fbpx

A dirt-cheap UK share under £3 to buy!

PZ Cussons (LSE: PZC) used to be one of the most reliable earnings generators out there. Largely speaking, demand for its soaps and shower gels remains pretty robust at all points of the economic cycle. Its highly popular brands like Imperial Leather and Carex gave it protection from competitive threats, too. This robustness has allowed this cheap UK share to lift the annual dividend for an astonishing 44 years on the bounce up until 2017.

The consumer goods giant hasn’t had things all its own way in more recent years, however. Sure, the pandemic gave sales of its soaps a significant boost over the last 18 months or so. But the problem of soaring costs and particularly harsh economic conditions in its crucial Nigerian market has had more of an impact on investor returns in recent years. PZ Cussons was forced to rip up its progressive dividend policy a few years back as profits sank.

PZ Cussons isn’t out of the woods just yet. Cost inflation remains a big problem, while currency headwinds also pose an ongoing threat. But under new chief executive Jonathan Myers, I think the business could be on the cusp of recovery. Unusually for the business it sourced external candidates to fill the role of CEO. I think Myers, who has a 20-year stint with Proctor & Gamble on his CV alongside shorter stints with Kellogg’s and Avon, could be the person they’ve been looking for.

Dividends rise again!

Recent news flow coming from PZ Cussons of late suggests that the ship is indeed beginning to turn around. In July, the business hiked its full-year profits forecasts for the period then just ended (to May 2021), thanks in large part to a 7% year-on-year revenues jump. Adjusted pre-tax profit ending up soaring 11% year-on-year, to £68.6m.

Rising sales weren’t the only cause for celebration. Adjusted operating margins at the business rose 60 basis points year-on-year to 11.8%. Net debt levels at the company have also been falling rapidly. These dropped almost £19m in the 12 months to May, to £30.7m.

The business had the confidence to resurrect its progressive dividend policy following last year’s strong all-round result. It raised the full-year payout to 6.09p per share from 5.8p the year before. Could there be more to come?

Why I’d buy this cheap UK share

All things considered I think PZ Cussons could be a great, dirt-cheap share for me to buy. The eternal popularity of its megabrands remains a big pull, and especially as the business is turbocharging investment in them to help them retain their allure. Marketing spending on these so-called ‘must win brands’ jumped 40% in fiscal 2021.

I also like PZ Cussons’ broad geographic footprint that gives it excellent long-term sales opportunities. As I say, trading in Nigeria has been a problem of late and could continue to be problematic. However, I think its broad wingspan across emerging markets will reap huge rewards on a broader basis as personal wealth levels rise. And this could help make investors like me terrific returns.

The post A dirt-cheap UK share under £3 to buy! appeared first on The Motley Fool UK.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

More reading

Is the skyrocketing Marks & Spencer share price a sign to buy?
Here’s 1 of my best stocks to buy now with £1,000
Here’s how FTSE 100 stocks could earn me up to a 30% dividend yield over time
The Darktrace share price plunges 30% in a month. What’s up?
2 in 3 people don’t know their pension is invested: are you one of them?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended PZ Cussons. 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.

Leave a Reply

%d bloggers like this: