A couple of ideas - Feedback welcome

[WickedLester]

Here's a couple of stock ideas that i'm considering and wondered if any other Fools had an opinion. Both stocks were big COVID winners and it looks like the hangover from an exceptional year has led to them being sold down to levels at which they may be attractive again.

Halfords Group PLC (HFD)

As you can imagine they had an exceptional year in 2021 as everyone got on their bikes because they didn't have a job to go to and with a crunch in disposable incomes upon us they may be in for a tough couple of years but there is more to the business than just bikes, they are now trying to focus more on motor servicing and MOT's and the like.

The market cap is about £315m and the balance sheet is not too bad but not great, mainly due to a large lease liability on all their retail sheds. That aside if you assume that is never going to all fall due at once they have net cash.

First half pre tax profits were around £58m and in a recent trading update they guided that they expected full year profits to be in the region of £80m-£90m. Assuming the second half performance is more indicative of a normal year then over a full year that would be pre tax profits of £40m-£60m which I think would leave them on an undemanding multiple. Cashflow also seems respectable.

Synthomer PLC (SYNT)

https://www.synthomer.com/?region=EUROPE&

They're a speciality polymer manufacturer and had a truly exceptional 2021 due to the boom in sales of medical gloves. Sales and profits are now returning to more normal levels. The market cap is about £1.15bn and this is after they raised £200m and spent $1bn on an acquisition so I expect net debt to have risen somewhat. Once again the balance sheet was not too bad (I don't know what it will look like after that acquisition). In 2020 the business made an underlying profit before tax of £160m so depending how that $1bn acquisition performs these look to be on an undemanding multiple to me. Cashflow seems fine to me.

Both of these companies seem to warrant a look to me at current prices, do any Fools have an opinion?

[WickedLester]

Well it's been a mixed bag for these two. Halfords has performed relatively well but poor old Synthomer has had an absolutely torrid time.

I think the price was around £2.40 when I made this post. It now sits at just 90p after a profit warning today.

https://www.investegate.co.uk/synthomer ... 00080733B/

Fortunately I haven't bought any to date but will now give them some real consideration. The elephant in the room appears to be the debt which has ballooned to about £900m. I would be happy to see them suspend the dividend for a couple of years to help get a grip on this. I think the market cap, however, is now just around £450m so there is the potential for substantial gains if the company survives this difficult period.

I think it's a quality company but all that debt at a time of rising interest rates and a looming recession mean that I won't invest much if I do decide to have a punt.