Moving lower

The market reacted badly to insurance play Beazley’s (LSE: BEZ) announcement on Thursday that it plans to relocate its headquarters from Dublin to London. Shares in the business were last dealing 5% lower from Wednesday’s close.

Beazley — which moved to the ‘Emerald Isle’ six years ago — advised that the plan “will simplify the management and decision making of the group and allow new Beazley shareholders access to a UK dividend stream.” The firm added that there should be no changes to its tax rate following legislative changes in the Finance Act 2012.

A vote will be held on the issue on 24 March. But regardless of the outcome of next month’s meeting, I believe a backcloth of rising competition and falling rates in its markets makes Beazley a risk too far at the present time.

Indeed, the City expects the insurer to endure a 23% earnings slip in 2016 alone, and further dips are predicted further out. I do not believe a consequent P/E rating of 13.8 times sufficiently reflects Beazley’s high risk profile.

Supermarket struggles

The newsflow surrounding embattled grocer Morrisons (LSE: MRW) just keeps getting worse and worse.

Discounter Aldi pulled its tanks directly onto the Bradford firm’s lawn this month with its new ad campaign, which claimed it undercuts the so-called ‘Big Four’ supermarkets on price by as much as 40%. The German giant also announced plans to open a further 80 stores by the end of the year as part of its aggressive expansion scheme.

Morrisons has persistently failed to stem the march of both Aldi and Lidl, with price reductions of its own failing to dent the rising popularity of its discount rivals. Indeed, the supermarket has introduced little more than token initiatives — like the rollout of wi-fi ‘hotspots’ and discounted coffee in its stores this month — to draw back customers.

Unsurprisingly the City expects Morrisons to have suffered yet another earnings fall in the year to January 2016, and while a 21% bounceback is predicted for the current period, I believe such predictions are fanciful at best amid rising competitive pressures. Besides, a consequent P/E rating of 17.9 times is far too expensive for a stock with such a poor long-term earnings outlook, in my opinion.

Stuck in a hole

Iron ore digger Beowulf Mining (LSE: BEM) also fell foul of the market in Thursday’s session following news of a capital raising, and the stock was last dealing 30% lower from yesterday’s close.

Beowulf advised that it was planning to generate £1.25m through the issuance of shares at 3.25p each. The company commented that “low metal prices and a broad lack of confidence has led to an unfavourable environment for exploration and development companies to raise capital and advance with project development”.

And worryingly Beowulf added that “we expect market conditions to remain difficult for the mining sector,” a view that I cannot disagree with.

 Sure, iron ore prices may have ticked up more recently, but I believe cooling Chinese steelmaking activity — combined with rampant production activity from industry giants like Vale and BHP Billiton — should prompt a severe reversal and keep Beowulf running at a loss in 2016 and beyond.

The post Should You Buy Beazley PLC, WM Morrison Supermarkets PLC & Beowulf Mining plc Today? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Beazley. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Revenue woes continue to swirl

Battered minerals play Kenmare Resources (LSE: KMR) announced in Friday business that a combination of lower commodity prices and production problems pushed revenues 9% lower during January-June, to $73.9m, a result that caused operating losses to widen to $27.2m, from $17.9m a year earlier.

The miner, which produces titanium minerals and zircon, has introduced a massive cost-cutting scheme to offset the effects of a sickly top-line, and total cash operating costs obligingly fell 17% in the first half to $69.1m. But Kenmare faces the prospect of further weakness in the ilmenite price — Melior Resources mothballed its Goondicum mine in Queensland earlier this month thanks to a weak market — a situation which threatens to smash its earnings outlook.

Indeed, the City does not expect Kenmare to flip into the black any time soon. Losses of 3.62 US cents per share last year are expected to narrow to 1.72 cents in 2015 and to 1.14 cents next year, but today’s results could result in downgrades to these sickly results, not to mention a subsequent collapse in Iluka Resources’ takeover attempt.

Swedish digger under pressure

The story was somewhat better for Beowulf Mining (LSE: BEM) in Friday trading, with the business announcing that it booked a £330,276 pre-tax loss in the first six months of 2015, a vast improvement from the £1.32m loss recorded in the same period last year. The Sweden-focussed miner had falling corporate overheads and zero derivative losses to thank for the result.

Beowulf said that it is “looking forward to a busy second half of the year” as it hunts an exploitation concession for the Kallak North iron ore asset. But although the explorer received a boost last month as authorities in Norrbotten County decreed that the project would create vast “economic benefits,” plenty of uncertainty still faces the company.

The necessary paperwork is still to be signed off for work to commence, of course, while Beowulf’s fragile capital position is also casting concerns — cash and equivalents of £172,955 have dived from £554,436 at the same point in 2014. And should the iron ore price continue to crash, the economic viability of Beowulf’s operations could come under fresh scrutiny.

Jubilee losing its lustre

So should the problems facing Kenmare and Beowulf prompt investors to park their cash in Jubilee Platinum (LSE: JLP)? In my opinion the answer is a resounding ‘no’, even though a 12.5% share price advance in Friday trade suggests the wider market is far more optimistic over the firm’s investment potential.

Shares in Jubilee also rocketed in July following news it had hived off its Middleburg non-platinum businesses to raise £5.8m, a critical step in financing the company’s two surface tailings projects. And the company has since secured debt funding to create what its two “transformational” platinum-processing assets.

But naturally Jubilee remains at the mercy of a volatile platinum price, and this week’s dive towards $970 per ounce took it to levels not visited since 2009. With Chinese demand on the wane and usage in the critical auto sector gradually eroding — automakers are opting increasingly for cheap palladium in exhaust systems — I fully expect platinum prices to continue falling, a terrifying prospect for Jubilee’s earnings outlook.

The post Is Jubilee Platinum PLC A Better Stock Selection Than Kenmare Resources plc Or Beowulf Mining plc? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.