Looking ahead, the supermarket’s turnaround plans could still mean that it is able to generate further capital growth. Although it is operating in a competitive industry, its strategy seems to be working well after a tough period for the business.

Clearly, it’s not the only potential turnaround stock which could be worth buying. Reporting on Tuesday was a relatively risky smaller company which could have high reward potential in the long run.

Significant change

The company in question is delivery solutions specialist DX Group (LSE: DX). It released results for the year to 30 June 2018 on Tuesday which highlighted the significant change which has occurred during the period. It has put in place a new management team which has restricted the business into two divisions: DX Freight and DX Express. The ‘OneDX’ strategy being employed is focused on reducing losses in the Freight division, with it making progress in this regard according to today’s update.

Looking ahead, the company could benefit from a three-year investment programme in core IT and management systems. It has also strengthened its sales teams, with a devolution of accountability to general and regional managers. They now have greater authority over their operations, with the company’s aim being improved customer service levels.

With the loss after tax narrowing to £19.5m from £81.1m in the previous year, a turnaround appears to be possible. While DX Group is a high-risk stock due to its financial performance, it could post improved capital gains in future.

Improving outlook

Tesco’s turnaround may still have some way to go. The company has been able to refocus the business on its core operations in recent years, with it now being a UK food retail business. This is helping to improve its efficiency at a time when competition within the supermarket sector is increasing. As such, it may be able to deliver impressive profit growth – especially with the growth potential which recently-acquired Booker offers.

The decision to open a no-frills operation called Jack’s could provide Tesco with a further growth catalyst over the long run. It may allow it to benefit from customers trading down to discount retailers, while at the same time maintaining its strong position as a mid-market operator. Clearly, Jack’s is a relatively small operation. But if it is successful then its parent company has the financial firepower to quickly grow it over the medium term.

With Tesco trading on a price-to-earnings growth (PEG) ratio of 0.8 even after its recent share price rise, it appears to offer good value for money. As such, it could be worth buying for the long term, with its recovery not yet complete.

The post FTSE 100 stock Tesco has surged 10%+ this year, but is there still time to load up? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Tesco. The Motley Fool UK has recommended Tesco. 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.

Today I’m going to look at two stocks which were once popular, but have hit troubled times. Do either of them offer the value needed to stage a strong comeback?

Cheap oil = cash

Since completing last year’s refinancing, Kurdistan oil pioneer Gulf Keystone Petroleum (LSE: GKP) has performed surprisingly well, despite the political problems in Iraq and Kurdistan.

Friday’s operating update confirmed that production is stable at more than 34,525 barrels of oil per day (bopd). The company’s oil exports to Turkey are continuing without interruption, with around 200 trucks loaded per day.

Best of all, the group has received regular payments for its oil and appears to be generating positive free cash flow. Gulf’s net cash balance has risen from $12m on 5 April to $47.2m in October, despite the company making $10m of interest payments during that time.

If it’s sustainable, this strong cash generation makes the stock look cheap to me. Based on the increase in the group’s net cash balance so far this year, I estimate that Gulf Keystone stock currently trades on a price/free cash flow ratio of about 5.

On sale at a discount

The company’s current market value prices its 360m barrels of net 2P reserves at less than $1 per barrel. That seems cheap to me, if you believe Gulf will be able to produce and receive payment for these barrels successfully.

Unfortunately, this isn’t certain, given the political and operational difficulties in the region. This risk is probably the main reason why — at 95p — the stock is trading at a 38% discount to its book value of 153p. I’d rate this firm as a speculative buy, but would only consider taking a small position.

An interesting turnaround

Shares of troubled logistics firm DX Group (LSE: DX) rose by 14% on Friday morning, after the company issued its financial results for the year ending 30 June.

Sales rose slightly to £291.6m, but the group’s adjusted pre-tax profit fell from £11.5m last year to “£nil”. It’s an unusual result, but today’s share price rise suggests the market sees grounds for optimism.

One reason for this may be that a new management team has taken charge. Chairman Ron Series and chief executive Lloyd Dunn have a lot of industry experience, including the successful turnaround of Tuffnells, which they sold to Connect Group.

DX has also managed to secure a new £24m convertible loan. This will be used to refinance the firm’s operations and fund necessary restructuring and investment. Shareholders should note that this loan is convertible into shares at 10p each. Based on today’s market cap of £25m, this means that existing shareholders could face dilution of up to 50% if the group’s lenders choose to convert their loan notes into shares.

This dilution risk may be one reason why the shares currently trade on a 2018 forecast P/E of 7. If the loan was fully converted, this forecast P/E would rise to 14.

Despite this dilution risk, I believe DX could have turnaround potential. Although I wouldn’t want to pay much more than 10p-12p per share, I think the shares could be worth a closer look.

The post 2 bombed-out value stocks you may want to consider for 2018 appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the 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.

John Menzies (LSE: MNZS) was making headlines in Monday business after it decided to bang a planned merger with DX Group (LSE: DX) on the head.

The firms had been examining a tie-up since March, and in June a deal was struck that would have seen DX snap up Menzies’ distribution operations for £40m in addition to new shares worth 65% of the new company.

However, DX’s worrisome trading update in July, in which it advised it expected EBITDA to flatline in the fiscal year ending June 2016, forced Menzies to undertake additional financial due diligence. These steps had forced the company to conclude that “the combination would be required to be effected on revised terms,” it advised today.

And the Edinburgh business has decided to pull the plug in light of these developments. It commented that it “does not believe it is currently possible to agree a revised set of terms with DX for the combination which would be in the interests of John Menzies shareholders.”

The company “has therefore terminated discussions with DX,” it said.

Menzies added that there remains strategic merit by separating its Distribution and Aviation divisions into two independent businesses however, as well as the potential to create shareholder value.

Ready to fly?

While latest developments have prompted it to go back to the drawing board, Menzies still looks like an attractive destination for growth investors.

The City expects it to flip back into the black from the losses of recent years, with consensus suggesting earnings of 54p per share in 2017. And this predicted spurt is not expected to be a flash in the pan either, with an 11% bottom-line improvement is predicted for next year, to 61p.

I reckon a subsequent forward P/E ratio of 12.9 times is excellent value given the company’s resilience in tough markets. The business saw revenues at Aviation soar 12% during the four months to April, it announced in May, while it also noted that “contract gain momentum has continued with notable wins across each region.” And its Distribution arm was also trading in line with expectations, Menzies said.

I believe the company’s low valuation could leave room for further share price strength, particularly should the next set of financials (first-half numbers are slated for Tuesday, August 15) impress.

Road warrior

Hill & Smith (LSE: HILS) is another stock tipped to be a great bet for growth hunters.

The number crunchers expect demand for the FTSE 250 firm’s signs, barriers and assortment of other roadside decorations to keep driving northwards. And as a result, earnings are predicted to grow 10% in 2017, and by another 5% next year.

The Solihull business may not carry the same sort of value as Menzies however, its prospective P/E ratio of 18.9 times hovering above the broadly-considered value benchmark of 15 times.

But this should not necessarily deter investors, in my opinion, as Hill & Smith picks up traction at home as well as in the US — revenues were a record £291.8m during January-June, it advised last week, up 6% at constant currencies. And I anticipate that the top line will keep on bulging as infrastructure investment increases in both of the company’s key markets.

The post 2 growth stars that could make you brilliantly rich appeared first on The Twelfth Magpie.

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Royston Wild 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.

Specifically, managements announced this morning that the two firms are in talks regarding the possible sale of John Menzies’ distribution division. DX is proposing to buy the division off Menzies for £60m in cash and the issue of new shares representing 80% of its issued share capital after the deal closes. The cash consideration of the deal will be financed by new borrowings of the enlarged group.

A good deal? 

The deal looks on paper to be a sensible decision. Based on a preliminary joint assessment, the boards estimate that the combination would generate cost synergies in the range of £8m to £12m per annum — a sizeable figure compared to the acquisition price.

However, after the deal closes, it seems John Menzies’ shareholders will end up owning DX, which may not be a favourable outcome considering the company’s past mistakes. 

Under the terms of the deal, it is intended that the balance of the new DX shares issued to fund the merger will be issued to Menzies’ shareholders pro rata their holdings at the relevant date. On this basis, current DX shareholders would own in aggregate 20% of DX’s issued share capital with 75% of the company owned by Menzies’ investors. The remaining 5% of the group will be given to Menzies’ defined benefit pension scheme to meet pension obligations.

Still, on the face of it, this deal seems to make a lot of sense for DX’s investors. By combining with the distribution division, DX should be able to cut costs significantly and improve profit margins to turn around its operating performance. The company has been blighted by operational problems during the past year, and losses have ballooned.

Plenty of problems

Alongside today’s merger proposal, DX also announced its interim results for the six months ended 31 December 2016 this morning, revealing a loss before tax of £29.3m and an adjusted profit before tax of £0.6m, down from £2.4m for the same period a year ago. The company continues to restructure to improve returns and drive revenues, and it seems that the Menzies deal is part of this. But whether or not it will turn out to be a sensible acquisition in the long term is not clear. 

Considering the operational issues DX has reported over the past year, I’m sceptical of whether or not management can successfully integrate Menzies’ distribution business without any further problems. That being said, with the deal structured as it is, if DX  can’t manage with the larger operation then Menzies could easily swoop and acquire the rest of the business it does not already own. All in all, the  deal looks to make sense on paper but it remains to be seen whether or not DX’s management can successfully pull off a merger of this size.

The post Will a merger help these two falling knives turn things around? appeared first on The Twelfth Magpie.

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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.

In today’s low-interest-rate environment dividends are even more important as they can give a new lease of life to your savings. So, here are three of my favourite dividend stocks for 2017. 

Slow and steady 

Furniture and flooring group SCS (LSE: SCS) may not be the most exciting company around, but it is an income champion. 

Indeed, for the year ending 31 July 2016, City analysts expect the company to pay a dividend to shareholders of 14.5p per share, which equates to a yield of 8.5% at current prices. The shares currently trade at a forward P/E of 7.9 and the payout is covered 1.5 times by earnings per share.

Unfortunately, analysts aren’t expecting any fireworks from the group this year. Earnings per share growth of zero is pencilled-in for the year ending 31 July. Still, SCS’s low valuation and 8.5% dividend yield appear to make up for the lack of growth. 

Putting shareholders first 

Shares in DX Group (LSE: DX) lost around 75% of their value last year when the company warned on profits and ever since the shares have struggled to return to their former glory. Nonetheless, even though DX’s earnings per share have fallen by 50% since 2015, the company’s dividend payout of 2.5p is still covered twice by earnings per share indicating that the payout is safe for the time being. 

A dividend payout of 2.5p per share equates to a dividend yield of 13.9% at current prices. What’s more, just like SCS, shares in DX trade at a highly attractive valuation. City analysts are projecting group earnings per share of 4.8p for the year ending 30 June 2017, meaning that the shares currently trade at a forward P/E of 3.8. 

Cloudy outlook 

Legal services group NAHL (LSE: NAH) will be glad to have put 2016 behind it. Concerns about the company’s business model knocked 47% off the share price during 2016 as investors fled the stock. However, City analysts aren’t predicting doom for the firm any time soon. 

For the year ending 31, December 2016 analysts are expecting the group to report earnings per share growth of 16% although these gains are expected to disappear next year. For the year ending 31, December 2017 earnings per share are projected to fall 21% back to the level reported for 2015. Analysts are also expecting management to reduce the company’s dividend payout in line with declining earnings. From a payout of 19.2p for 2016, analysts have pencilled-in a full-year dividend payout of 15.9p per share for NAHL during 2017, down 17.2% year-on-year but still equal to a dividend yield of 11.8%. 

Further, NAHL’s shares currently trade at a forward P/E of only 5.7, which is cheap even considering the market’s concerns about the company’s outlook. 

The post These 8%+ yields are some of my top dividend buys for 2017 appeared first on The Twelfth Magpie.

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Rupert Hargreaves 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.

Broker forecasts suggest that DX could report earnings of 4.4p per share for its current financial year, which ends on 30 June. If so, DX shares would trade on a remarkably low P/E of 4.2. It’s also worth noting that the company is expected to pay a total dividend of 2.5p per share this year. This would give a staggering 13.5% yield!

The big risk is that DX’s most profitable business, DX Exchange, appears to be in decline. DX Exchange provides a secure mail service for lawyers and businesses. Demand is being rapidly eroded by email.

The other businesses in this group appear to be fairly standard low-margin courier and logistics operations. The group doesn’t provide a breakdown of profit in its results, so it’s very hard to tell how dependent DX is on DX Exchange.

In my view, DX could double in a year — but it may also have further to fall.

Summer drilling could unlock value

Shares in North Sea explorer Hurricane Energy (LSE: HUR) dipped slightly this morning, after the company said it would “temporarily suspend” efforts to find a farm-out partner for its Lancaster field.

The decision was made following the success of a recent £52.1m placing, which will fund two new exploration wells this summer.

In my view, suspending the search for a partner is a smart move. Hurricane’s current contingent resource estimates for Lancaster range from 62m to 456m barrels of oil equivalent (mmboe). I suspect this is too wide a range for a potential partner to be able to value accurately. The Lancaster 7 wells planned for this summer should refine this range.

This should enable Hurricane to put a firmer and hopefully higher value on its asset. Dr Robert Trice, Hurricane’s founder and chief executive, is highly regarded in the oil industry. I think shareholders should trust his judgement and remain patient.

A double bagger from the current level of 18p is definitely possible, in my opinion.

This could be risky

I’m far less confident about the outlook for Indian online fashion retailer Koovs (LSE: KOOV). Shares in the firm fell by 4% this morning, after it announced a £3.3m fundraising at 25p per share. That’s a discount of almost 50% to Tuesday’s closing price of 48.3p per share.

Although Koovs’ sales rose by 189% to £10m last year, its operating losses during the first half of the year were three times greater than its sales revenue. A huge increase in sales appears to be needed to make this business viable. Although Koovs could become India’s answer to Boohoo.Com, it could also run out of cash quite soon.

In my opinion, Koovs is simply too risky to be an attractive investment.

The post Could DX (Group) plc, Hurricane Energy plc and Koovs plc double within a year? 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.

Despite being in line with revised management expectations, DX posted a fall in revenue and pre-tax profit, with the former falling by 3.9% and the latter by 86.9% versus the same period of the previous year. The key reason for this is a challenging trading environment, with DX implementing measures to try and overcome such difficulties.

For example, it has completed the managed exit of a number of unattractive contracts and has enjoyed some success in securing new contracts on more favourable terms. Furthermore, DX believes that it will meet current guidance for the full-year and is focused on positioning itself for long-term growth, with its strategic OneDX programme set to improve financial performance in the coming years. However, it may be a stock to watch rather than buy at the present time given the scope for further short-term disappointment.

Value for money

Also reporting today was British Polythene (LSE: BPI), with its shares rising by 7% after it delivered an increase in pre-tax profit. It rose by over 4% despite revenue coming under pressure after total volumes declined due to lower demand from multiple UK sectors. Sales were also hurt somewhat by reduced polymer prices and the impact of currency headwinds.

But with its North American division moving back into the black, British Polythene’s overall profit improved and this has enabled it to increase dividends for the full-year by 12.5%. This puts it on a yield of 2.8% which, while low, is covered 3.9 times by profit. This indicates that rapid dividend growth is on the cards and with British Polythene trading on a price-to-earnings (P/E) ratio of just 9.4, it offers huge upward rerating potential, too.

Despite the challenges that British Polythene faces, it seems to offer excellent value for money. That’s especially the case since earnings are due to rise by 5% in each of the next two years, thereby showing that it’s set to perform relatively well even during a rather difficult period.

Take a risk?

Meanwhile, shares in biotech company Proteome Sciences (LSE: PRM) have risen by over 8% today following the release of an upbeat trading update. The company has reported a positive start to the 2016 financial year, with a strong order book and a growing pipeline in biomarker services.

Notably, following the addition of a further Fusion mass spectrometer in the latter part of 2015, the increased capacity that it brought (through doubling the levels of SysQuant/TMTcalibrator production) is being fully utilised this year. In fact, it has resulted in four customer projects already being completed and an increase in customer enquiries. In addition, partnering has also started well in 2016 and Proteome Sciences is optimistic regarding its long-term prospects.

Clearly, Proteome Sciences may be of interest to less risk-averse investors, although it remains a lossmaking smaller company and therefore, most investors may find more appealing risk/reward ratios elsewhere.

The post Do Today’s Updates Make DX (Group) PLC, British Polythene Industries plc And Proteome Sciences plc 3 ‘Must-Have’ Stocks? appeared first on The Twelfth Magpie.

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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.

The falls can range from anything from a 10% loss to sometimes 20%, 30% or even 40% if it’s perceived to be a bad one, or if the company shares are quite illiquid. Sometimes this can create an opportunity for the eagle-eyed investors amongst us. Whether that be in the form of picking up some shares on the cheap, or simply hoping for a dead-cat bounce, there are opportunities out there – it’s just a matter of spotting them.

So when I saw DX Group (LSE: DX), a share that I’d previously held, drop by over 75% in a day following a profit warning, closely followed by UK Mail (LSE: UKM) dropping further on a rather gloomy-sounding outlook that accompanied the interim results a few days later, I felt compelled to take a deeper look.

I didn’t see that cliff!

As you can see from the below chart, DX Group’s share price does look to have fallen off a cliff, such was the scale of the sell-off when the news was broken to the market at 10:51 on Friday 13 November.

And while there were some who may have dabbled on the day, I did wonder what the market knew that I didn’t. Since the announcement, the shares seemed to have settled around 20p-22p. This rates the shares at a rather lowly 3x forecast earnings and expected to yield over 10% – that seems very cheap, but are they cheap for a reason?

It may be that the market is less than impressed with management. You see, it was only on 21 September that the CEO’s outlook stated:

“Looking forward, our OneDX programme remains a key focus and we have a solid strategy supported by a robust balance sheet. Trading conditions continue to be tough but we are well placed to take advantage of any improvement and we have started the year in a positive manner.  The Board remains confident of our strategy to deliver long term growth.”

Less than 8 weeks later there was a profit warning, which seemed mainly due to higher-than-expected volume attrition in the highly profitable area of the secure DX Post and the slower-than-expected contract wins elsewhere. Additionally, management announced that the dividend would be reduced to 2.5p for the full year ending 2016 – less than half that paid in 2015.

Sorting out the issues?

Adding to investors’ pain five days later were interims from UK Mail. The shares had been sliding since the company warned on profits on 7 August 2015, the issues being mainly related to the transition to its fully automated hub in Coventry.

The market didn’t like management’s update, which pointed to guidance for 2016 being lowered, again due to the teething trouble at the new hub.

All in, the shares trade on a rather warm 16 times forecast earnings, though they are expected to yield over 6% — a yield not to be sniffed at.

However, I’d like to see management get a grip of the issues at the new hub and see it working seamlessly before investing here.

Market dominance?

Then last Thursday, Royal Mail (LSE: RMG) reported the half-year results. Reading through, though, there was the expected fall in letter volumes as well as increased debt as more staff left under voluntary redundancy schemes. Management, however, sounded quite chirpy. Of particular note (for me at least) was:

“Royal Mail is winning new volumes from well-known ‘bricks & mortar’ retailers and e-retailers. New contracts include John Lewis, Waterstones, House of Fraser, The Book People, The Hut Group and ASOS. This follows the development and launch of a number of initiatives to support retailers. For example, in the fast growing clothing and footwear sector, our online returns portal gives e-retailers full visibility of returned items. The new portal is important in the world of e-retail, where returns growth is outpacing the rest of the market. We have extended our strategic partnership with Alibaba, linking Chinese exporters with UK online shoppers, and allowing them to supply goods for UK delivery much more quickly.”

I think that announcements like this have, in part, given rise to the recent 10%+ rise in the price of the shares. For me, the company needed to be rightsized in order to compete properly in an ever-changing, ultra-competitive market – I think this is happening, albeit slowly.

However, as can be seen by the contract wins, here we have a company with the infrastructure to deliver nationwide whilst still being able to compete on price. In time, if not already, I can see it giving its smaller peers a run for their money.

And for those patient investors amongst you, it pays a near 5% yield while you wait!

The post Are Falls In DX (Group) plc (-75%) & UK Mail Group plc (-18%) Overdone? Or Is Royal Mail plc Showing Its Dominance? appeared first on The Twelfth Magpie.

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• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Dave Sullivan 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.

Here are potential candidates. 

Well covered

At the top of the list is Centrica (LSE: CNA). Centrica cut its dividend payout earlier this year, but the company has since recovered some composure. After cutting the annual payout to investors by 30%, Centrica’s dividend payout is now covered 1.5 times by earnings per share, which makes it safer than most.

Indeed, SSE’s dividend payout is only covered 1.2 times by earnings per share, and while National Grid‘s dividend cover also stands at 1.5 times, it’s dividend yield is only 4.7%, compared with  Centrica’s 5.3%. What’s more, as Centrica is one of the UK’s largest utility companies, it’s unlikely the company will suddenly disappear overnight. Centrica currently trades at a forward P/E of 12.7. 

Printing money

Next up is De La Rue plc (LON: DLAR). Just like Centrica, De La Rue has fallen out of favour with the market this year after cutting its dividend payout by around 40%. Nonetheless, now that the company’s dividend payout has been reduced to a more sustainable level, it looks as if it is here to stay for the foreseeable future. 

De La Rue’s new dividend payout of 25p per share is covered 1.8 times by earnings per share. At present levels, the company’s dividend yield is 5.4%. De La Rue currently trades at a forward P/E of 10.4. 

The best yield around 

Mid-cap telecoms group KCOM (LSE: KCOM) earns itself a place on this list thanks to the company’s highly impressive 6.1% dividend yield. The payout is currently covered 1.5 times by earnings per share and analysts are expecting management to hike the payout by 10% next year.

If City predictions prove true, KCOM is set to yield 6.8% next year and 7.0% during 2017. The company currently trades at a forward P/E of 11.5. 

Falling out of favour 

Ashmore (LSE: ASHM) is the riskiest pick in this article. The company’s shares currently support a dividend yield of 6.2%, but according to City forecasts, next year the company won’t be able to cover its dividend payout with earnings from operations. In other words, there’s a chance that Ashmore could be forced to slash its dividend payout next year. 

City analysts currently expect Ashmore’s earnings per share to fall 23% next year to 15.5p, just below the company’s expected dividend payout of 16.7p per share. Based on these forecasts Ashmore currently trades at a forward P/E of 17.4. 

Can it deliver?

Lastly, independent mail group DX (LSE: DX). DX supports a dividend yield of 7.1% or 6.1p. With earnings per share of 10.85p expected for next year, DX’s dividend payout looks safe for the time being, but the market doesn’t seem to trust the company. 

You see, DX currently trades at a forward P/E of 8.0, which signals to me that investors are wary of the group’s growth. However, only you can decide if the company is suitable for your portfolio. 

The post Five 5%+ Yielders You Can’t Afford To Ignore: Centrica PLC, De La Rue plc, KCOM Group PLC, Ashmore Group plc, DX (Group) PLC appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Centrica and KCOM 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.

For example, the share price performance of digital inkjet developer, Xaar (LSE: XAR), is rather surprising. That’s because it has risen by 38% since the turn of the year despite Xaar being forecast to post a fall of 35% in its earnings for the full year. Certainly, Xaar is expected to improve on its performance next year, with net profit growth of 12% being pencilled in, but even if it meets its current guidance its shares still trade on a relatively high forward price to earnings (P/E) ratio of 26.9. As such, they appear to be worth avoiding even though they are up by a further 6.5% today.

Meanwhile, the share price of fashion company, Mulberry (LSE: MUL), is also somewhat surprising. It fell heavily in 2012 and 2013 as its strategy of increasing prices backfired and many of its loyal customer base switched to what were perceived to be better value products. However, under a refreshed strategy, Mulberry is now forecast to reverse the slump in its profitability, with net profit forecast to treble this year and rise by 2.5 times next year. Despite this, Mulberry’s share price has only risen by 9% since the turn of the year and, with it trading on a price to earnings growth (PEG) ratio of 0.4, it seems to be worth buying.

It’s a similar story with delivery services company, DX (LSE: DX). It had a difficult year in 2014, posting a pretax loss of £55m. However, it is due to reverse this in 2015, with a pretax profit of £26m being forecast and, while profit growth of 4% next year is rather pedestrian, DX appears to be worth more than its current share price. That’s because it trades on a P/E ratio of just 7.9 and, furthermore, offers a yield of 7.1% at the present time, with dividends being covered 1.8 times by profit. As such, it appears to offer a potent mix of value and income potential that make it an appealing buy.

Of course, not all share price movements are so difficult to understand. For example, online advertising company, Blinkx (LSE: BLNX), has seen its share price fall by 86% since the start of 2014 as the company has moved from being a highly profitable business into a loss-making one. And, while Blinkx is currently transitioning its business model to mobile and is restructuring its marketing, divisions and wider product offering, a lack of profitability is likely to hold it back over the short to medium term. And, with further losses expected in the current year and next year, further weakness could lie ahead for Blinkx.

However, with a dirt cheap valuation (it trades on a price to book ratio of just 0.75) and a cash pile that provides it with the time and space to deliver a more focused offering, Blinkx seems to be worth buying at the present time. Certainly, it is relatively risky, but the potential rewards seem to justify buying with such an uncertain outlook.

The post Is Now The Perfect Time To Buy Blinkx Plc, Xaar plc, Mulberry Group PLC And DX (Group) PLC? appeared first on The Twelfth Magpie.

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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.