qualities, I would take advantage of the recent slump in the shares and buy the stock while it is trading at a discount P/E of 5.7. 

Although I will be keeping an eye on growth headwinds, the most important is competition. Plenty of companies in the financial services sector are looking to grab market share. 

Recovery play

As well as the two stocks above, I would also buy Reach (LSE: RCH) as a cheap recovery play. The regional and national news publisher has been struggling to turn itself around in the face of falling newspaper advertising revenues over the past five years. 

However, last year was somewhat of an inflexion year for the organisation, as digital revenues surged. Increasing visibility of its websites means the group is now back on a more stable growth footing and, more importantly, it has eliminated borrowings from its balance sheet. 

Management now has plenty of headroom to invest for growth and, in 2020, the corporation restored its dividend for the first time since the financial crisis. 

Today, the stock yields 2.7%. It is also trading at a forward P/E ratio of 7.2. Considering these figures and Reach’s newfound balance sheet strength, I am excited about the company’s outlook. 

That said, I will be keeping an eye on its progress. While the turnaround seems to be producing results, there will always be the risk that the firm will return to its old ways.

The pace of the recovery in advertising spending continues to surpass most expectations as we close out 2021. I reckon they could continue to surprise in 2022 too, so there’s a good chance Reach’s earnings next year could end better than expected.

I wouldn’t just buy Reach for the ad industry rebound though. I’d also buy it because of the impressive progress it’s making to digitalise its operations. It has added an extra 1.3m reader registrations since the end of July, a trading update this week showed. I’d buy Reach despite the continued problem of falling circulation across its print operations.

Investing for future growth

Door, window and conservatory manufacturer Eurocell (LSE: ECEL) is another cheap UK share on my radar today. A robust housing market and strong consumer spending on home improvements is helping sales to soar. In fact, latest financials this week showed like-for-like revenues between January and October jumped 21% and 38% respectively, versus the same periods in 2019 and 2020. 

Eurocell isn’t just thriving because of bright market conditions however. Revenues are also ripping higher as it effectively steals market share from its competitors. Buoyant customer spending and these share grabs have prompted the business to raise profits forecasts at various times in 2021. Eurocell has invested heavily in new warehousing and to boost production capacity to keep this momentum going too.

City analysts think earnings will leap 200%+ in 2021 and by a further 7% next year. Consequently, Eurocell trades on a P/E ratio of 12 times for 2022, a reading I consider good value. I’d buy the company despite the threat posed to profits by rising input costs in the more immediate future.

A cheap UK share for the downturn

A troubling outlook for the British economy suggests that Manolete Partners (LSE: MANO) should witness rising demand for its services. This UK share finances insolvency litigation cases, an industry which I think could grow in 2022 as the number of companies hitting the rocks is unfortunately likely to rise.

Government support for business has suppressed the number of corporate insolvencies during the public health crisis. But even so, Manolete saw case completions rise 23% in the six months to September, latest financials showed. And it said that it’s witnessing “a sharp increase both case enquires and signed cases” since temporary government measures ended on 1 October.

Researchers at Atradius are expecting insolvency levels in the UK to be 33% higher in 2022 compared with pre-pandemic levels. This is the second-highest rate in the world, level with Australia and behind only Italy (where insolvencies are tipped to soar 34%).

So I’m thinking of buying Manolete shares, despite the risk of unfavourable decisions on the litigation cases it finances.

However, the shares of this national and regional news publisher have fallen by over 20% since August. Is this recent dip just a case of profit taking? And should I consider buying the shares for my portfolio?

Crash and return

It hasn’t all been plain sailing for Reach in recent times. In fact, the shares crashed hard in 2020, from near 180p, all the way back down to under 50p, making it a penny share. But after a stellar run, the share price is currently over 300p – a whopping 500% return since that low point!

So, what’s gone right for Reach?

Reach’s turnaround story

Reach is an interesting turnaround story. Traditionally a print newspaper business, the company recognised the need to pivot as the industry is in structural decline.

However, it owns a lot of online assets, and has shifted the business to growing its digital advertising revenue. Its websites include nine national titles (including the Express and the Mirror), and more than 110 regional ones.

Reach says that 48m people a month visit its websites for news, entertainment and sport in the UK. What’s more, in the last annual report for 2020, it only ranked behind the Big Tech names – Google, Microsoft, Facebook (now Meta) and Amazon – in terms of monthly unique visitors to its online estate.

Management

The company has a fairly new management team on board too. The current CEO, Jim Mullen, took the helm in 2019 after his previous role of Chief Executive at Ladbroke Coral. Mullen has further experience as a Director of Digital Strategy at News International, so is well equipped to take the CEO role at Reach.

In the same year as Mullen joined, a Chief Financial Officer and Non-Executive Director with experience at the BBC and Channel 4 both joined the company. I think this shows the digital transformation strategy is well under way.

Valuation risk

Now that the shares have fallen 20% recently, is it the right time to buy?

Interim results to the end of June showed revenue growth of 4%. Digital revenue increased 42.7%, but print declined 5.2%. This is to be expected and shows the turnaround strategy in progress. Earnings rose 27% to 17.8p per share, and trading is ahead of full-year expectations so far.

On a price-to-earnings (P/E) ratio, the shares are valued at nine times earnings for this year, which looks cheap.

But it’s the debt I’m cautious over, specifically the large pension deficit. Net profit in its recent half-year results was £28.6m, but a huge £37.1m in cash was paid out as contributions to its defined benefit pension schemes.

In fact, on a debt-adjusted P/E ratio, the shares are valued on a multiple of 20.

The bottom line

I really like the turnaround situation developing at Reach. The digital strategy is working, judging by recent figures, and the management team has excellent experience. But taking into account its huge pension liabilities, I think the valuation is up to speed with current events. Therefore, the explosive growth might be over for now. But it’s on my watchlist.

The stock market can fall sharply due to all kinds of reasons. Global economy concerns, or unfavourable news regarding a particular industry or country can cause stock market weakness. Recent sharp falls in share prices were due to concerns over Chinese property group Evergrande and its potential effect on global markets.

I reckon the concerns are overdone and it’s a great time to add my favourite shares to my Stocks and Shares ISA. But which ones?

Top UK shares

One of my favourite UK shares I’d buy is Reach (LSE:RCH). Formally known as Trinity Mirror, this news publisher is moving firmly into the digital age. Despite physical news readership falling, digital news is going from strength to strength.

Online readership figures are on the up. This is great news for Reach as it owns over 70 online brands. In addition to national newspapers, it also owns many regional publications. Online content is big business and Reach is in prime position.

Little known to many, it owns the fifth largest digital asset in the UK, behind the likes of Google and Facebook. It also has an audience of over 40m.

With such a large audience comes much customer data. This mid-sized company is trying to monetise more of its customer data by growing digital advertising. And it looks like it’s working.

That said, there are some issues to look out for. It’s possible that print revenues could fall by more than the company expects. Converting customer data into advertising revenue also comes with challenges. Regulation could make it more difficult to capture data.

Overall, this company’s updates are encouraging. In fact, I reckon it’s still early days for Reach. Its share price is up by over 550% in the past year, but the recent fall could be a great opportunity, in my opinion.

Technology focus

The move from physical to digital is a big trend that isn’t going away. Several industries have been disrupted by technology and many are still undergoing changes today. That’s why I like to focus much of my portfolio on technology. Even non-technology companies can use tech to their advantage to gain market share.

In particular I like firms that offer double-digit growth and recurring revenues. Sales that regularly repeat are far more valuable than a one-off purchase.

In addition, I like technology companies that have bold, global ambitions and are ready and able to disrupt their respective industries. However, many of the companies that have these qualities are based outside of the UK.

With investments focused on UK shares, I could buy Scottish Mortgage Investment Trust (LSE:SMT) instead. This UK-listed global technology fund has performed phenomenally well in recent years. In the past year it has returned around 50%. Even over a 10-year period, it has managed to produce a 27% annual return.

It owns several “exciting new businesses with deep competitive advantages, targeting large opportunities.” For example, it’s largest holding is Moderna. This US-based biotech company focuses on medicines based on mRNA technology. Scottish Mortgage also has large holdings in Tesla and Amazon.

There are some things to bear in mind, however. Fast-growing technology companies are often more volatile than some of the mature FTSE 100 firms. This can often lead to greater swings in share prices. In addition, some of the tech firms that the fund invests in are based in China. Every country operates differently, and some countries have greater regulatory risks than others.

Overall, I’d say it’s an excellent, well-managed fund that I’d be happy buying in any stock market crash.  

A small slice

I like to own UK shares of all shapes and sizes. Spreading a selection across industries can diversify my investments. And having a mixture of small-cap, mid-cap and large-cap shares can create a nice mix. Scottish Mortgage Investment Trust is large-cap and Reach is mid-cap. Which leaves my small-cap idea.

One small-cap share that I’d buy in a stock market crash is franchise retailer Cake Box Holdings (LSE:CBOX). It manufactures fresh cream cakes and supplies them to its franchise-operated retail stores.

The reason why I like this firm isn’t just its delicious cakes. It also has a tasty business model. Much of its earnings come from new shop openings. It has over 150 stores and it’s growing at a reasonable pace. In fact, it opened 24 new franchise stores in the most recent financial year. And it has an encouraging pipeline of upcoming sites across the UK.

Also, demand for its cakes is strong and I reckon it’ll continue to be so over the coming months. As many restrictions were relaxed this year, I think there would have been many parties and celebrations during the summer months. This could bode well for its next trading update.

I like that it has entrepreneurial leadership, with the company founders still running the show. I also like that it offers big, fat, juicy returns and profit margins. It’s also growing at pace, the shares are relatively cheap and it even offers a 2% dividend. What’s not to like?

Well, there are some negatives. One thing to bear in mind is that the shares are relatively illiquid. This is mainly due to the founder owning a large portion of the company. Less liquid shares can make large purchases and sales more difficult. For individual private investors like me, however, this could be less of a factor. Also, I would look out for when growth of new franchises starts to slow. It’s currently growing swiftly, but any sign of a slowdown could have a negative effect on its share price.  

Overall, if a stock market crash lowers its share price, I’d love to add a slice of these shares to my portfolio.

Here are three stocks I’d buy that meet these goals. 

UK shares to buy 

The first company on my list is retailer Marks & Spencers (LSE: MKS). In the past, I’ve stayed away from this enterprise because it always seems to the in the middle of a turnaround, but it’s never turned. It now looks as if the latest plan is starting to yield results. 

The company recently informed the market it was upgrading its profits forecast for its current financial year off the back of better-than-expected trading. This is the first time the group has outperformed expectations for over a decade. 

There’s still plenty of work for the company to do, but the fact that customers are returning faster than expected is incredibly positive. It will provide much-needed cash flow to drive the rest of the group’s recovery. It’s trying to expand its digital operation, cut costs and boost its food business. 

Challenges it may face include cost inflation, competition from online peers and potentially higher taxes. But as Marks’ recovery continues, I’d buy the stock for my portfolio of UK shares. 

Digital revolution

Three years ago, newspaper publisher Reach (LSE: RCH) appeared to be facing a bleak future. Circulation volumes were declining, and so was advertising income. 

However, the organisation has managed to turn things around by investing heavily in its online news business. Digital advertising and other e-commerce strategies have helped the company expand its top and bottom lines, and it has returned to growth. 

That said, the online news industry is incredibly competitive. Reach may have been able to reverse its revenue decline, but keeping readers interested going forward is going to be another challenge altogether. 

Still, the recent boost in profitability has allowed the group to pay down debt and reward shareholders with a dividend. It’s now on a firmer financial footing than it has been for some time. 

These are the reasons why I’d buy the company for my portfolio of UK shares. 

Green revolution 

The final company I’d buy is public transport operator National Express (LSE: NEX). Throughout the pandemic, consumers have been advised to avoid public transport. This decimated the organisation’s revenues.

As customers return, growth should return too. And there’s a more substantial tailwind working in the background. 

Public transport is going to play a crucial part in decarbonising the UK’s transportation system. This suggests demand for National Express’s services will expand in the long run. Driving is also becoming more expensive, which may push more car owners to use public transport as well. 

These are the reasons why I’d buy this recovery stock for my portfolio of UK shares, although this might not be suitable for all investors.

National Express’s recovery is still in its early stages. Another lockdown could set the group’s recovery back months. Rising fuel and wage costs may also hinder its recovery. I’ll be keeping an eye on these risks as we advance. 

With that in mind, here are two non-FTSE 100 shares I’d buy for my portfolio right now. 

UK shares to buy

The first company on my list is Moonpig Group (LSE: MOON). The online greetings cards and gifts retailer only recently came to the market, but it’s made a big splash since its landing. 

In the company’s financial year to the end of April 2021, group revenue increased 113% year-on-year and adjusted profit before tax rose 125%. These numbers are awe-inspiring, and I think they show the group’s true potential. 

While it is likely that Moonpig benefited from a number of one-off transactions due to the pandemic, as most bricks-and-mortar stores closed, the transactions have provided the company with valuable consumer data.

For example, it has 190m cumulative consumer transactions on its database, with 50m reminders set by consumers for events. This suggests the firm will benefit from repeat business as we advance. 

This potential for repeat business is why I would buy the stock for my portfolio of UK shares. 

That said, I think the company will see a drop in revenues and profits this year as the world returns to some sort of normal. This could have a negative effect on the stock price. Sales may also suffer as this is a competitive market, and competition is springing up all the time. 

Reach for growth 

The second company I would buy for my portfolio of UK shares is publisher Reach (LSE: RCH). The owner of various regional and national newspapers has reported explosive growth over the past two years. Management has been focusing on growing the group’s digital divisions. Thanks to these efforts, growth on the digital side of the business has offset declines in traditional media. 

Its first-half figures show the extent of the shift. For the 26 weeks to 27 June, group revenue rose 2.6% overall, with digital revenues increasing 43% and print revenues falling 5%. And as margins on the digital side are far wider than those for print, the group’s operating profit jumped 26% year-on-year. Its opening profit margin jumped from 19% to 23%. 

As the company’s digital transition continues, I think profits will continue to grow, and its share price should begin to reflect this. These are the reasons why I would buy the stock for my portfolio of UK shares. 

Challenges the enterprise may face as we advance include competition from other online publications and restrictions on online advertising and the use of digital data. These restrictions could increase costs and reduce overall profitability. They may also hold back growth in the long run. 

Today I’m looking at two UK shares that have risen by 100% or more in the past year. Often, winners keep winning. In investing, it can sometimes be psychologically difficult to buy shares that have increased a lot. But in my experience, it can potentially be rewarding.

Best shares to buy now

First on my list is Reach (LSE:RCH). Formally known as Trinity Mirror, Reach is a leading national and regional news publisher. Aren’t newspapers a declining industry? Yes, circulation for physical newspapers continues to shrink. However, digital readership is on the up.

And Reach’s digital business is exciting. It owns over 70 online brands spanning news, sport and showbiz. Like many online content sites, it makes its money from digital advertising. Typically, it does well when website visitor numbers rise. So it’s great to see its number of registered customers growing. In May, according to the company, it now stands at 6.2m customers, and “remains well on track to reach 10m by the end of 2022”.

Fine print

Its growth sounds encouraging. However, a word of warning. There is a risk that print revenues decline faster than it expects. In addition, digital sales could struggle to grow quickly enough to offset those print declines. These risks will need to be watched closely, but for now, the updates are encouraging.

Since I last wrote about Reach as one of the top shares to buy in November, its share price has more than doubled. And over and year it’s up by a whopping 350%+. In hindsight, I should’ve bought it last year. Nonetheless, I still think it could grow further and would consider buying it for my portfolio now.

An excellent update

When looking for the best shares to buy, it’s always encouraging to see positive trading updates. In particular I like to see companies reporting results that are “materially ahead of market expectations”.

So it was great to see Future (LSE: FUTR) mention those exact words in its recent trading update. Future is a global platform business for specialist media. According to the company, its content reaches over one in three adults online in both the UK and US.

Some of its brands might sound familiar. It owns TechRadar, Marie Claire, Tom’s Guide and many more magazine titles. Like Reach, its origins are in print media. But over the years, it has transformed its business into a digital-led, and diversified media company.

Looking to the future

Despite the positive results, bear in mind that economic uncertainties remain. The pandemic continues to change customer behaviour and can make it more difficult to predict, in my opinion. Also, the use of mobile devices continues to increase. Future will need to ensure it continuously adapts to evolving mobile technology.

Its share price is up by 20% since I wrote about this company in June. Over the past year, it’s up by around 180%. Given its strong business momentum, I think it could have further upside and consider it as one of the best shares to buy right now.