Advice on buying shares

ozzycoz

Hi all,
Just a quick one, I would like to buy shares in a certain company but as I've never bought any before, what would you say the best, easiest and cheapest way to do so? I don't intend on buying and selling loads of different shares, just occasional.
Am I best looking at platforms like Cavendish etc....any suggestions?
Thanks for your help

bowlhead99

It depends on what the 'certain company' is. 

The service offering of Cavendishonline  most frequently discussed here is to offer you a route to buy investment funds offered by FundsNetwork.

If what you want to do is just to buy a share of a company trading on the London Stock Exchange, you don't need a funds platform, and could instead use an execution-only online stockbroker such as Jarvis's x-o.co.uk.  They will give you an ISA account to hold your shares, and don't currently have an annual account maintenance fee.

However, if the company you were looking to buy is (for example) only traded on the New York or German or Hong Kong stock exchange, x-o couldn't help because they only trade shares listed in London and settled through Crest. 

Halifax Sharedealing and sister company IWeb are also cheap to use if you don't want much in the way of ongoing cost or service and they do allow some overseas markets. Others offer more, have smartphone apps or other features you might like, but if you are only going to make sporadic purchases you don't need anything too clever. As a general rule it's best to stick to reputable brokers / platforms who have been around for years and are profitable, so that they are still around when you want to sell

ozzycoz

Hi there, Thanks for the reply, the company is on the London Stock Exchange and the company in question own a large chain of Restaurants and in the UK and are offering discount vouchers for people who hold more than 250 shares., but only if bought before end of this month. 
I was going to buy some last year but didn't bother, the price then was three times what they are now. As the current price is low I feel the time to buy is right

bowlhead99

The reason the current price is low is that chain restaurants  in major population centres very heavily on good volumes of customers coming in to cover their fixed overheads (including interest on all the debt) and staff costs, not to mention having sufficient staff available to man them, even if they can afford the supply chain disruptions that threaten to stop them having something to sell. 

Some relatively boring businesses (where employees just sit in an office all day) will have a tough time with coronavirus as if it goes as badly as it might, studies show a high proportion of people will either be unable to work (e.g. sick) or if physically able to work, be unwilling to work (issues with public transport, childcare etc and personal perceptions of the risk of coming to work, even if only working with colleagues rather than needing to work with the general public). Staffing issues could be huge, but at least some people can work remotely from home in this day and age with good telecoms etc. 

But in a restaurant, the staff can't wait tables or cook meals from home. They have to be able to (and want to) come in to the city and work with the general, sneezy, public. And potential customers who are at home with sick families, or have had their income disrupted, or are being generally discouraged by government and media from going out and mingling with the great unwashed, or working from home rather than from the city centre office locations, or shopping online rather than going to the high streets, or not needing to travel to that part of town because the sporting event or show got cancelled etc etc... will not be 'passing trade' for fast/casual restaurants. And while the passing trade dries up, the bookings for parties or other events for groups will simply go on hold everyone is willing/able to attend (whether business customers cancelling events and client entertaining, or families saving their pennies or looking out for their health, parents who would otherwise have been taking ten primary school kids for a childrens party on a weekend, etc etc). 

If you cancel a restaurant visit, you don't  make it up by going to the restaurant twice the next day. The money you were going to give the business is lost by that business, even though its costs still exist.

Some parts of the restaurant sector were struggling in the last couple of years for a whole variety of publicised issues like extra competition, changing habits etc. Sectors like travel and hospitality can be a bad thing to be involved in during a recession - restaurants are luxuries and nobody needs another Wagamama , Chiquito or Frankie & Bennie's. If the cause of the economic downturn is a serious pandemic, 25% or 50% or 75% discount off the food bill or the share price may not be enough to make them a good deal.

Heedtheadvice

....and you did not even mention the B word or the I word reducing or limiting the availability of staff in the hospitality (or other) industries reliant on available foriegn workers for a good proportion of their staff! .....impressive reasons nevertheless 99! A good explanation of factors other than just price and discounts available (for the present) to be the sole reason to own a share!

Used to have shares in Stakis then Hilton (that both gave excellent discounts -not bought because of that!) but morphed into gambling. Got shut of those (on ethical grounds) and made a reasonable profit. Did not use the services a lot so the handsome discount was a nice bonus at the time. Maybe the OP goes out there for breakfast llunch and dinner daily?

So does that make them a buy or avoid for the OP?

bowlhead99

Heedtheadvice said:

....and you did not even mention the B word or the I word reducing or limiting the availability of staff in the hospitality (or other) industries reliant on available foriegn workers for a good proportion of their staff!

Yes, Brexit is bad for the casual dining crowd because not only does it cut the number of potential customers but also the available workforce. If you stem the flow of young workers looking for jobs which don't require formal qualifications and a high score on a points-based immigration system, you increase the cost or reduce the availability of the labour that gets food made, taken to tables and the dishes washed afterwards. 

Still, that has been on the cards for the last 3+ years so uncertainties around the exact form of Brexit were already in sector share pricing. You could say I covered it with, "Some parts of the restaurant sector were struggling in the last couple of years for a whole variety of publicised issues like extra competition, changing habits etc".  The 'B word' is certainly one of the variety of publicised issues and will change habits of diners and workers by, for one, stopping them getting into the country

The Restaurant Group shares down another 10+% this morning despite the FTSE250 and FTSE100 being up. At some point of the price continuing to fall, it may become an attractive price, if you presume the business will survive a drought of customers and employees through having a strong enough balance sheet. You might instead presume that it won't.

Albermarle

I was going to buy some last year but didn't bother, the price then was three times what they are now. As the current price is low I feel the time to buy is right

The problem with buying individual company shares , is that there is always the possibility they go bankrupt and the shares then have zero value and you have lost 100% of your investment ( and the discount vouchers would be worthless)  For reasons explained above buying shares in a restaurant chain in the current environment could be a brave move . 

Freecall

Ozzycoz, although there are some interesting comments above regarding the pros and cons of investing in a restaurant chain, the issues raised will all be ‘priced-in’ to the current share price.  If you buy at that price it may turn out to be a good or bad investment (only time will tell) but the advantage you have is that your ‘return’ will be greater than the market as a whole.

Institutional investors, which effectively set the trading price, cannot get the benefit of customer discounts which you seek.  This means that the market price will generally be slightly lower than its true value to you.  Therefore, if you really can take advantage of the discounts, the purchase is probably a worthwhile thing to do.

This all assumes that the sum of money involved is trivial relative to your overall wealth of course.

Reaper

ozzycoz said:

the company in question own a large chain of Restaurants and in the UK and are offering discount vouchers for people who hold more than 250 shares.

Beware most nominee accounts doesn't pass on the perks to you. I don't think X-O will but it sounds like HL might:
https://www.hl.co.uk/shares/shareholder-perks
I wouldn't advise buying a share purely for the perk. Buy only if you think the share itself worth holding and check the charges for whichever platform you go for.

Thrugelmir

Reaper said:

ozzycoz said:

the company in question own a large chain of Restaurants and in the UK and are offering discount vouchers for people who hold more than 250 shares.

Beware most nominee accounts doesn't pass on the perks to you. I don't think X-O will but it sounds like HL might:
https://www.hl.co.uk/shares/shareholder-perks
I wouldn't advise buying a share purely for the perk. Buy only if you think the share itself worth holding and check the charges for whichever platform you go for.

P.S. I've just figured out the share you mean is "Restaurant Group Plc"

X-O charge a flat £20 to transfer a holding into certificated form. Default is always nominee account. 

bowlhead99

Thrugelmir said:

Reaper said:

ozzycoz said:

the company in question own a large chain of Restaurants and in the UK and are offering discount vouchers for people who hold more than 250 shares.

Beware most nominee accounts doesn't pass on the perks to you. I don't think X-O will but it sounds like HL might:
https://www.hl.co.uk/shares/shareholder-perks
I wouldn't advise buying a share purely for the perk. Buy only if you think the share itself worth holding and check the charges for whichever platform you go for.

P.S. I've just figured out the share you mean is "Restaurant Group Plc"

X-O charge a flat £20 to transfer a holding into certificated form. Default is always nominee account. 

Not that it changes the concept at all, but ito avoid shopping around over a few pounds, X-O's charge for re-registration is £15+VAT ( =£18) rather than £20.

If you want to just stick a share certificate in your cupboard and receive annual reports and discount books straight to your home address, without retaining an online nominee service to provide an easy exit route when you want to eventually sell the shares, X-O's service is an easy way to do it. 

Of course you might find that TRG decides next year that as £250 shares is less than a couple of hundred quid of investment value they are going to increase the threshold for the perk to 251 shares or some other greater number.  So even if the shares don't tank to nothing, the perk might.  While you are at it on buying hospitality businesses at bombed-out prices for perks, I'd note that Mitchells and Butlers gives discount books at the end of each year too.  A while until the next one comes around, but the share price has fallen back to about as low as it's been in 2018 or 19.