Why have these firms been so successful this year, and can they deliver another blockbuster performance in 2016?

Betfair

With its shares up by 132% so far this year on the back of strong earnings growth, Betfair seemed to have proved the wisdom of focusing on online gambling only.

However, it’s all change for the firm in 2016. Betfair’s planned merger with Irish bookmaker Paddy Power is expected to complete in the first quarter of the new year.

Despite the challenges being faced by other big high street bookmakers, the City seems keen on this merger. Shares in both companies have climbed by around 25% since the deal was announced.

It’s hard to compare this year’s standalone performance with how a combined ‘Betty Power’ business might perform next year. However, it may be worth noting that both companies, operating independently, are expected to increase earnings per share by around 20% next year.

Offsetting this appeal is the reality that both companies also trade at more than 30 times forecast earnings and offer dividend yields well below 2%.

The merged business might deliver further gains over the next few years, but this steep valuation suggests a lot of growth is already in the price.

Greggs

Are investors on safer ground with coffee and sausage roll provider Greggs, whose shares have risen by 66% so far in 2015?

Underlying this stock market performance has been a solid operational performance. Like-for-like sales rose by 5.6% during the first nine months of the year and the firm’s increasing focus on providing café facilities alongside its core bakery offering seems popular.

City analysts are keen, too and Greggs has benefited from a steady stream of upgrades. Broker forecasts for this year’s earnings have risen by 20% to 54.1p per share since January. This puts Greggs on a forecast P/E of 22, which isn’t cheap. However, Greggs’ strong track record of steady, profitable growth suggests to me that there could be further gains in 2016.

OneSavings Bank

OneSavings Bank’s business is based on the trade and assets of the former Kent Reliance Building Society. The shares are up by 67% so far this year and have doubled since the bank floated in 2014.

OneSavings’ relatively simple retail banking model and lack of legacy issues has meant that costs are low and profits high.

For example, OneSavings Bank’s cost:income ratio is expected to be 26% this year. Lloyds Banking Group, one of the most profitable of the big banks, has a cost:income ratio of 48%. Similarly, the bank’s underlying return on equity was 31% during the first half of the year, compared to 15.7% at Lloyds.

This high level of profitability means that OneSavings shares trade on three times their book value. This is quite high for a bank and means that the share price isn’t supported by the value of the bank’s net asset, unlike most larger banks.

Analysts expect earnings per share growth of 39% this year, falling to a more modest 9% in 2016. However, the shares trade on a forecast P/E of 10, and remain cheap enough to buy, in my view.

The post Will Betfair Group Ltd (+132%), Greggs plc (+66%) & OneSavings Bank PLC (+67%) Beat The Market Again In 2016? appeared first on The Twelfth Magpie.

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

But look back over the longer term and we see a very erratic share price and a chart full of spikes, so what gives? The thing is, Character Group owns a number of toy brands (including Scooby Doo and Fireman Sam), but that can be a very faddish market — one year’s must-have toy is soon past its sell-by date, and there’s no guarantee of a new blockbuster for next year.

It’s hard to guess where Character Group shares will go next, and there are precious few analysts covering the £100m AIM-listed company — eyes peeled for results due the first week of December.

Gambling growing strongly

Online gambling is pretty big business, as a look at Betfair (LSE: BET) clearly shows. The shares are up 130% in a year, to 3,450p, and up nearly 200% in two years. Some of the recent optimism is due to the firm’s planned merger with Paddy Power, as consolidation in the business is becoming the name of the game. Paddy Power has revealed an interim net debt for the first time in years, but the combined company will have a very attractive range of services.

The big problem, though, is valuation. Betfair’s shares are trading on a P/E multiple, based on forecasts for the year ending April 2016, of a pretty massive 40 — and even the 20% EPS growth currently penciled in for 2017 would drop that only as far as 33. That’s a very serious growth valuation, and we’d need to see earnings more than double from today’s levels to get it closer to the FTSE 100 long-term average.

A fashion winner

My third for today is Ted Baker (LSE: TED), whose shares are up 67% in 12 months, to 3,402p — and over five years we’ve seen a five-bagger. But again, we see shares on a seriously high growth valuation and a forward P/E of 35.

Growth has been going well so far, with the first half of the current year bringing in a 25% rise in revenues, providing a 23% boost to adjusted EPS and allowing the company to lift its first-half dividend by 17%. The top-end fashion label is attracting an increasing following from an growing pool of rising wealth around the world, with new licensee stores opened in Azerbaijan, Dubai, Qatar, Saudi Arabia, Taiwan and Thailand during the half.

The risks are that fashion is fickle, and that there might be too much growth expectation built into the current share price — we have a PEG ratio here of around 2, which is more than twice the maximum that growth-seekers tend to look for.

The post Can Character Group PLC (143%), Betfair Group plc (130%) & Ted Baker plc (67%) Keep Climbing Next Year? appeared first on The Twelfth Magpie.

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

Ever since the general election in May, Taylor Wimpey‘s (LSE: TW) shares have been stuck in the 180-205p range. The lack of further upward momentum could be regarded by technical analysts as a signal that its shares may have peaked.

But the fundamentals of the housebuilder, and the sector in general, remains positive. Long term structural factors should keep property prices buoyant, as the supply of new homes has massively lagged behind demand for decades. This imbalance in demand and supply would likely continue to hold true, despite recent growth in new housebuilding.

The housebuilder looks set to continue to deliver robust earnings growth over the next two years. The consensus analyst estimate for underlying EPS in 2015 is 14.8p, which represents a 32% gain on the previous year. For 2016, underlying EPS is projected to increase by another 16% in 2016, to 17.3p.

This means its shares trade at just 13.9 and 11.9 times its expected 2015 and 2016 earnings. What’s more, its shares have a prospective dividend yield of 4.6%.

Betfair

Shares in Betfair Group (LSE: BET) have climbed 29% since the announcement of its proposed merger with Paddy Power in August. The merger will bring together two companies with highly complementary assets, with a strong presence online and on the high street.

The tie-up with Paddy Power is certainly positive, but valuations have become quite stretched. Betfair trades at a forward P/E of 39.5, whilst Paddy Power trades at 32.6 times its expected 2015 earnings. Both companies have yet to comment specifically about how much they expect to gain from synergies of the merger, which should raise doubts about the potential cost savings and revenue gains from the merger.

Its competitors are also looking to bulk up, with Ladbrokes joining forces with Coral and Bwin.party in a potential deal with GVC. So, although the number of competitors are due to shrink, its rivals could become stronger.

JD Sports

JD Sports (LSE: JD), the fashion retailer, saw its pre-tax profits rise 88% in the first half of its 2015/6 financial year. Revenues has been robust, growing 21% over the period, but that was still slower than the 29% recorded over the same period last year.

Analysts expect JD’s underlying EPS will grow 24% this year to 48.2p in 2015/6. For 2016/7, analysts expect underlying EPS wil grow by another 9%, to 52.3p. This means its shares trade at 19.4 and 17.5 times its expected 2015/6 and 2016/7 earnings.

Sirius Minerals

Sirius Minerals (LSE: SXX) has been benefiting from a series of positive news flow over the past few months. It has gained planning approval and is making progress in securing qualification for the government guarantee scheme, which would make it easier for it to secure financing.

With Sirius Minerals being at such an early stage with the mining project, there are still significant uncertainties surrounding the development of the mine and when the site will begin production. Sirius still needs to find some £2 billion to develop the site, and it is missing a key planning permit from the North York Moors National Park Authority, which it needs before it can begin construction.

But, although there are major risks facing the project, the potential rewards are also massive. Once developed, the mine would likely benefit from much lower operating costs than many existing potash mines, and this should mean it would benefit from much higher operating margins.

The post Is It Time To Call The Top For Taylor Wimpey plc, Betfair Group Ltd, JD Sports Fashion plc & Sirius Minerals plc? appeared first on The Twelfth Magpie.

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Jack Tang has a position in Taylor Wimpey plc. 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.

Although regarded as a “merger of equals”, Paddy Power shareholders will receive an 11% premium to its share price, based on yesterday’s closing price. This is mostly down to the special dividend of €80 million that Paddy Power shareholders would receive immediately prior to completion.

Following today’s announcement, shares in Paddy Power and Betfair rose by 17.2% and 17.5%, respectively. The double-digit percentage gains recorded by the share prices of both stocks reflect that the market views the merger as a win-win proposition for the shareholders of both companies.

Paddy Power and Betfair are two of the fastest growing gaming companies in the industry, and the combination of the two companies would create an even more powerful competitor in the gambling industry. The combined company would generate revenues of £1.1 billion and will become a market leader in many markets, including the US, UK, Ireland, Australia, and much of Continental Europe.

Betfair has a strong online betting franchise and unparalleled popularity with its betting exchange, whilst Paddy Power has a retail, mass market business and a strong presence in Australia. The two companies have highly complementary assets, and the merger of the two should create significant revenue and cost synergies. Management intends to retain both brands, but there is still significant scope to eliminate duplication, given the overlaps in online operations and geographies.

One area this could have a significant effect is with product development costs. The gambling market is evolving quickly, and companies face costly investments to develop new products and features to attract customers to their online and mobile betting platforms.

With increasing regulatory pressure and higher taxes in many markets, the need to expand is increasingly important. Scale has become a byword in the corporate board rooms, and acquisitions is the quickest way to grow. M&A activity in the gambling industry has picked up recently, with Ladbrokes and Coral agreeing a merger in June, and Bwin.party in talks with potential suitors.

Both companies also released their trading updates today. Despite the pressures affecting the industry, both Betfair and Paddy Power are showing robust growth in revenues and earnings. Betfair saw revenues in the three months leading up to 31 July rise 15% to £135.4, despite a tough comparable period last year, which included the 2014 World Cup.

In the first six months of 2015, Paddy Power’s underlying operating profits grew 68%, whilst net revenue increased 25%. Its latest results also showed the importance of the mobile channel, as mobile net revenue accounted for 67% of online revenue, with 78% of active customers transacting via mobile.

The post A Merger Between Paddy Power Plc And Betfair Group Ltd Is A Win-Win Proposition appeared first on The Twelfth Magpie.

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Jack Tang 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.

Gamble on gambling?

You might eschew gambling itself, as I do, but it’s big business. Investors in Betfair (LSE: BET) know that all too well, as they’ve seen their shares more than double in value over the past 12 months, to 2,837p. The longer term ride for Betfair has been a bit rockier, but with the exception of 2013 we’ve seen annual EPS rises averaging around 50% — the firm recorded 34p per share in 2014, compared to just 5.9p back in 2011.

The trouble is, EPS is forecast to rise by only 14% over the next two-year period, which would represent a rapid slowing. Yet the shares are still on a clear growth valuation, with a forward P/E of nearly 37 for this year dropping only as far as 31 on 2017 forecasts.

The pundits are still on a strong Buy consensus, and if faster growth should resume then they could be right — but it’s not one for me.

Which comparison site is best?

Then we come to the runaway success that is Moneysupermarket.com (LSE: MONY). Here we’re looking at a more modest 12-month share price rise of 73% to 331p, but over five years that rises to 365%. Last month’s first-half report told of a 30% rise in adjusted EPS for the period, and the company upped its interim dividend by 10% to 2.55p.

Moneysupermarket.com has actually been paying decent dividends for a few years now, with 2014 bringing in a 3.4% yield. Forecast yields for this year and next drop to under 3%, but that’s only because of the soaring share price — in actual cash, they’re growing by about 10% per year.

But again we’re facing slowing growth, with EPS predicted to rise by only 10% this year and 7% next. And at the same time, we have higher-than-average forecast P/E values — though in the 22 to 24 range, they’re only about 65% above the long-term FTSE average of 14.

Moving house?

Finally we come to online estate agent Rightmove (LSE: RMV), whose shares have provided the most impressive five-year gain of the three — up 530% to 3,782p, including a 12-month gain of 56%.

Rightmove has achieved something impressive in that it’s become the “go to” online place for buying and selling houses (and just for checking on prices), and competing with that is not easy. That’s helped provide EPS rises of around 25 to 30% per year for the past five years, but again the City is expecting that growth to slow and has 14% penciled in for this year and the same next.

And with that slowing growth we get big P/E multiples, of 33 based on 2015 forecasts, followed by 29 a year later. That’s more than double the market average, with dividend yields of only around 1%.

The post Are Betfair Group Ltd, Moneysupermarket.Com Group PLC And Rightmove Plc Still Good Value After Massive Gains? appeared first on The Twelfth Magpie.

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

Its latest trading update also offered some negative news. 32Red spent more money to attract new casino customers this year, as customer acquisition costs rose £17 per person on last year, to £197. In addition, casino player yields fell 5% to £380. Although that still leaves a huge profit margin for its casino business, the latest trading update confirms the trend of increasingly expensive customer acquisition costs and declining profitability per customer.

With continued momentum in earnings growth, 32Red’s valuation is attractive. It currently has a P/E ratio of 15.4, but as analysts expect underlying EPS will grow 26% to 5.9 pence in 2015, its forward P/E is just 12.0. For 2016, analysts expect underlying EPS will grow by another 49% to 8.8 pence, which means 32Red’s shares trade at 8.1 times its expected 2016 earnings.

Shares in 32Red fell 2.9% to 70.4 pence in morning trading.

GVC Holdings and Bwin.party Digitial Entertainment

GVC Holdings (LSE: GVC), which owns the sportingbet and Casino Club franchises, is considering making another rival bid for Bwin.party Digitial Entertainment (LSE: BPTY), after the latter agreed to 888 Holdings’ (LSE: 888) offer last week.

An acquisition of Bwin.party could turn out to be a negative for GVC, as Bwin.party has a heavy presence in uncertain regulatory markets, and its online poker business is exposed to a structural decline in the market. Its limited operating cash flow would also put pressure on GVC’s dividend policy.

Analysts expect underlying EPS will grow by 8% to 49.6 pence in 2015, which means its shares have a forward P/E of 8.7. On top of this, GVC has an attractive indicative dividend yield of 9.3%.

Betfair

Betfair (LSE: BET) is probably the best gaming franchise of the four, but it is also by far the most expensive. With a strong management team in place, the company has introduced a savvy advertisement campaign and launched many innovative features. Betfair’s popular betting exchange gives it a strong competitive advantage over its peers, because network effects tend to lead to a single dominant platform.

Diversification offers valuable revenue synergies, and Betfair is particularly strong at cross-selling casino, poker and bingo products. With a strong sports betting franchise, it uses introductory offers and internal advertisements to lower its external casino and bingo customer acquisition costs.

Underlying EPS has grown by an average compound rate of 29.7% over the past five years. After a strong set of results in 2014, analysts currently expect underlying EPS will decline by 4% to 76.3 pence in 2015/6, which implies a forward P/E of 34.4. Underlying EPS is also forecast to grow by 19% in 2016/7, to 90.5 pence, but that still leaves Betfair trading at 29.7 times its expected 2016 earnings.

Cheap and fast growing

In conclusion, 32Red’s shares seems to offer the best balance between value and growth. But as 32Red is a small-cap company, investors should also be prepared for greater volatility.

The post Is 32Red plc A Better Buy Than GVC Holdings plc, Bwin.party Digital Entertainment plc & Betfair Group Ltd? appeared first on The Twelfth Magpie.

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

Payment will be with £2m of cash from 32Red’s net cash balance of £7.0m and 10m new shares, which are worth around £6.6m at today’s 66p share price.

According to 32Red, Roxy Palace generated net gaming revenue (NGR) of £10.1m last year, and earnings before interest, tax, depreciation and amortisation (EBITDA) of £1.6m.

32Red reported NGR of £32.1m and EBITDA of £5.4m in 2014, so Roxy Palace should add about 30% to 32Red’s NGR and EBTIDA.

The £8.4m paid for Roxy Palace is 5.3 times EBITDA, which also looks reasonable to me, especially as both companies use the same gaming platform. This should mean that 32Red can find some cost savings and have little difficulty integrating its operations with those of Roxy Palace.

Is 32Red a buy?

My calculations suggest that the additional earnings generated by Roxy should broadly cancel out the dilutive effect of the 10m new shares issued to pay for this acquisition. This means that earnings per share forecasts could remain largely unchanged for next year.

Assuming I’m right, 32Red shares now trade on a 2015 forecast P/E of 12.7, falling to a P/E of 9.6 for 2016, based on the latest forecasts from the firm’s broker.

The stock also offers an appealing, cash-backed dividend yield of about 4%.

I think 32Red looks good value and could be an interesting buy.

However, I am concerned that the firm’s small size could means it lacks the defensive advantages of scale enjoyed by competitors such as Ladbrokes (LSE: LAD), Betfair Group (LSE: BET) and William Hill (LSE: WMH).

3-point comparison

32Red is a specialist business focusing on online casinos, poker and bingo websites only. In contrast, Ladbrokes, Betfair and William Hill all offer a wider range of sport and gaming services.

Ladbrokes and William Hill also have high street branches too, while Betfair only operates online.

Here’s how the four firms compare in terms of valuation, yield and profit margins:

Earnings have crumbled at Ladbrokes and the firm is in the middle of a cost-cutting business review and an attempted merger with Gala Coral. It’s hard to guess how things will eventually pan out, but Ladbroke’s combination of high debt, low dividend cover and an uncertain outlook is a turn off for me.

Betfair is very profitable and generates a lot of free cash flow, enabling it to fund growth without debt. However, the firm’s forecast P/E of more than 30 looks demanding to me. Earnings per share are expected to fall slightly this year before rising in 2016, but if future growth falls below expectations, the firm’s shares could fall sharply.

William Hill looks more appealing. This year’s forecast P/E of 16 should fall to 14.5 in 2016, and the firm’s steady dividend growth has been consistently covered by free cash flow in recent years. Debt levels are reasonable and Hill’s operating margin of 17% is three times that of high street peer Ladbrokes.

For a long-term mix of income and growth, I believe William Hill could be a sensible buy.

The post Is 32Red Plc A Better Buy Than Ladbrokes PLC, Betfair Group Ltd Or William Hill plc? appeared first on The Twelfth Magpie.

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Roland Head 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.

Operating expenses for the year rose £14.1 million to £265.7 million, even as sales and marketing expenses rose 10% to £136.1 million. This helped EBITDA margins to rise from 23.1% last year to 25.2%.

Betfair is showing the success of its savvy “Tap Tap Boom” marketing campaign, which highlights the simplicity of its mobile betting platform. Mobile gaming revenues now represent 33% of its total, up from 6% two years ago. Ease of navigation and introductory incentives have also led to cross-selling of multiple gaming products, ranging from poker to bingo and online casino.

Betfair is better known for its betting exchange, where the company takes commissions from matching bets between different customers. Although the betting exchange is a less capital-intensive business, liquidity is usually concentrated in the large sporting events. This reduces the appeal of Betfair to new customers, which is why the company launched its own bookmaking business to extend its coverage to a wider range of markets.

Sportsbook, its bookmaking business, is attracting more customers to Betfair, because of its greater simplicity to customers that are more familiar with traditional bookmakers. But, there are synergies with running the two businesses alongside each other. Through “Price Rush”, Betfair could offer its Sportsbook customers better odds, if higher odds are available through the exchange. Product innovations like these increase value for customers, and strengthens Betfair’s competitive position. Its betting exchange also improves its brand awareness, by being a unique unbiased market.

Betfair has a high forward P/E of 35.7, but the premium seems well deserved because the company is seeing rapid revenue growth and has captured market share from its competitors. With its trendsetting product innovations, Betfair will likely continue to deliver much faster earnings growth than William Hill (LSE: WMH) and Bwin.party (LSE: BPTY).

William Hill

Traditional bricks-and mortar-bookmaker William Hill is seeing much slower revenue and earnings growth. Adjusted EPS rose just 4% to 29.9 pence in 2014, even as the company is showing strong growth from online, where revenues have grown by a compound annual growth rate of 21% since 2009.

2015 will be a much more challenging year for William Hill. The increase in the Machine Game Duty cost the company an additional £20 million in the first quarter alone. William Hill has £14 million shortfall, as a series of customer friendly football results were unexpected. This also highlights the value of Betfair’s betting exchange, which reduces the bookmaker’s exposure to one side of the game.

William Hill’s forward P/E is 17.3, with analysts expecting earnings will decline by 18%.

Bwin.party Digital Entertainment

Bwin.Party had said that several gaming companies are interested in acquiring the company, but the selling down of its shares from two of its largest shareholders seem to suggest that the prospects of its takeover is unlikely.

Emerald Bay Limited and Stinson Ridge, owned by former co-founders of Partygaming, sold 49.5 million shares, even as two interested parties, 888 Holdings and Sportingbet owner GVC are said to be preparing for a bid for the company.

Despite the company’s online and mobile focus, revenues have fell 6% to £611.9 million in 2014. The company has been hit hard by its focus on uncertain regulatory markets. It faces a 5% turnover tax in Germany, and the company has pulled out of Greece due to consistent loss-making. With a forward P/E of 21.7, Bwin.party is unattractive for investors and potential suitors.

The post Why Betfair Group Ltd Is A Better Buy William Hill plc & Bwin.party Digital Entertainment Plc appeared first on The Twelfth Magpie.

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Jack Tang 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.

Over a century of empirical evidence suggests that this method of choosing shares is ill-conceived. Buying shares that are trading near their historical lows often leads to poor investment returns. Shares that have outperformed the market, or are trading near their historical highs, tend to also outperform poorly performing shares in the following months. This phenomenon is known as the “momentum effect”.

Although analysts are not entirely certain for why the momentum effect exists, there are many possible explanations. One reason could be that investors may have systemic upward biases for the earnings forecasts of underperforming shares, leading to a cycle of earnings disappointment and lower share prices. Another could be crowd behaviour, where fund managers follow one another to create a similar portfolio of assets, causing share prices to exhibit momentum.

“Buy high, sell higher” is the adage that investors would do well to remember. And here are attractive five momentum shares:

Shire

Shares in Shire (LSE: SHP) have risen 50% over the past year, and the company has a forward P/E of 21.1. The company has gone on an acquisition spree in recent years to bolster its pipeline of new treatments for rare diseases. Currently, Shire is looking at buying Actelion, a Swiss biotech firm, for a reported £12.4 billion.

Shire’s strong pipeline of new treatments for rare diseases should help it to deliver faster earnings growth than its big pharma rivals, including GlaxoSmithKline and AstraZeneca.

ITV

ITV (LSE: ITV) has been showing strong earnings momentum in recent years, with adjusted earnings having risen by 75% over the past four years. The company has recovered strongly since the recession, and is successfully growing its online, pay and interactive offerings, which saw revenues grow 30% in 2014. Its forward P/E is 17.0.

Sirius Minerals

Shares in Sirius Minerals (LSE: SXX) have risen by 79% over the past year, as the prospects of obtaining the necessary permits for its Yorkshire potash mining development seem increasingly promising. The prospective cost of production is expected to be as low as $30 per tonne, which compares favourably to the market price of potash of over $200 per tonne.

But, the company still needs to source more than £1.5 billion to fund development costs, when the project is finally approved. Investors will have a long wait before the company begins to return cash to shareholders.

Betfair

Although Betfair (LSE: BET) is better known for its betting exchange, its bookmaking business is doing much better in attracting new customers. The company has invested strongly in developing a competitive edge through product innovations, including in-game cash outs and “price rush”.

The bookmaker is set to announce its preliminary full year earnings on Wednesday 17 June. Currently, analysts expect adjusted earnings per share of 74.2 pence, with revenues of $471 million. This implies a forward P/E of 33.8.

Oxford BioMedica

Oxford BioMedica (LSE: OXB) is attractive because of its development collaboration deal with Novartis. Significant development revenues from Novartis could transform the company to become operationally cash flow positive by 2016. The company’s pipeline of gene and cell therapies are in the early stages of development, so investors in Oxford BioMedica may have a long wait.

The post “Buy High, Sell Higher”: A Look At Shire plc, ITV plc, Sirius Minerals plc, Betfair Group Ltd & Oxford BioMedica plc appeared first on The Twelfth Magpie.

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

Elsewhere, a relatively high-beta stock such as ARM (LSE: ARM), has come under pressure in recent days — but at 1,128p a share, I would still retain exposure.

The same applies to Shire (LSE: SHP) — but will Betfair (LSE: BET) beat them all?  

Better Than Most 

Growth is a problem, but SAB isn’t any different from most of its rivals. It’s a difficult point in the business cycle for the beer industry: less effective price and volume policies jeopardise revenues, cash flows and earnings. SAB trades at 22x forward earnings, and at 14.5x based on its adjusted operating cash flow — it is slightly more expensive than AB Inbev, but commands a meaningful premium versus Heineken and Carlsberg. Based on fundamentals and other factors, the gap will likely widen over time, in my  view.

At £33 a share, it trades 12% below its 52-week high of 3,857p. At 2.1%, its forward dividend yield looks safe, but is lower than that of AB Inbev. Takeover talk surrounding Diageo rather than SAB are likely to favour the former over the very short term, but I wouldn’t trust the rumours, while I still prefer SAB’s prospects. 

Growth & Yield

At 1,127p, ARM trades in line with the average price target from brokers. According to consensus estimates from Thomson Reuters, if analysts in the bull camp are right, upside could be as much as 37%… but if they are wrong, downside could be as much as 38% from this level. I’ve been bullish on ARM for a long time, ever since it traded at around 850p a share, and although its forward trading multiples are demanding, I believe there’s still value in ARM, whose margins could grow at a faster rate in the next few years, rendering its stock less expensive over time. ARM reports reports its interim 2015 results on 22 July, and you’d do well to add the stock to your wish list right now if you haven’t done so already. 

Elsewhere, Shire is finding it more difficult to create value for shareholders at 5,380p share, yet there’s more than one reason why this remains a solid play against volatility. It’s one of the most efficient pharmaceuticals plays in the marketplace, and I support its capital allocation strategy. Speculation has it that Shire could target Swiss biotech company Actelion (which is up 9% on Monday on the back of takeover chatter), but I’d invest in Shire due to its appealing valuation and strong fundamentals, which make it for an ideal long-term value investment. 

Size Matters? 

If stocks in the FTSE 100 are not on your wish list, I suggest you look at Betfair, whose stock was down 5% on Friday, as some brokers have turned bearish on strategy. While it’s true that Betfair, which trades at 2,550p, is not exactly in bargain territory, weakness in its stock price is the inevitable price to pay for a rally that, as I expected, has determined a stellar performance in recent times — the shares are up 119% over the last 12 months. While you may be tempted to take some profit (Betfair trades well above the average price target from brokers), consider that consensus estimates have risen 66% to 21.4p over the last 12 months, and further upgrades should not be ruled out. Its 2015 full-year results are due on 17 June.

The post Is The Party Over At SABMiller PLC, ARM Holdings Plc, Shire plc & Betfair Group Ltd? appeared first on The Twelfth Magpie.

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