Clearly, this is positive news for investors in Cape. However, could it be followed by a bid approach for another company which also appears to be a strong buy for the long term?

Rationale

The deal for Altrad to purchase Cape is a relatively obvious one, with the two companies likely to have a number of synergies if the acquisition goes through. There is a clear strategic fit between the two businesses, and this could lead to reduced costs as well as helping to create a multi-disciplinary industrial services company. At a time when a number of the companies’ end markets are experiencing a difficult period, a merger may provide additional financial strength and resilience should trading conditions remain tough.

A good deal?

Since its operating conditions are challenging at the present time, Cape is forecast to report somewhat volatile earnings over the next two years. In the current year, its bottom line is expected to rise by 17%, before falling by 23% next year. This puts it on a price-to-earnings (P/E) ratio of 9.8 at the offer price of 265p, which suggests Altrad is obtaining the company for a bargain price.

Certainly, Cape’s bottom line could experience more volatility and may even fall over the medium term. However, it remains a relatively sound business in terms of its fundamentals, and it could therefore be worth a higher valuation than 265p per share. As such, while today’s news has pushed the company’s share price significantly higher, in the long run it may have been worthy of a valuation which is above and beyond that reached after the bid approach.

Bid potential

Also offering bid potential right now is building products distributor, SIG (LSE: SHI). It is expected to record a rise in its bottom line of 10% in the next financial year, which indicates it is moving into a more profitable period following a challenging couple of years. Despite this, it trades on a price-to-earnings growth (PEG) ratio of just 1.4, which suggests it may benefit from an upward re-rating over the medium term.

Even though the prospects for the UK and European economies remain uncertain, loose monetary policies look set to remain in place over the next few years. They could help support activity levels across the building industry and lead to improved trading conditions. As such, SIG could become a realistic bid target, while also offering upside potential for investors due to its growth prospects and valuation.

The post Cape plc surges 45% on offer: will this stock be next? 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?

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

With such a spotty record of growth, it’s easy to see why investors do not seem hugely interested in Cape. With all but the diehards having given up on the company, its shares trade at a discount valuation, which may offer a great opportunity for value investors.

Undervalued?

the shares currently trade at a forward P/E of 7.7 despite the fact that City analysts expect the group’s earnings per share to grow by 5% this year.

And it now looks as if these city forecasts are set to be revised substantially higher following a trading update from Cape today. Specifically, the company announced that following several substantial contract awards, management expects earnings performance to be “materially ahead of previous expectations” for the current year. Unfortunately, despite this upbeat statement, within the trading update management went on to note that 2018 may be more of a challenging year. This is due to the “reduction in volume from the current high level of construction activity in Asia Pacific and the effect of project delays and margin pressures in the Middle East.”

Still, even though management now believes 2018 will be a tough year for the group, the overall takeaway from today’s trading update is a positive one. Cape announced today the award of one new contract in Australia and the renewal of two contracts in the North Sea. While the majority of the work on the new Australian contract is expected to take place in the second half, the North Sea contracts with BP provide up to three years of work for the group and the total value of the contracts is more than £150m. For Cape to be able to win such work at a time when oil companies are aggressively cutting costs shows just how appreciated its services are.

Time to buy?

After a rough few years, it looks as if it could finally be time to buy the shares. Even though the company is expecting a tough 2018, a positive 2017 should restore the market’s faith in the group’s growth potential. What’s more, with more than half a year to go before 2018 begins, management has time to try and improve the outlook for the year.

Cape’s low valuation discounts much of the growth risk associated with the company with a forward P/E of less than eight. But if management can surprise investors with a positive performance, then the combination of both higher earnings growth and a revaluation could produce lucrative rewards for long-suffering investors.

While you wait for the turnaround, shares in Cape currently yield 2.9%. The payout is covered more than four times by earnings per share.

The post Is this dirt cheap growth stock worth your money? 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?

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Risky insurance?

Take Novae Group (LSE: NVA). It’s a lot smaller than the big players, with a market cap of under £400m. And its in a more risky sector of the business, as a specialist Lloyd’s insurance firm. 

Novae slashed its 2016 dividend after the Ogden discount rate was heavily cut — the effect of which is that people suffering serious injuries will receive significantly higher compensation payments. That has a knock-on effect across much of Novae’s business, slashing pre-tax profit for last year by 60%.

But being small also means being agile, and a Q1 trading update on Wednesday showed that the firm’s “withdrawal from certain casualty classes where we deem future profitability to be unsustainable” is already having a positive effect. Gross written premiums rose by 13.8% over the first quarter of last year, and though an investment return of 0.7% is down, it’s ahead of expectations at this stage.

Forecasts are suggesting a fairly speedy recovery, with EPS rises of 17% this year and 33% next, putting the shares on PEG ratings of 0.9 and 0.4 respectively — an attractive growth rating. The dividend should be coming back too, and though we’re only looking at yields of 2.6% to 2.7%, they’d be well covered by earnings and we should be seeing further progress in the coming years.

I see a strong future for Novae after its speedy reaction to the Ogden rate cut. At 619p the share price is down 26% since the news broke, and I reckon that’s oversold — I see an attractive long-term buy here.

Oil profits

My other pick, Cape (LSE: CIU), is a very different company. It’s in the oil and energy services business, and the falling prices that have assailed the sector have hurt and have kept the share price depressed. Earnings have been a bit erratic and are expected to remain pretty much flat for another couple of years, and the dividend was cut in half in 2016.

So why do I see Cape as a tasty buy right now?

It’s because the shares just look too cheap to me, on forward P/E multiples of under eight and with a dividend of around 3%, that pretty much matches the FTSE 100 average.

An update on Wednesday told of “a strong trading performance in the first quarter, largely driven by increased project volumes and excellent operational performance in the Asia Pacific region“. And though the firm says the North Sea and its coal sectors are still challenging, its order book looks good and UK margins are expected to improve.

Debt can be a problem with smaller companies in this sector, but Cape’s adjusted net debt actually fell in 2016, to £80.4m at the end of December. For a firm with a market cap of around £300m and revenues approaching £900m, I really don’t see a problem there.

The share price has picked up quite nicely since November, but at around the 240p level today I’m still seeing a long-term bargain on a short-term buying opportunity.

The post These cheap small-cap stocks could help you retire early 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?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Turnaround potential

Reporting on Friday was oil and gas support services company Lamprell (LSE: LAM). Its financial performance in 2016 was hugely disappointing, with sales and profitability falling. The latter was negatively affected by a writedown, while the outlook for the industry is hugely challenging. The company expects more difficulties in the remainder of 2017. With the oil price not expected to surge, it could be another difficult year.

However, Lamprell offers significant turnaround potential. A key reason for this is its sensible strategy. It is seeking to reduce costs in order to become more sustainable in an era when the oil price may remain at below $100 per barrel for some time. It is also seeking to move into new projects, such as the potential participation in the Maritime Complex in Saudi Arabia.

While its strategy may improve its performance, a rising oil price could have an even bigger effect. In the coming months, the supply surplus is forecast to narrow and this may have a positive effect on the price of black gold. A rising oil price could mean higher profitability across the industry, which may improve investor sentiment in Lamprell. Trading on a price-to-book (P/B) ratio of just 0.75, there seems to be considerable upside potential on offer in the long run.

Dirt-cheap opportunity

Of course, Lamprell is not the only support services company which has been negatively affected by the falling oil price. Sector peer Cape (LSE: CIU) has lost 52% of its value in the last five years, while it recorded a pre-tax loss last year of £44m.

While disappointing, a turnaround could be on the cards. Cape is forecast to return to profitability in the current year, which could improve investor sentiment in the stock. Although no growth is forecast for next year, the company’s valuation appears to be difficult to justify. Using the current year’s earnings forecast, Cape has a price-to-earnings (P/E) ratio of just 6.8. This indicates that a significant upward re-rating could take place.

Certainly, there is scope for more disappointment regarding the oil price. However, Cape’s valuation appears to fully factor-in the risks it faces. Buying a slice of it now may be viewed as risky by many investors. Its share price could become increasingly volatile. However, given its wide margin of safety and a logical strategy which is due to turn its performance around, now could be the perfect time to buy it for the long run.

The post 2 bargain turnaround stocks to bring you a step closer to retirement 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?

Peter Stephens 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.

I’ll also consider the attractions of another a mining stock — one which has stacks of cash, and offers a 6% forecast dividend yield.

A sudden turnaround?

Cape issued a trading update this morning advising investors that 2016 full-year results are expected to be “materially ahead of current expectations”. In my view, that’s likely to mean that adjusted earnings per share will be 10%-20% higher than current consensus forecasts.

If I’m right, then we could be looking at earnings of 28p-30p per share for 2016. Even after today’s gains, Cape shares would still be trading on a forecast P/E of about six, with a prospective yield of 7.8%.

This cheap valuation could be a buying opportunity. But it’s also a warning that the dividend may be unsustainable.

Cape is involved in a significant amount of litigation relating to industrial disease claims and, more recently, to product liability claims. Although this all relates to historic elements of the group’s business, the costs must be met by today’s shareholders.

Cape shares fell by about 25% in November after management warned investors that the dividend might have to be cut if the firm loses a complex trial that’s due to start this month.

A second concern, in my view, is that Cape already has quite high levels of debt. The group’s June 2016 net debt of £113.7m is double the level reported in 2010, even though its profits are now much lower.

Today’s news suggests that trading conditions are improving for Cape, but doesn’t really change the financial risks facing the firm. There’s no way to know how the various legal actions will turn out, which makes the shares too speculative for me.

A 6% yield from copper?

One of today’s other movers is fast-growing Kazakhstan copper producer Central Asia Metals Ltd (LSE: CAML). According to an operations update this morning, the group’s copper production rose by 16% to a record high of 14,020 tonnes in 2016.

CAML has very low costs, and the development of its Kounrad project was fully funded by shareholders. This means that when Kounrad went into production, CAML had no debt and plenty of cash.

The firm’s shareholders are now benefitting from this far-sighted approach. The value of their stock has doubled over the last four years, while dividend payments have risen by about 55%.

CAML reported an impressive operating margin of 50% during the first half of last year. The price of copper has risen since then, and I expect cash generation and margins to improve in 2017.

The shares currently trade on a forecast P/E of 13 and offer a prospective dividend yield of 5.8%. Earnings per share are expected to rise by 13% in 2017. For investors who are happy with the risks of investing in emerging market mining stocks, I believe CAML remains a tempting buy.

The post Why shares in Cape plc soared 17% today 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?

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.

In this article, I’ll ask whether the potential rewards of Cape’s high yield outweigh the risk of an investment. I’ll also ask whether it’s time to buy technology firm Oxford Instruments (LSE: OXIG), following the group’s latest disposal.

Asbestos claims could sink dividend

Cape’s latest trading update had two parts. The first section indicated that recent trading has been in line with expectations. Full-year profits are expected to be slightly better than expected, thanks to recent exchange rate movements.

The latest consensus forecasts show that Cape is expected to report full-year adjusted earnings of 24.4p per share. This puts the stock on a forecast P/E of just 6.6, with a forecast dividend yield of 8.7%.

Extremely high yields and low valuations are usually a warning that the market expects problems. Cape is no exception. The group said this morning that it has increased the provision made against industrial disease claims by £9.6m. That’s not great news, but it isn’t the reason for today’s dramatic slump.

The final part of today’s update warned shareholders that new product liability litigation relating to Cape’s historic use of asbestos could lead to “an extended period of uncertainty.” Management warned that if the case goes against Cape, the dividend could be suspended.

This case was previously reported in last year’s results, but the tone of today’s statement is more negative than previously. Although Cape believes “the merits of our defence are persuasive,” the group admits that there’s no certainty about the outcome.

Markets hate uncertainty, and this is why Cape shares are so cheap, despite the group’s solid trading. In my view, the stock is too speculative to buy at the moment.

Oxford could be a better choice

Shares of Oxford Instruments are worth 20% less than they were at the start of the year, but I believe the outlook is improving for this maker of hi-tech industrial tools.

The company said today that it had sold its superconducting wire business (OST) for $17.5m. Trading had been difficult for some time, and while OST is profitable, Oxford’s figures show that OST’s operating profit fell by 33% during the first half, to just £1.1m.

Cash from this sale will be used to reduce Oxford Instrument’s net debt, which was £141.1m at the end of September. This represents a level of 2.6 times earnings before interest, tax, depreciation and amortisation (EBITDA). Net debt of more than two times EBITDA is generally considered high, so I’m pleased that the group is focusing on debt reduction.

November’s interim results suggest Oxford Instruments’ trading has stabilised. Adjusted earnings from continuing operations were just 1.4% lower, at 21.4p per share. The interim dividend was left unchanged at 3.7p.

This year’s results are expected to be broadly unchanged from last year, but consensus forecasts suggest earnings could rise by about 10% in 2017/18.

The shares currently trade on a 2016/17 forecast P/E of 12, and offer a 2.1% yield. I believe this could be a good time for turnaround investors to start buying.

The post Are Cape plc and Oxford Instruments plc today’s top turnaround buys? appeared first on The Twelfth Magpie.

More reading

• How much should a 45-year-old put in a SIPP each month to try for a million?
• Closing in on £33 and around an all‑time high, is this FTSE 250 favourite seriously mispriced?

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.

Housing boom still on?

Shares in housebuilder Persimmon (LSE: PSN) rose by 5% this morning, after the firm said sales since 1 July have been 17% higher than during the same period last year.

Fears of a post-referendum slump have so far proved unfounded. Persimmon’s shares have rebounded and are now only 10% lower than they were before the referendum. The group’s operating margin rose by 3.2% to 23.8% during the first half, while completions rose by 6% to 7,238 homes. Pre-tax profits were 29% higher, at £352.3m.

Persimmon’s £2.76bn capital returns plan remains unchanged. The company paid out 110p per share in April, and expects to make the next 110p payment in July 2017.

Persimmon shares trade on 10 times forecast earnings and offer a 5.9% forecast yield. However, profits are expected to fall by around 10% next year, pushing the forecast P/E multiple towards 11.

In my view, the current valuation is about right. I’d hold.

A confident outlook

Bingo hall and casino operator Rank Group (LSE: RNK) said this morning that adjusted pre-tax profit rose by 4% to £77.4m last year, lifting adjusted earnings per share by 5% to 15.4p.

The final dividend for last year will be 4.7p, an 18% increase on the previous year. This takes the group’s total payout up by 16% to 6.5p, giving a yield of 2.9%.

Rank’s bricks and mortar bingo and casino operations may seem dated to many investors, but they seem to generate plenty of cash. The company had to make a £21.7m tax payment last year in relation to a disputed tax planning scheme. Despite this, net debt fell by 22% to just £41.2m, and the group generated enough free cash flow to cover the dividend 1.6 times.

The company is now focusing on digital growth as it moves on from its failed attempt to combine with 888 Holdings and William Hill. The shares currently trade on 13.5 times forecast earnings and offer a 3.2% forecast yield. I believe this could be a decent level for new and existing shareholders to buy.

Is this 7% yield a buy?

Industrial services firm Cape (LSE: CIU) saw adjusted pre-tax profits fall by 30% to £14.9m during the first half of the year. Although revenues for the period were 10% higher at £396.3m, lower margins pushed profits down.

Cape expects trading to improve during the second half of the year. The firm says that full-year expectations remain unchanged. This puts the stock on a forecast P/E of 7.5. The expected dividend of 14p per share means that Cape offers a prospective yield of 7.7%.

These shares ought to be cheap, but I’m not sure. New claims relating to historic asbestos activity mean that the group has decided to make an additional £9m payment into its claims fund this year. Net debt of £113.7m also remains stubbornly high, relative to forecast profits of £27.9m.

Cape’s profits are expected to fall by 10% this year, and be flat in 2017. It may still be too soon to buy.

The post Are these stocks too cheap to ignore after today’s results? appeared first on The Twelfth Magpie.

More reading

• Down 63% and yielding 6.3%! Is this FTSE 100 share a brilliant bargain?
• This 5.5%-yielding income stock’s at a 13-year low and cheap to-boot! Time to consider buying?
• Down 65% but yielding 6%! Is this FTSE 100 dividend stock an unmissable bargain?
• A 6.7% forecast yield and 53% below ‘fair value’! 1 stunning FTSE income stock for investors to consider today?
• How much do you need in an ISA to target a £2,066 monthly passive income in 2066

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.

Diversified dynamo

I reckon support services play Cape’s (LSE: CIU) exposure to a broad range of industries should allow it to keep revenues moving skywards. And although the energy and mining industries remain in peril, investors should take heart from the firm’s chunky £862m order book as of March.

The City expects Cape to maintain the dividend at 14p per share in both 2016 and 2017, figures that yield a splendid 7.1%. And dividend cover of 1.8 times for these years is pretty robust, even if it falls just short of the safety benchmark of 2 times.

Staffing star

I also believe SThree’s (LSE: STHR) terrific sector and geographic diversification make it a terrific bet for those seeking reliable earnings — and consequently dividend — growth in the years ahead. And the recruitment specialist is undertaking shrewd restructuring to mitigate weakness in key segments such as the oil and gas markets.

SThree is expected to pay a dividend of 14.1p per share for the year to November 2016, up from 14p last year and yielding a decent 5.8%. And this figures moves to 5.9% next year thanks to a predicted 14.4p reward.

Dividend coverage stands at 1.5 times through to the close of next year.

Marketing marvel

I’m backing the impressive international footprint of Communisis (LSE: CMS) to help it avoid the worst that Brexit kicks up. The company currently operates in almost 30 global territories, and is expanding its presence in order to keep winning business with major blue chips — it counts AXA, Barclays and BT Group among its clients.

The marketing play has a long history of hiking the dividend, and is predicted to raise it to 2.4p per share this year, up from 2.2p in 2015 and yielding 6.6%. And next year’s anticipated payout of 2.5p pushes the yield to 6.9%.

Meanwhile, dividend cover of 2.6 times and 2.5 times for 2016 and 2017 respectively should satisfy even the most cautious of investors.

Make healthy returns

I believe healthcare facility provider Primary Health Properties (LSE: PHP) is a great long-term pick for investors. Not only should government investment in primary care keep boosting PHP, but bubbly acquisition activity should also help to drive the bottom line.

Primary Health Properties’ dividend is predicted to rise from 4.91p per share last year to 5.1p and 5.3p in 2016 and 2017, yielding a splendid 4.7% and 4.9% respectively.

It’s true that dividend coverage for the period is poor — payouts are covered just 1 times by estimated earnings for 2016 and 1.1 times for next year. But I reckon the firm’s defensive operations and solid balance sheet should soothe the nerves.

The post Can you afford to miss these ‘secret’ dividend winners? appeared first on The Twelfth Magpie.

More reading

• £10,000 in either of these FTSE 250 gems could net around £800 in passive income. But which to pick?
• 1 REIT could turn a £20,000 ISA into annual passive income of £1,580
• With yields of 8.4% and 7.9%, are these FTSE 250 shares perfect for a Stocks and Shares ISA?
• 8% dividend yield! This REIT could be a BIG winner after Keir Starmer’s resignation
• With an 8.5% dividend yield, is this cheap income stock a no-brainer?

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

In today’s article I’m going to look at four small-cap stocks I believe offer investors attractive opportunities in the current market.

“Significantly stronger” trading

Somero Enterprises (LSE: SOM) makes equipment that’s used by construction firms to produce perfectly flat concrete floors for warehouses. Somero said today that trading in June was “significantly stronger” than both the previous month and the same period last year. Management now expects full-year results to be “slightly ahead of current market expectations”.

Most of Somero’s profits come from its home market of the USA. It’s also working hard to expand in China, where the high-spec floors produced by Somero’s equipment are relatively new.

Somero shares currently trade on about 9 times 2016 forecast earnings and offer a 3.5% forecast yield. The group has ample net cash and strong cash flow. I think further gains are likely.

Profits could rise in a recession

Shares of the UK’s largest insolvency practitioner, Begbies Traynor Group (LSE: BEG), fell sharply this morning after the group issued its annual results. Adjusted earnings per share of 3.2p were in line with expectations and the group’s dividend remained unchanged at 2.2p per share. But the company warned that “the market … remains difficult to predict”.

Begbies said today that insolvency volumes are currently at their lowest level since 2004. The group is depending on recent acquisitions to deliver profit growth this year.

Begbies’ shares are up slightly this year, but their 2016/17 forecast P/E of 11 and prospective yield of 4.6% still look cheap to me. I see Begbies as a growth buy and as insurance against a recession.

Weak pound could boost profits

Industrial services firm Cape (LSE: CIU) has been hit hard by the oil and mining downturns. Most of the firm’s clients are in these sectors. However, with trading and sentiment improving in the commodity sector, most of the bad news may already be reflected in Cape’s share price.

The group recently renewed its £300m credit facility until 2020, relieving some of my concerns about its £109m net debt. The weaker pound should also boost profit and cash flow. While Cape reports in pounds, much of the group’s business is priced in dollars.

Cape shares currently trade on 8.5 times forecast earnings for the current year and offer a 6.8% forecast dividend yield. Now could be a decent time to buy.

A diamond opportunity?

After a difficult 2015, the diamond market has recovered somewhat this year. However, shares in FTSE-listed Gem Diamonds Limited (LSE: GEMD) remain 27% lower than they were at the start of 2015. I believe this could be a buying opportunity.

Gem Diamonds had a cash balance of $60.6m at the end of March and is expected to report adjusted earnings of 24 cents per share 2016. This puts the firm’s stock on a forecast P/E of just 7, with a prospective yield of 3.4%.

This valuation seems overly cautious to me. I think Gem Diamonds could deliver decent returns from current levels.

The post 4 Brexit-proof small-caps with big growth potential 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?

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.

Yet there still will be life after Brexit, companies will still trade, and the economy will still roll on. That’s why the current low share prices may present a buying opportunity.

And if you’re looking to invest, then here are a consumer goods giant, an industrial services firm, and a house builder that are my dividend dynamos.

Reckitt Benckiser

Reckitt Benckiser (LSE: RB.) has been one of the stock market’s greatest success stories of recent years. In a 17-year bear market where most stocks have been sliding, Reckitt’s valuation has been climbing steadily higher.

Why? Because it’s one of the most positive and focused consumer goods companies in the sector. It invests heavily in game-changing research and bright, optimistic marketing to sell a broad range of household products. And it’s now turning its attention from doing well in Europe and America to expanding in the booming consumer markets of China and India. Emerging markets remain largely untapped for Reckitt Benckiser, and offer the opportunity for the company to continue its rapid growth.

And earnings are still climbing. The 2016 P/E ratio is 23.44, with a dividend yield of 2.16%. That’s not cheap, but it seems a fair price for buying into what could be many more years of growth.

Cape

Cape (LSE: CIU) is a little-known mid-cap industrial services company that has been hidden away in the FTSE 250 index. The share price crashed after the company turned to a loss in 2013.

But since then it has recovered, and it’s now once again consistently profitable. Indeed, earnings per share are set to progress from 18.7p in 2014 to 25.33p in 2017. That then makes the 2016 P/E ratio of 8.21 particularly cheap.

What’s more, the dividend yield is predicted to be 7%, and should be well covered by profits. This makes Cape a value and recovery play with a very substantial income.

Berkeley Group

I’ve long been an advocate of investing in housebuilders as property prices and the number of transactions in the UK climb steadily higher. That’s why businesses like Berkeley Group (LSE: BKG) have been on a strong bull run.

Yet the rapid rise of earnings in this sector means that Berkeley is still good value. EPS is expected to jump from 188.4p in 2014 to 410.13p in 2018. And the 2016 P/E ratio is just 11.33, with a dividend yield of 6.25%, again well covered by profits.

This means the property developer is a growth prospect that’s also a value play and a high yielder. So this another one to tuck away in your income portfolio.

The post Are Reckitt Benckiser plc, Cape plc and Berkeley Group Holdings plc 3 dividend dynamos? appeared first on The Twelfth Magpie.

More reading

• Start buying shares with just £20 a week? Here’s how even that could help someone build wealth
• Here’s how putting £800 a month into a Stocks and Shares ISA from age 27 could fund a £2m retirement!
• Relying on the State Pension for retirement? Here’s why it might not be enough
• 3 beaten-down FTSE 100 shares to consider buying and holding for a decade
• How much would you need in a SIPP to replace a £3,000 monthly salary?

Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has recommended Berkeley Group Holdings and Reckitt Benckiser. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.