Beware these bargain FTSE stocks! Here’s why I’m avoiding these 2 dirt-cheap shares today

Beware these bargain FTSE stocks! Here’s why I’m avoiding these 2 dirt-cheap shares today

July 5, 2021 dltbsyjqzoag 0

first_imgBeware these bargain FTSE stocks! Here’s why I’m avoiding these 2 dirt-cheap shares today I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. See all posts by Harvey Jones Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Everybody loves to buy bargain FTSE stocks, but you have to tread carefully. Some bargains are just too risky. Like these two.The FirstGroup (LSE: FGP) share price is down more than 13% this morning after it reported a statutory operating loss of £152.7m in the year to 31 March. That starkly reverses last year’s £9.8m profit. Revenues rose 8.8% to £7.75bn. But pre-tax losses nonetheless climbed sharply, from £97.9m last year to a hefty £299.6m.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…The FTSE 250-listed bus and rail operator, which operates in the UK and US, blamed losses on a North American self-insurance provision, Greyhound impairment charges, restructuring and reorganisation costs and, of course, Covid-19.Bargain FTSE stocks I’d avoidAlthough the pandemic only affected the end of the year, it still cut average passenger volumes by around 90% by the end of March, with international lockdowns in place and the North American schools it serves closed.Chief executive Matthew Gregory said guidance for this financial year is simply “not possible” as travel volumes have “reduced very substantially.” As the US struggles with the first wave of coronavirus infections, that looks set to continue.Gregory says FirstGroup’s long-term fundamentals remain “sound.” It has fiscal and contractual support for running essential services during the pandemic, but admits to “material uncertainty as to the continuation of these measures.” It also has committed undrawn liquidity of around £850m at the end of June.The FirstGroup share price looks like a FTSE bargain, trading almost 70% below its pre-pandemic peak. But the road to recovery looks too long, bumpy and fraught with potholes for me. Plans to sell its North American operations could stall, given current uncertainties. Investors are selling. I’m not buying.I wouldn’t buy this share eitherNow here’s a bargain FTSE 100 stock I’d love to buy, but won’t. Coincidentally, insurer Prudential (LSE: PRU) is also looking to reduce its US exposure, to concentrate its firepower on Asia instead. It’s selling a stake of it US arm Jackson to Athene Holding for $500m. Athene will also reinsure a $27.6bn portfolio of annuity liabilities.Prudential has already backed away of the UK, selling UK fund management arm M&G and £12bn of its UK annuity portfolio. Trading at less than nine times earnings, this stock looks like a classic FTSE 100 bargain. But here’s why I wouldn’t buy it.The Prudential share price remains vulnerable to political uncertainty in Asia, as China cracks down on Hong Kong democracy. That’s a problem, given that revenues from the territory make up a third of sales. Locals have been buying less insurance while China-based customers have stayed away, due to fear of hostility towards mainlanders.On Monday, I warned against investing in Asia-focused banks HSBC Holdings and Standard Chartered. This morning, shares in HSBC plunged on reports that the White House may undermine the peg between the Hong Kong and US dollars.This added layer of uncertainty means I wouldn’t buy Prudential either. Shame. Otherwise it looks like a top FTSE 100 bargain. Enter Your Email Address Simply click below to discover how you can take advantage of this.center_img Image source: Getty Images Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Harvey Jones | Wednesday, 8th July, 2020 | More on: FGP PRU Our 6 ‘Best Buys Now’ Shares Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Prudential. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. “This Stock Could Be Like Buying Amazon in 1997”last_img

 

Leave a Reply

Your email address will not be published. Required fields are marked *