Given the strong performance of global equity markets in 2019, I’m pretty happy with the performance of my own portfolio over the last 12 months. A number of stocks I’ve held for a while have generated solid returns while most of the stocks I’ve bought during the year have performed quite well.
That said, I’m kicking myself for not buying a few stocks that I analysed throughout the year. Here’s a look at three companies I regret not buying.
Asset manager Impax (LSE: IPX), which focuses on sustainable investment strategies, is a stock that I’ve been interested in for a while. The reason for this is that interest in sustainable investing is increasing at an exponential rate right now.
Back in late October, IPX shares were trading at around 260p and the P/E ratio was around 20. That looked quite appealing to me and in a report on 24 October, I said that the stock was a ‘buy’. But unfortunately, I didn’t buy the stock myself. I regret that now, as the share price has climbed around 40% since then to 369p on the back of strong full-year results in which assets under management climbed 21% for the year.
Would I buy Impax now? Probably not, to be honest. Given that the forward-looking P/E has climbed to 30, there’s not much value left, in my view. For now, the stock will remain on my watchlist.
Restore (LSE: RST), which provides essential services such as document storage and shredding to offices and workplaces, is a stock that was well and truly beaten up in the final quarter of last year. Indeed, by early 2019, its P/E ratio was just 10 – an absurdly cheap valuation given the company’s growth.
When I covered Restore on 18 March at 295p, I said that the stock was a ‘buy’ and that it deserved to trade on a P/E ratio of at least 15, meaning there could be 50% upside. However, I didn’t buy it myself and I regret it. Since then, the stock has soared to 554p on the back of strong results, which means that it has gained nearly 90%.
Is there any value left now? Well, currently, analysts expect the group to generate earnings of 29.4p for next year. That puts the stock on a forward P/E of 18.8. That’s not outrageously expensive, however, it’s also not a bargain valuation.
Finally, FTSE 250 property group Workspace (LSE: WKP), which provides flexible office, co-working, and meeting room solutions to fast-growing, early-stage companies in London. I listed WKP as my top stock for February but never bought it myself.
Like so many other UK-focused companies, Workspace was hit by Brexit uncertainty throughout the year and there were several occasions when you could have picked the stock up for around 800p with a yield of 4%+. In hindsight, that was a bargain. Today the shares change hands for over 1,200p, meaning they’re 50% higher. With the forward-looking P/E ratio now at 26, the stock looks fully valued, in my view.
Ultimately, the takeaway here is that short-term share price weakness can present fantastic buying opportunities. Throughout the year, WKP released some strong results and raised its dividend significantly, but this wasn’t reflected in the share price. If only I’d followed Warren Buffett’s philosophy and loaded up when others were fearful…
Edward Sheldon has no position in any stocks mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.
Motley Fool UK 2019