How to Buy Stagecoach Shares UK – with 0% Commission

Transit operator Stagecoach Group plc has been hit hard by the coronavirus pandemic. The company saw ridership on its buses and trams drop by more than 80% in the United Kingdom, and nearly entirely during the national lockdown. The same story played out around the world, severely hampering Stagecoach’s ability to create revenue this year.

However, there have been signs of light for Stagecoach. This company received subsidies from the UK government to keep public transport running, which has helped it survive the year without taking on new debt. On top of that, the company reported in October that it has restored over 90% of its bus service and that consumer demand is bouncing back faster than expected.

So, is now the right time to buy Stagecoach shares? We’ll take a closer look at this stock and explain how to buy Stagecoach shares in the UK with no commission.

Step 1: Find a UK Stock Broker That Offers Stagecoach Shares

Stagecoach is a UK bus operator and former rail franchise operator that is a constituent of the FTSE 100 index on the London Stock Exchange (LSE), so most UK stock brokers offer trading on this company’s shares. That said, there are a couple additional things to consider when choosing the right broker for your needs.

To start, look at the price. We recommend 0% commission stock brokers, since eliminating commissions can save you a lot of money in the long run.

You should also consider the trading tools your broker provides. Technical charts, analyst research, and news feeds are all important for successful trading.

Finally, look closely at factors like regulation and customer support. It’s important to know that your broker will be there when you need help and that the platform is trustworthy.

With that in mind, let’s take a closer look at two of the top UK brokers you can use to buy Stagecoach shares today.

1. Fineco Bank – Commission-free Trading on Thousands of Shares

Fineco Bank isn’t the most well-known broker in the UK, but this Italian bank and CFD broker has been around for more than 20 years. Although it’s a relatively new player in the UK, there’s a lot to like about Fineco. To start, you can trade thousands of shares – including nearly all of the stocks on the FTSE 100 – as CFDs with 0% commission.

Fineco Bank also offers share dealing, although this isn’t commission-free. UK share deals cost £2.95 each, while US share deals cost $3.95 each. In addition, Fineco offers commission-free forex trading, commodity trading, index trading, and bond trading through CFDs.

One of the best things about this broker is its trading platform, PowerDesk. The PowerDesk software comes with dozens of built-in technical indicators and a market news feed. Plus, the platform is extremely flexible, allowing you to examine multiple charts simultaneously and take advantage of a second monitor if you have one.

Fineco has some additional research tools, such as a stock screener. The broker also has frequent webinars led by its analyst team, which are good opportunities to find out more about top stocks.

Fineco Bank is regulated by the Bank of Italy and is a publicly traded company, so it should be considered highly trustworthy. The broker offers support from 8 am to 9 pm Monday to Friday by phone, email, and live chat.

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Step 2: Research Stagecoach Shares

Before you buy Stagecoach shares in the UK, it’s important to know as much as possible about this company. So, let’s examine this company’s history and the outlook for Stagecoach shares in the aftermath of the COVID-19 pandemic.

Stagecoach Share Price History & Market Capitalisation

Stagecoach was formed in Perth, Scotland in 1976 and became a major player in UK transportation in the early 1980s as the national bus system was deregulated. Stagecoach grew throughout the 1980s and 1990s, taking over an increasing share of local bus lines in the UK and moving into the UK rail industry. The company also expanded internationally to the US, Europe, Australia, and New Zealand.

Stagecoach shares began trading on the London Stock Exchange in 1995 at a price of 42 pence apiece. The shares’ fortunes followed the broader fortunes of the UK stock market, peaking in 1998 and 2008 before falling due to the ensuing recessions. From a low of 111 pence in the wake of the 2008 market crash, Stagecoach shares exploded in value to over 400 pence by 2015.

However, Stagecoach shares have been in a decline for the past five years, in part because the company sunk money into rail services that failed to turn a profit. At the start of 2020, Stagecoach shares were trading at just 160 pence. By the middle of the UK lockdown, the share price had tumbled to a low of just 51 pence. The stock continued to slide throughout the summer, ultimately bottoming at 32 pence in November.

Stagecoach shares bounced on news of promising COVID-19 vaccines from Pfizer and Moderna. The company’s shares are currently trading at 78 pence, a more than 100% gain in the span of just a few weeks.

At the current share price, Stagecoach has a market cap of £435 million. The company reported earnings per share (EPS) of 22.1 pence in 2019, although the 2020 EPS is expected to be much lower and analysts are expecting an EPS of 7.8 pence next year.

Based on 2019 earnings, Stagecoach’s price-to-earnings (P/E) ratio is a very attractive 3.5. If you calculate a forward P/E based on expected 2021 earnings, the P/E ratio is still just 10.

Stagecoach Shares Dividend Information

Stagecoach paid out a dividend yield of 7.7 pence per share in 2018 and 2019, which equated to a yield between 5% and 7%. This company  has long been considered a reliable dividend stock in the UK.

However, Stagecoach canceled its dividend for 2020, as did many other companies in the FTSE 100. It’s not clear if or when this dividend will return – it is unlikely to return before 2022 at the earliest.

Should I Buy Stagecoach?

Stagecoach shares have been battered by the coronavirus pandemic, which came at the end of a five-year run of disappointing earnings for the company. While Stagecoach’s performance over the past several years is less than confidence inspiring, there are several reasons to think that Stagecoach is an excellent value investment right now.

Stagecoach Shares are Still Cheap

Although Stagecoach shares have more than doubled in value since the start of November, this company is still trading at an extreme discount. There is every reason to believe that Stagecoach could match its 2019 earnings by 2022, which means that investors today could pick up shares of this company at just 3.5 times future earnings.

Even if you base your analysis off of the 7.8 pence EPS that analysts expect next year, Stagecoach shares are trading with a P/E ratio around 10. That makes it an undervalued stock no matter what way you look at it.

Ultimately, Stagecoach is only a good stock if the company can maintain or grow its earnings over the long term. But based on fundamental valuation alone, Stagecoach looks extremely underpriced right now.

Ridership is Recovering

One important thing that investors largely ignored in October was the good news in Stagecoach’s most recent market report. By that time, the company had restored 93% of its normal coach service and revenue from ridership was back to more than 50% of normal.

While those are terrible numbers in the absence of a pandemic, in the context of COVID-19 they’re quite impressive. Even during the height of the pandemic, Stagecoach has managed to keep its bus lines running and to bring in a reasonable chunk of its normal revenue. Notably, Stagecoach has fared much better than most airlines, which took on new debt and are burning through cash every day.

To be sure, the latest lockdown will hurt ridership in the short-term. But over the long-term, Stagecoach’s rapid recovery points to a more sustained bounce in ridership into 2021 and beyond. That will help Stagecoach improve its earnings situation more quickly so that investors can see a return in the next few years.

Re-focusing on Coach

The other important thing that Stagecoach has going for it is that it finally has a direction again. For several years, the company was mired in investments in rail service that didn’t pan out into a profitable business division. Stagecoach made clear at the end of 2019 that it would no longer be pursuing new rail services.

That’s good news for investors because the company’s bus and coach lines are far more profitable. Stagecoach has done an extremely good job at cutting coach costs and maximising revenue per customer. So, a renewed focus on bus and coach service could produce better profit margins for Stagecoach in 2021 compared to 2019.

Stagecoach Shares Buy or Sell?

Stagecoach isn’t a blockbuster company by any means. The company was hit hard by the COVID-19 pandemic and has experienced years of losses from its core business that have hurt the share price.

That said, we think that the market has largely overreacted to Stagecoach’s problems in the wake of the pandemic. Stagecoach has managed to get through the crisis without taking on new debt and has already seen ridership return to more than 50% of normal.

Despite that, Stagecoach shares are trading at just 10 times the company’s expected 2021 earnings. That’s an attractive value in any situation, and it only helps that a quick vaccination campaign could see Stagecoach perform even better next year. At the current valuation, we think that Stagecoach represents a bargain opportunity that will pay off nicely for patient investors.

The Verdict

Transportation company Stagecoach has faced a difficult year, with the coronavirus shutting down leisure coach travel and limiting ridership on intra-city bus lines. However, the company is poised for a relatively rapid recovery next year and the share price doesn’t yet reflect that potential. That creates a value opportunity for patient investors, who can pick up Stagecoach shares now at a very cheap price and benefit as the company regains its footing in the years ahead.

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