Is the FTSE 100s Royal Mail one of the best shares to buy now?
When I look at the indicators for quality, value and momentum, Royal Mail (LSE: RMG) is flashing buy me like a bright neon sign. How the companys fortunes have changed since the almost universally negative media coverage of the stock from around a couple of years ago. Back then, the business was dogged by poor industrial relations with its workforce, shrinking profits, rising costs and difficult market dynamics. The letter post business was in serious decline. And the parcel post operation looked to me like a poor, low-margin alternative. I didnt see much potential for a turnaround at Royal Mail. 5G is here  and shares of this sleeping giant could be a great way for you to potentially profit! According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air And if you click here well show you something that could be key to unlocking 5Gs full potential... But there has been a turnaround. And its remarkable because even that most seasoned of successful investors, Warren Buffett, tends to avoid potential turnaround situations. In 1979, for example, he wrote: Both our operating and investment experience cause us to conclude that turnarounds seldom turn.  Mentally, I wrote off the stock around the time of my previous article about the company in 2019. However, some prescient investors called the turn in the companys fortunes. For example, Motley Fool writers Manika Premsingh and Roland Head went against the crowd near the stocks lows and suggested it could be a decent buy. Its clear the cheap valuation back then was a big influencer for those investors. But they also sniffed out the potential for a turnaround in the companys fortunes. And some institutions started buying too. For example, RWC Asset Management established a new notifiable position in the shares around 10 January 2020. And Vesa Equity Investments increased its holding around 1 May 2020, and has added more stock to its portfolio since. Improving news flow  The company news flow began to get better. There was progress regarding industrial relations, a new CEO, and the execution of the restructuring and cost-control programme. But a big factor in Royal Mails improving performance has been the coronavirus pandemic, which pushed up demand for parcel post. Earnings rebounded in the trading year to 2021 and the share price shot up. From its coronavirus low around the end of March near 125p, the stock has risen to todays price of around 580p. However, my assumption is the fast gains from the share price are now behind us. City analysts expect earnings to dip by three or four per cent in the current trading year and to recover that lost ground the following year to March 2023. In other words, earnings will likely be essentially flat. But, of course, those analysts could be wrong and Royal Mail may surprise again and deliver meaningful growth in earnings. Nevertheless, Im not tempted to buy the stock now for growth in earnings. And, despite the company maintaining its shareholder dividend payments, Im not attracted to the company as an income share. If the business makes the 24p per share payment predicted for the full year to March 2023, the dividend will be back to 2018 levels. Meanwhile, the forward-looking yield works out at about 4%. However, Royal Mails business remains lower margin. And Id rather seek out my long-term investments from sectors with more robust economics.