Due to current macroeconomic headwinds and the tragic events in Ukraine, some FTSE stocks have been on a downward trajectory in recent months. I believe there are some bargains out there. One that caught my eye recently is Tyman (LSE:TYMN). Let’s take a look to see whether I should buy or avoid the shares.
Windows and doors
As a quick introduction, Tyman manufactures and sells windows, doors, other access solutions, as well as other components linked to these products for the construction industry. With a presence in over 16 countries globally, the firm employs over 4,000 people.
So what’s happening with Tyman shares currently? Well, as I write, they’re trading for 216p. At this time last year, the stock was trading for 422p, which is a 48% decline over a 12-month period.
A FTSE 250 stock with challenges ahead
I believe the biggest challenge that Tyman faces is the current headwinds. These include soaring inflation, the rising cost of materials, as well as the global supply chain crisis. Rising costs will put pressure on profit margins. If Tyman increases its prices, it could risk losing custom. In addition to this, supply chain constraints could hamper its ability to manufacture and sell its products.
Next, the current cost-of-living crisis brought on by the issues noted above could see demand for Tyman’s products fall. This applies to both domestic and commercial customers. A drop in construction projects due to budget constraints could see performance and returns fall for Tyman.
Why I like Tyman shares and my verdict
So to the bull case then. Firstly, I am buoyed by Tyman’s recent performance track record. I am conscious that past performance is no guarantee of the future. However, looking back, I can see it has doubled profit since 2019 due to increased demand when the pandemic struck and many splurged on DIY projects while at home. It has also decided to reinvest this into growth and enter new markets, which is pleasing to see and could support future returns.
Next, Tyman shares would boost my passive income stream through dividend payments. Its current dividend yield stands at 6%. This is higher than the FTSE 250 average of 1.9%. I am aware that dividends can be cancelled at any time, however. Furthermore, the shares look value for money right now on a price-to-earnings ratio of close to nine.
Finally, despite shorter-term demand potentially falling, I believe Tyman could benefit from long-term demand for its products. This is because infrastructure spending throughout the world is only increasing. A core part of this is in the construction of homes, office buildings, hospitals, and more. All of which require products Tyman sells. It could leverage its global profile to boost its performance and returns.
In conclusion, I am not worried that Tyman shares will continue to fall. In fact, they have fallen into the bargain category for me. With an extensive profile, a passive income opportunity, and active growth prospects, I would buy Tyman shares for my holdings for long-term growth and returns. I do expect to encounter some volatility in the shorter term, however.
The post Could this FTSE building stock be primed for long-term growth and returns? appeared first on The Motley Fool UK.
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Tyman Plc made the list?
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
- If I’d invested £1,000 in IAG shares at the start of 2022, here’s what I’d have now
- 2 stock market bargains I’d buy to boost my passive income!
- I’d invest £50 a week in a Stocks and Shares ISA to try to make a million
- Should I buy this REIT to boost my passive income with its 6%+ yield?
- Is the Jupiter dividend yield of 17% sustainable?
Jabran Khan has no position in any of the shares 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.