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Britain’s Warren Buffett just bought this FTSE 250 stock. Should I buy it too?

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first_img Our 6 ‘Best Buys Now’ Shares Edward Sheldon, CFA | Tuesday, 7th January, 2020 | More on: PZC ProfitabilityIn a recent trading update, the group told investors that “challenging market conditions across key geographies led to a decline in first-half revenue and operating profit compared with last year.”After revenue growth, I tend to take a look at profitability as I like companies that are highly profitable. I look at metrics such as return on equity (ROE), and operating margin. What concerns me here is that both of these metrics have deteriorated recently. That’s not a good sign. 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. Simply click below to discover how you can take advantage of this. Revenue (£m)821809740689653 I’ll also point out that analysts are downgrading their earnings forecasts for this year, which is not ideal.Dividend growthWhen it comes to dividend stocks, one of the first things I look at after the yield (which is about 4% here) is the dividend growth track record. I like to see at least four consecutive increases. Again, I can’t say that I’m overly impressed here. Over the last three years, PZC has paid three identical payments of 8.28p per share. Often, a dividend freeze leads to a dividend cut. Year (to 31 May)2016201720182019 “This Stock Could Be Like Buying Amazon in 1997” 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. Portfolio manager Nick Train (who is often referred to as ‘Britain’s Warren Buffett’) is generally regarded as one of the UK’s top stock pickers. Over the last decade, his funds have smashed the market by a wide margin.Recently, it was revealed that Train has added a new UK stock to his portfolios (his first such purchase since 2010). Given his incredible track record, should I follow him and buy it for my own portfolio?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…FTSE 250 stockThe stock that I’m referring to is FTSE 250 consumer goods firm PZ Cussons (LSE: PZC), which owns a number of well-known brands such as Imperial Leather and Original Source. Given Train’s focus on brands within his portfolios (he owns a number of companies that have very strong brand power including Unilever, Diageo, and Heineken) I can understand why he sees appeal in the £894m market-cap company.Looking at PZC’s recent share price action, it appears that a number of investors have already bought the stock after hearing about Train’s purchase. But does it meet my own investment criteria?Revenue growthOne of the first things I look for in a stock, whether it’s a dividend stock or a growth one, is revenue growth. Without revenue growth, it’s a struggle to increase earnings and dividends – which has implications for share price expansion.Looking at PZC’s revenue growth, I can’t say that I’m impressed. As you can see in the table below, over the last few years, revenue has been trending down, and analysts expect a further drop this year. Year (to 31 May)20162017201820192020 (e) Image source: Getty Images center_img Edward Sheldon owns shares in Unilever and Diageo. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK owns shares of PZ Cussons. The Motley Fool UK has recommended Diageo. 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. Operating margin10.911.28.86.3 Year (to 31 May)20162017201820192020 (e) Return on equity14.213.59.16.1 ValuationFinally, turning to the valuation, PZC currently trades on a forward-looking P/E ratio of 17.1. I see that as a little expensive, given the company’s recent performance.Should I buy?All things considered, I’m going to leave PZ Cussons alone for now. While the stock could turn out to be a good long-term investment for Train, I think there are better stocks to buy right now. Enter Your Email Address Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Britain’s Warren Buffett just bought this FTSE 250 stock. Should I buy it too? See all posts by Edward Sheldon, CFA 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. Dividends (p)8.118.288.288.288.31last_img


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