No smoke without fire

The headlines have focused on how the new tobacco display ban and plain packaging restrictions have hit Booker, with tobacco sales down 7.5% on a like-for-like basis. This is to be expected, because everybody knows that government pressure on the nation’s dwindling band of smokers will only intensify. However, it won’t worry Tesco boss Dave Lewis, who is pursuing Booker for its food operations.

On this front the news is good, with group non-tobacco sales rising 4.7% like-for-like. Booker chief executive Charles Wilson said franchises Budgens and Londis are performing well, while internet sales increased a healthy 8% and Booker India continues to make progress.

Charles Wilson’s war

Total sales for the year to 24 March 2017 rose 6.7% to £5.3bn, and Booker ended up with approximately £160m in net cash. Wilson hailed the period as “a good year“, with good customer satisfaction scores and sales “the best we have ever achieved”. 

There is nothing here to derail the Tesco bid. Lewis wants to create “the UK’s leading food business” (I thought he already ran it), by integrating Booker’s cash-and-carry wholesaler operations, which supply food to 120,000 independent retailers nationwide, while the group also owns the Londis, Budgens and Premier franchises. Its food service arm supplies high-street chains such as Wagamama as well as pubs, caterers and Rick Stein’s restaurants, and its direct arm generates £1bn of online sales to M&S and others.

The merger should also speed up Tesco’s push into the fast-growing convenience market, adding 5,400 stores to its 2,900-strong network of Tesco Express, Metro and One Stop brands. It reckons this will save it £200m a year and boost annual profits by £25m.

Ground for concern

The Competition and Markets Authority (CMA) may yet block the deal, which is also running into resistance from major Tesco shareholders, who think Dave Lewis is paying too high a price. Schroders and Artisan Partners, who collectively own 9% of Tesco, have asked it to pull out. Schroders fund manager Jessica Ground reckons that most acquisitions destroy value for acquiring shareholders. This is particularly true if you overpay in the first place, as many think Tesco is doing.

Today’s results from Bookers won’t affect the bid but it could backfire for other reasons, such as potential CMA intervention and the distraction of integrating Booker’s sprawling operations – Tesco already has quite enough on its plate. For me, the killer is that I did not rate Tesco even before the added uncertainty this deal will bring. I cashed out of the supermarket sector several years ago, and the Booker deal will not tempt me to carry myself back in.

The post What Tesco plc investors should make of Booker Group plc’s Q4 results appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Booker. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

British retail sales sank 0.3% in January, according to the Office for National Statistics, missing broker forecasts by a large margin. And the body noted that in the three months to January, sales dropped 0.4%, the first such fall since December 2013.

ONS economist Kate Davies said that “increased prices in fuel and food are significant factors in this slowdown,” and this trend looks set to continue in 2017 and potentially beyond, casting a long shadow over sales prospects for the likes of M&S.

The company is already facing extreme sales pressures as its fashion lines are still failing to fire. And it could see sales at its Food division — currently the only ray of light at the firm — come under pressure too, should inflation dent demand for its high-priced goodies.

And with it also reining-in its international ops, I reckon the retailer is in danger of prolonged earnings trouble. So I thus believe investors should give the firm short shrift, in spite of an attractive forward P/E ratio of 11.2 times.

Takeover trouble?

I am also far from bullish concerning the long-term outlook for Tesco (LSE: TSCO) even if sales data has picked up in recent months.

The Cheshunt chain has reinvigorated its till performance by continuing to cut costs and investing in customer service. But concerns remain as to whether these measures are a mere sticking plaster on a titanic wound as both new and established rivals step up their expansion strategies on the street and in cyberspace.

Glass-half-full investors will be hopeful that the £3.7bn takeover of Booker Group (LSE: BOK) will invigorate Tesco’s profits performance in the years ahead.

But while Tesco plans to widen its scope to encompass the dining needs of Britons eating out and at home, concerns are rising over whether the tie-up will bring the desired sales and cost benefits for Britain’s biggest grocer. Indeed, Tesco senior independent director Richard Cousins is said to have relinquished his post in protest at the deal.

Besides, many Tesco investors will fear that chief executive Dave Lewis’s gaze will be drawn away from maintaining the recent recovery in its supermarkets. And with good reason — after all, it has previously been caught over-stretching itself with disastrous moves into the US and Japan, just as Aldi and Lidl taking bites from its core UK customer base.

Sure, the City expects earnings at Tesco to rebound strongly from the current year. But a prospective P/E ratio of 26 times — soaring above the forward FTSE 100 average of 15 times — is not indicative of the massive structural problems facing the business that could derail any sustained recovery.

And this elevated reading leaves Tesco’s share price in danger of a painful retracement should the recent sales renaissance at its stores prove to be another false dawn.

The post These 2 Footsie stocks could prove toxic to your portfolio 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 Booker. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

After all, the chain has seen its bottom line shrink during each of the past four years as competitive pressures have grown. However, City analysts believe Tesco’s turnaround strategy should set it up for resplendent earnings expansion from this point on.

Indeed, current forecasts suggest a 120% earnings detonation during the period to February 2017, and a further 30% rise in the following year.

Booker boom?

And glass-half-full investors would have no doubt been encouraged by Tesco’s blockbuster takeover attempt for Booker Group (LSE: BOK) late last month.

The proposed £3.7bn merger should see Britain’s biggest supermarket bulk up its position in the convenience store market by taking the Londis and Budgens fascias under its wing. Also, Tesco’s move will see it acquire a sprawling cash-and-carry empire.

But it’s Booker’s position as one of the UK’s biggest wholesalers that attracted Tesco to pile in. The business supplies a wide range of fresh and non-perishable foodstuffs to restaurants, pubs and stores the length and breadth of the country.

The supermarket’s chief executive Dave Lewis commented that the deal “will further enhance Tesco’s growth prospects by creating the UK’s leading food business with combined expertise in retail, wholesale, supply chain and digital.”

More earnings woe predicted

But Tesco isn’t the only blue-chip supermarket to undertake potentially-transformative acquisition activity to turn around its ailing fortunes.

J Sainsbury (LSE: SBRY) famously forked out £1.4bn in 2016 to buy catalogue giant Argos, a move designed to create additional revenues streams and reduce the impact of rising competition in its traditional grocery business.

And the takeover appears to be rich with logic. While like-for-like sales at Argos rose 4% during the 15 weeks to January 7, for example, underlying sales for Sainsbury’s traditional operations crept just 0.1% higher.

Despite Sainsbury’s initiative however, ongoing stress in its core operations is expected to keep the bottom line sinking, at least according to analyst forecasts. Drops of 16% and 4% are chalked-in for the years to March 2017 and 2018 respectively.

Not out of the woods

While Tesco’s latest move could prove a stroke of genius, I believe the risks still facing the business aren’t fully factored-in at current share prices. The supermarket changes hands on P/E ratios of 25.9 times for fiscal 2017 and 19.6 times for next year, sailing above the FTSE 100 forward average of 15 times.

Although the proposed Booker Group takeover gives Tesco a strong position in both ‘in home’ and ‘out of home’ segments, the move adds an extra layer of complexity to Tesco’s operating model, and could arguably draw the firm’s eye away from turning around its core retail operations.

Besides, the deal could still theoretically be derailed on competition grounds as the Association of Convenience Stores lobbies the Competition and Markets Authority.

And I retain a particularly bearish stance concerning the long-term outlook for Sainsbury’s, particularly as — unlike Tesco and Morrisons — the London-based operator continues to see sales slipping through the floor.

With no light at the end of the tunnel as yet, I reckon the grocer remains an extremely poor growth pick, in spike of conventionally-cheap P/E ratios of 12.8 times and 13.3 times for this year and next.

The post Is this Footsie growth stock finally a buy following recent M&A news? 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 Booker. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

First, study after study has shown that continually receiving and reinvesting dividends is an excellent (if rather unexciting) way of growing wealth over the long term. Although the reinstated payments may be initially modest, every little helps.

Second, the return of its bi-annual payouts suggests that Tesco’s finances are now in considerably better shape than three years ago — a state of affairs that will likely make its stock more attractive to investors. So, in addition to receiving dividends, holders could enjoy a sustained rise in the company’s share price. The fact that Tesco’s shares shot up a full 10% last Friday rather than down (which is the more traditional reaction when an acquisition is announced) suggests market sentiment towards the UK’s biggest retailer has returned in spades.

To be sure, Tesco’s not completely out of the woods yet. Only last Tuesday, it was reported that the company faces a fresh lawsuit from US investment house Manning and Napier over its accounting irregularities, in addition to the legal action instigated by investors against Tesco last October. Moreover, the £16.9bn cap still faces intense competition in the grocery market from listed peers and the German budget supermarkets.  

That said, Tesco looks to be in a far better position than it was a while back, particularly when compared to high-yielding FTSE 100 peers such as Next (LSE: NXT) and Vodafone (LSE: VOD)? So should those investing for income ditch the latter two and snap up the former?

Time to switch?

In sharp contrast to Tesco’s relatively buoyant last month, Next has been going through a torrid time. Claiming the title of ‘biggest loser’ following January’s flurry of retail updates, shares in the £5.7bn cap have continued their downward trajectory after estimating that annual profits would now be at the lower end of expectations. Given that inflation is expected to continue rising and the clothing market is more competitive than ever, I can’t see the shares bouncing back in 2017.

Although times are hard, there’s little doubt that Next remains a decent company, albeit one that has lost its way. A 4.7% yield is appropriate compensation while investors await a recovery. Most importantly, this is covered well over twice by earnings. As such, I’m not sure that those investing for income should move their capital over just yet.

Vodafone, on the other hand, seems to lurch from one crisis to the next. Following last week’s downgrade from Merrill Lynch, the shares now sit 14% lower than this time last year. According to analysts, price wars in both the UK and India mean that the communications giant will report an operating loss in 2017 — its first in a decade.

With returns being “unsustainably low“, Vodafone may soon be pushed into offloading some operations. Even if it chooses not to do this, any re-run of 2016’s Brexit-induced anxiety may leave its forecast earnings growth of 24% in 2018 looking wildly optimistic. While more will be revealed in next week’s trading update, I wouldn’t begrudge investors for moving on. A cut to its 6% yield is certainly possible, particularly as cover is still worryingly low. 

The post Should dividend investors dump these FTSE 100 giants and buy Tesco plc? appeared first on The Twelfth Magpie.

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Paul Summers 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.

As a Tesco shareholder myself, I’m pleased with today’s news. But the supermarket’s share price has now risen by 33% in six months. After such strong gains, is Tesco still a buy? Let’s take a closer look.

What’s on offer?

For each share they hold, Booker shareholders will receive 42.6p in cash and 0.861 new Tesco shares. At Tesco closing price of 189p yesterday, this represents a price of 205.3p per Booker share, or £3.7bn in total.

If Tesco shares hold onto today’s gains, then the deal will be worth more for Booker shareholders. As I write, Booker’s share price is up by 15% to 211p. This represents a 25% gain since Christmas!

This merger should work

Tesco’s turnaround seems to be going well. The group’s Christmas trading statement showed that like-for-like sales rose by 1.5% during the third quarter. But growth is difficult. The UK supermarket sector is very competitive, and is pretty much saturated.

By acquiring Booker, Tesco is gaining access to two new areas of the market. Booker’s wholesale customers are typically restaurants, cafés and takeaways. They include chains such as Carluccios and Wagamama. So Tesco will now be able to sell food to people who are eating out, as well as eating at home.

The second new group of customers for Tesco will be Booker’s convenience store customers. Booker currently supplies about 4,900 convenience stores under the Premier, Londis and Budgens banners. That’s more than double the number of small stores operated by Tesco.

Today’s deal will give Tesco a much bigger share of the convenience store market, assuming the Competition and Markets Authority (CMA) is happy to allow the deal to go through.

Do the numbers add up?

Booker is a well-run profitable company. The group has no debt and reported an adjusted operating margin of 3.8% last year, well above Tesco’s equivalent figure of 2.2%.

Booker’s £5bn annual sales will add about 10% to Tesco’s total revenue. I estimate that this will be enough to offset the dilution caused by the new Tesco shares issued to Booker shareholders. My calculations suggest that the initial effect on Tesco’s earnings per share will be neutral.

The opportunities for Tesco lie in economies of scale and the continued growth of Booker’s businesses. Tesco has already identified about £400m of potential cost savings. The firm believes that more will be possible during the first three years of ownership.

Acquiring Booker should give Tesco what it most needs — an opportunity to deliver growth and higher profit margins.

Is Tesco a buy?

After this morning’s gains, Tesco shares trade on a 2017/18 P/E of about 20. Today’s confirmation that dividend payments will restart means that the stock should yield about 1.8% this year.

That’s not obviously cheap, but Tesco is targeting an operating margin of 3.5-4.0% by 2019/20. If it succeeds, I estimate that earnings per share could reach 20-25p by 2020. On this basis, Tesco could still be good value at current levels.

The post Why Tesco plc shareholders should cheer £3.7bn Booker Group plc deal appeared first on The Twelfth Magpie.

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Roland Head owns shares of Tesco. The Motley Fool UK has recommended Booker. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Online sales rose by 13.9% during the same eighteen-week period, raising two-year online sales growth to more than 25%.

Still facing challenges

It’s a solid performance for a company that’s been struggling to deliver growth in recent years. The company’s plan to shift its sales mix away from clothing and towards beauty products appears to be helping to boost revenue.

However, today’s figures suggest to me that Sergio Bucher, Debenhams’ ex-Amazon chief executive, does still face some challenges. When currency gains are excluded, UK like-for-like sales only rose by 1% during the period. If we exclude online sales from this total, today’s figures suggest to me that in-store sales may still be falling.

Beauty and gift sales now account for 57% of the group’s total sales. But this shift in focus comes with slightly lower profit margins, which means that the group’s gross margins are expected to be flat again this year.

Cheap enough to buy?

Despite these concerns, today’s figures suggest to me that Mr Bucher is making progress at Debenhams. As a former Amazon executive, you’d expect him to improve the group’s online offering. But he’s also overseeing a shift in the stores’ focus towards dining, beauty and gift shopping — areas in which stores can offer a better service than online retailers.

The outlook remains uncertain, but I believe that with the shares trading on 8 times 2016/17 forecast earnings and offering a tasty 6.3% yield, most of the risk is already reflected in Debenhams’ share price. The shares could offer decent upside potential from here.

A genuine growth buy?

Shares of wholesaler Booker Group (LSE: BOK) edged higher this morning, after the firm said that like-for-like sales rose by 3.2% during the third quarter.

The share price didn’t move far, however. At the time of writing, Booker stock is up by less than 1%. One reason for this is that Booker is already priced for growth, on a 2016/17 forecast P/E of 22.8.

A mixture of acquisitions and organic growth has doubled the group’s after-tax profits since 2012. The market may now be pausing for breath to see if this momentum continues.

Serious quality

Valuation aside, there’s a lot to like about Booker. Earnings per share have risen by an average of nearly 14% per year since 2011, during which time the group’s operating margin has risen from 2.1% to 3.0%.

Free cash flow has been consistently strong. This has enabled management to increase the dividend by an average of 22% per year over the last six years, while also maintaining a net cash balance and making acquisitions.

Probably the best indicator of the quality of this business is that return on capital employed has risen from 18% to 25% since 2011. Those are extremely high figures and show that as Booker grows, it is becoming more profitable.

Booker’s high returns means that I rate the stock as a strong hold and a potential buy, even at current levels.

The post Should you buy Debenhams plc & Booker Group plc after 5% sales growth? appeared first on The Twelfth Magpie.

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

Booker’s sales increased by 13% versus the same period of the previous year. This was despite continued challenges with tobacco sales. They fell by 5.6% due to the display ban on tobacco products. Booker’s earnings per share increased by 11% as its plan to Focus, Drive and Broaden the business made progress. Its customer satisfaction numbers were strong as it offered improved choice, process and service. This could prove to be key to Booker’s future since the outlook for the UK’s food market is very competitive.

In this sense, Booker could prove to be of interest to Warren Buffett. He’s focused on companies that offer a competitive advantage over their rivals. Booker’s focus on improving customer satisfaction could allow it to generate higher margins and also provide more stable sales over the medium-to-long term.

Looking ahead, Booker is forecast to increase its earnings by 11% in the current year and by a further 9% next year. However, it trades on a relatively high price-to-earnings (P/E) ratio of 22.7. This indicates that it lacks upward rerating potential. As a value investor, this high price would be likely to dissuade Warren Buffett from purchasing Booker. Therefore, even though its integration of Londis and Budgens is set to positively catalyse its financial performance, Booker lacks appeal right now.

Just buy?

One company that offers significantly better value for money within the food retail sector is Just Eat (LSE: JE). The online takeaway service company is forecast to increase its earnings by 70% in the current year and by a further 49% next year. This puts it on a price-to-earnings growth (PEG) ratio of just 0.7, which is significantly lower than Booker’s PEG ratio of 2.3.

Just Eat is investing heavily in improving the customer experience so as to develop a competitive advantage over its peers. For example, it has partnered with the likes of Microsoft and Apple to enable online ordering through Xbox and Apple TV, while also developing new technology that provides the most up to date restaurant information and degree of personalisation across the sector. It’s also investing in Orderpad terminals that will be deployed at restaurants to keep customers better informed on the progress of their takeaway order.  

Clearly, the online takeaway space is highly competitive. However, Just Eat’s investment in new technology and in the customer experience should boost customer loyalty. This may provide it with an economic moat. When coupled with a low valuation and the scope to scale up its offering across multiple geographies, it means it may be of interest to value investors such as Warren Buffett.

The post Would Warren Buffett back this stock reporting 10%+ earnings growth? appeared first on The Twelfth Magpie.

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

Booker (LSE: BOK) has released an encouraging update for the second quarter of the year and leads me to ask whether the food wholesaler can repeat its 30% gain of the last three years, or whether consumer sector peer Unilever (LSE: ULVR) is a better buy.

Booker’s sales increased by 15.2% in Q2. This included the contribution of recently acquired convenience store chains Budgens and Londis, both of which have been successfully integrated into the wider company.

The catering and retail sides of Booker’s business performed well in the quarter. Like-for-like (LFL) non tobacco sales grew by 0.9%, although with tobacco sales included the figures were much less impressive. Due to the ban on small stores displaying tobacco products, sales of cigarettes have come under pressure. Booker’s tobacco LFL sales fell by 3.5% in the quarter and contributed to an overall decline of 0.4% versus the same quarter of the previous year.

Looking ahead, Booker is forecast to increase its bottom line by 12% in the current year and by a further 9% next year. These are impressive rates of growth and show that the company’s strategy is working even with the negative effect of declining tobacco sales. Furthermore, its balance sheet remains strong due to its net cash position of £105m. And with Booker’s strategy to broaden its product offering, it looks set to deliver additional top line growth.

However, Booker faces an uncertain future. The UK economy could come under pressure as a result of Brexit and the UK retail outlook in particular is highly volatile. Consumer spending fell in August and further falls are expected over the medium-to-long term. Therefore, Booker’s price-to-earnings (P/E) ratio of 22.8 appears to be rather rich and this means that a gain of 30% may be difficult to achieve.

Global focus

Clearly, consumer peers such as Unilever also have high ratings. For example, Unilever’s P/E stands at 22.7, but it offers greater diversity and more resilience than Booker. That’s largely because it operates across the globe so that slow sales in one region can be offset by faster growth elsewhere. And with Unilever deriving 60% of its sales from emerging markets, it has a more enticing long-term growth outlook than UK-focused Booker.

Certainly, Unilever’s forecast growth rate over the next two years is behind that of Booker. It’s due to increase earnings by 5% this year and by a further 8% next year. However, Unilever’s risk profile is much lower than that of Booker and this makes its overall risk/reward ratio more appealing for long-term investors.

In addition, Unilever has a forward dividend yield of 3.1% versus 2.7% for Booker. Unilever’s dividend is covered 1.6 times by profit, which is the same as for Booker. Allied to its lower risk profile and greater diversity, this makes Unilever a better income as well as growth and value option. And its shares offer a greater chance of a 30% gain than those of Booker.

The post Is this consumer stock set to soar by another 30% after today’s results? appeared first on The Twelfth Magpie.

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Looking ahead, Booker is on track to meet full-year expectations and remains a financially sound business with a strong net cash position. Although Booker is expected to increase its earnings by 13% this year and a further 10% next year, its current valuation appears to price this in. For example, Booker trades on a price-to-earnings growth (PEG) ratio of 1.7 and while this isn’t sky-high, given the continued decline in LFL sales being experienced it seems to offer little in terms of a margin of safety. Therefore, 20% gains seem unlikely over the medium term.

On-going issues

Also reporting today was budget airline easyJet (LSE: EZJ). Its passenger statistics for June show that it continues to deliver improving figures but is still suffering from a significant number of cancellations. For example, easyJet’s passenger numbers rose by 5.8% versus June 2015, with the load factor increasing from 92.7% to 94.1%. However, 852 flights were cancelled versus 487 in June 2015, mainly as a result of French air traffic control strikes.

Further strikes could lie ahead and cause additional disruption for easyJet. Therefore, its share price could continue to come under pressure following its 41% fall since the turn of the year. However, despite this risk and the potential fallout from Brexit, easyJet seems to be worth buying right now. It has a wide margin of safety, as indicated by its PEG ratio of 0.7. Therefore, for long-term investors who can cope with above average volatility and uncertainty, gains of substantially more than 20% are on the cards.

Falling profit

Meanwhile, Daejan Holdings (LSE: DJAN) has also reported today. The property investment company recorded a fall in pre-tax profit in its most recent financial year due to valuation gains made on investment property being lower than in the previous year. In fact, pre-tax profit fell from £278m in 2015 to £173m in 2016, but encouragingly for its investors, Daejan was able to report a rise in total rental income during the same period.

Furthermore, Daejan increased dividends per share for the year to 93p from 88p in the previous year. This puts it on a yield of 1.9%, which is still disappointing even though Daejan’s share price has fallen by 13% since the EU referendum. And due to uncertainty being high and the outlook for property being rather downbeat, there may be better opportunities elsewhere to generate a return of over 20%.

The post Are Booker Group plc, easyJet plc and Daejan Holdings plc set to rise by 20%+ after today’s updates? appeared first on The Twelfth Magpie.

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However, with a sound strategy, Vodafone now appears to offer superb capital growth potential. It has invested heavily in its network across Europe and has therefore been able to retain customers as well as attract new ones. Furthermore, Vodafone has broadened the services and products it offers, with it expanding into the UK’s broadband market as well as acquiring discounted assets across Europe.

As a result of these changes, Vodafone is forecast to increase its bottom line by 18% in the current financial year and by a further 29% next year. This means that if Vodafone maintains the same rating, then its shares could be trading over 50% higher within a couple of years. And if Vodafone’s strategy continues to pay off, they could double in value over the medium-to-long term.

Wait and see

Also offering an upbeat forecast is cash and carry specialist Booker (LSE: BOK). Its shares have fallen by 9% since the turn of the year due in part to concerns surrounding the growth rate of the UK economy. As such, Booker’s share price could come under further pressure in the near term – especially as the risk of a Brexit increases.

However, with Booker forecast to increase its bottom line by 13% this year and by a further 10% next year, it remains an above-average growth proposition. The problem, though, is that it trades on a price-to-earnings-growth (PEG) ratio of 1.8 and this indicates that its shares may be fully valued. With them having a narrow margin of safety, it may therefore be worth waiting for a lower share price before piling-in to Booker’s shares.

Long-term pick

Retirement housing specialist McCarthy & Stone (LSE: MCS) has endured a disappointing 2016 thus far. Its shares are down by 12% and this could be due to weakness in the wider housing sector. With investors being concerned at valuations across the UK compared to buyer earnings, there’s a worry that house prices could come under a degree of pressure. That’s especially the case since interest rate rises seem likely over the coming years.

Despite this, McCarthy & Stone has the potential to double over the medium-to-long term. That’s because it trades on a PEG ratio of just 0.3 and this indicates that its shares have the capacity to double in price and still offer good value for money. And with McCarthy & Stone likely to benefit from a demographic tailwind as the number of retirees increases, it could be a sound long-term performer.

The post Are Vodafone Group plc, Booker Group plc and McCarthy & Stone plc set to double in value? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Vodafone. The Motley Fool UK has recommended Booker. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.