One stock that could be worth a closer look is Centrica (LSE: CNA). The company has endured a period of significant uncertainty, but may be able to outperform the wider index in an uncertain era. Another stock that could have a wide margin of safety and a favourable risk/reward ratio released a relatively positive update on Friday.

Encouraging prospects

The company in question is oil & gas production and development business Eland (LSE: ELA). It released an operations update which showed development operations on the Gbetiokun field are continuing as planned, following the successful infill drilling on Opuama. The company continues to believe development of Gbetiokun has the potential to deliver a 50% increase in oil production from OML 40, which could lead to improving financial performance.

Looking ahead, the stock is expected to report a rise in earnings of 48% next year. Despite this, its shares seem to offer a wide margin of safety, having a price-to-earnings growth (PEG) ratio of 0.1. This suggests they may offer capital growth potential.

Clearly, the outlook for the wider oil & gas sector could hold back Eland over the near term. Uncertainty regarding the future for the world economy, and its potential impact on demand for oil, may lead to disappointing share price performance for a number of sector incumbents. But with what seems to be a sound strategy, and a high forecast growth rate in earnings, the stock could also offer high potential rewards.

Increasing appeal

With the prospects for the UK economy seemingly uncertain at present, investors may adopt an increasingly cautious stance. This could make defensive shares, such as Centrica, more appealing versus cyclical stocks, as investors place greater emphasis on business models that may be less closely correlated to the performance of the wider economy.

Certainly, the company faces a number of risks. Political risk remains high – especially since the government’s slim majority may now have disappeared. This could leave a weak government. And with the potential for nationalisation should there be a change in leadership, Centrica’s valuation may continue to trade at a discount to its intrinsic value. There is also regulatory risk from the price cap, which could have a negative impact on its financial outlook.

With the Centrica share price having a dividend yield of around 8%, though, the stock may offer a margin of safety. In a period where the FTSE 100 is displaying a significant amount of volatility, the stock may be able to deliver relatively sound total returns. While not without risk, it could become an increasingly popular share, relative to some of its index peers.

The post Have £1,000 to invest? Why I’d go for Centrica held in a Stocks and Shares ISA appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Centrica. 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.

Strong performance

The Worcestershire-based business revealed that trade of late has been improving. Despite ongoing competitive pressures of its road tunnel and street lighting business, the group is seeing excellent revenue and operating profit growth at its retail and display business Thorlux and Lightronics in the Netherlands, which continues to drive double digit growth for the group as a whole.

Annual revenues for the year to 30 June grew by 18.6% to £105.4m, following a particularly strong performance from its overseas operations. And this helped annual pre-tax profits to grow 12.8% to £18.4m and earnings per share to increase by 11.6% to 12.54p.

Meanwhile, cash and cash equivalents at the end of the year had risen to £24.7m from £18.3m a year earlier, paving the way for a 0.3p increase in the final dividend to 2.85p – and bringing the ordinary full-year dividend up from 3.75p in the previous year to 4.20p.

Bumper returns

Shareholders in lighting specialist have enjoyed bumper returns over the last couple of years as the firm moves on from its past troubles, but is there further room to run?

Going forward, Chairman Mike Allcock is cautious about the company’s outlook, as he warned investors that a repeat of this year’s performance will be difficult given “ongoing economic uncertainty from Brexit, government instability and exchange rate variations”.

FW Thorpe also sounds very much still in the market for acquisitions, although nothing seems imminent. “We continue to review options for further acquisitions. We have the financial capacity, so it could be said that it is easy to acquire, and there are indeed frequent options for us to review,” added Mr Allcock.

And from a valuation perspective, with shares in the company trading at 22 times next year’s expected earnings, things aren’t looking too demanding given the rapidly expanding bottom line.

Turnaround play

Elsewhere, Nigeria-focused small cap oil explorer Eland Oil & Gas (LSE: ELA) may be a better pick for investors looking for a turnaround play.

Eland recently reported a positive start to its Opuama-7 sidetrack operations, with production expected to ramp up to 5,900 barrels of oil a day by October. As increasing crude shipments flow to the market, the firm is on course to improve its cash position and deliver high potential rewards to its shareholders.

Following a successful equity raise earlier this year and growing operational cash flow, the company is set to deliver further progress with its pipeline of development assets. As such, City analysts expect the significant upside in its financial performance in the coming year, after a number of operational difficulties in recent years.

Its shares are up 31% year-to-date, but Eland still seems very attractively valued, with shares trading at a forward price-to-earnings ratio of 5.9, based on analysts’ 2017 forecasts.

The post Could these bargain small-cap stocks make you brilliantly rich? appeared first on The Twelfth Magpie.

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• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

Jack Tang has no position in any shares mentioned. The Motley Fool UK owns shares of FW Thorpe. 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.

Improving performance

Diversified mining company Anglo American (LSE: AAL) released a production update on Monday which showed its current strategy is yielding improved results. The first quarter of the year saw a strong operational performance from the company, with a 9% increase in production on a copper equivalent basis when compared to the same quarter of the prior year. Of note was a rise in rough diamond production of 8%, and platinum production which was 1% up on the first quarter of 2016.

Of course, Anglo American has sought to de-risk its business of late. It has introduced major cost-saving measures and sought to create a more streamlined operation. While they seem to have worked relatively well, the reality is that the company’s financial performance is closely linked to the performance of commodity prices. Therefore, there remains a high degree of risk despite the important changes made to the company’s business model.

Still, the potential rewards from investing in the stock seem to be high. It is forecast to grow its bottom line by 33% in the current year and yet trades on a price-to-earnings (P/E) ratio of just 6.4. This indicates that while there may be relatively high volatility ahead and the company’s share price could be affected by currency changes, commodity prices and operational developments, its risk/reward ratio remains highly enticing.

Improving outlook

Investing in the Oil & Gas industry is relatively risky. The price of oil has failed to rise in recent months after a strong performance in the final quarter of 2016. Therefore, buying a relatively small production and exploration company such as Eland (LSE: ELA) could be an even riskier move, since it may lack the size and scale of its larger sector peers.

However, the company released a positive update on Monday. It showed that it is currently producing 8,000 barrels of oil per day from the Opuama-3 well, with around 120,000 barrels of oil having been delivered to the export terminal since its last update. It also announced a borrowing base review with its lender which now means it has sufficient funding for its upcoming work programme at Opuama-7. This is expected to start soon, with a target production of 17,500 barrels of oil per day by the end of the year.

Looking ahead, Eland is forecast to move into profitability this year after five years of losses. In 2018, its bottom line is due to rise by 107%, which puts its shares on a price-to-earnings growth (PEG) ratio of just 1.4. As such, the shares could rise significantly, although the risk remains high.

The post 2 attractive ‘risky’ shares for growth investors appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

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.

Don’t panic

I think panic is the word, at least for Old Mutual (LSE: OML) shareholders of late. The insurer is heavily exposed to South Africa, and faltering economics there and in emerging markets in general has turned many investors away — adding to the general fear of the financial sector to create a double-whammy that has led to a 35% share price fall between August 2015 and 2016’s low point in January.

Since then we’ve seen a 24% recovery, to 185p, but Old Mutual Shares are still on a forward P/E for 2017 of only 9.5, with a 4.8% dividend yield currently forecast. To me that suggests there could be a 50% upside even on current forecasts, which suggest essentially flat earnings over the next two years.

But I see emerging markets fears as overdone and I suspect forecasts could be unduly pessimistic, so I see a good chance of more than that. We should also see some confidence returning to UK financial shares should we choose to Remain in the EU and stave off a potential devastation of the sector.

A terrific oil play?

It’s not often that we see a small oil company that’s financially sound and has great earnings growth forecasts, but has suffered a share price crash — but that’s what we see at Eland Oil & Gas (LSE: ELA).

Forecasts suggest a massive escalation of earnings in 2017 — and with the shares currently trading at 26.9p after having fallen by 66% in the past 12 months, that would give us a P/E for this year of a modest 5.7, falling to less than 1 in 2017! On the liquidity front, Eland has recently completed a $15m share placing, which should see it in a comfortable position. So why are the shares so cheap?

The big issue is that Eland operates mainly in the Niger delta in Nigeria, a country that is battling Boko Haram militants who are set on trying to destroy the country’s oil and gas infrastructure. But only last week Eland rejected “unsubstantiated press speculation” and confirmed that its operations are unaffected. It’s risky, but barring any catastrophe, Eland could become a nice multi-bagger.

Challenger bank

The big banks are suffering from continuing weak sentiment. But at the same time we see Virgin Money (LSE: VM), which is not saddled with the same legacy problems that still afflict its bigger competitors, on a similar low P/E valuation. Virgin Money shares have slipped by 22% over the past 12 months, to 334p, despite the bank having posted solid results for 2015 and an upbeat update in May which reported record mortgage lending in Q1 this year.

Two years of strong earnings growth forecasts would drop the P/E to only 8.3 by December 2017, while inflation-busting dividend rises would take the yield to 2.4%.

And it really shouldn’t stop there. With Virgin commanding only around 3.5% of the UK’s mortgage market, and being ranked the number one UK mortgage lender in a recent survey, the potential for earnings growth and big dividend increases looks very attractive to me. I reckon Virgin shares deserve to be on a significantly higher rating that this.

The post 3 shares that could double in a year: Old Mutual plc, Eland Oil & Gas plc, Virgin Money Holdings (UK) plc appeared first on The Twelfth Magpie.

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• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

Alan Oscroft 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.

Soaring higher

Defence play Ultra Electronics (LSE: ULE) soothed investor nerves in Friday trading after announcing a solid uptick in client activity.

While trading has been in line with management expectations during the quarter, the London business advised that “order intake for quarter one has been strong.” The order book has swelled to £833.5m as of the start of April, Ultra Electronics advised, up from £753.8m at the beginning of 2016.

This is great news considering that £100m worth of orders at Ultra Electronics had slipped into this year and beyond — broker Edison notes that “the first quarter improvement would tend to suggest that at least some of these have been recovered alongside significant elements of new intake.”

Indeed, the Greenford firm has also inked lucrative contracts with the Royal Navy and fellow defence giant Raytheon during the past couple of weeks alone.

The City expects earnings at Ultra Electronics to tick 5% higher in 2016, and a further 6% rise is predicted for next year. I believe that subsequent P/E ratings of 13.7 times and 12.9 times represent a decent level to latch onto the firm as market conditions seem to be improving.

Failing to ignite

Boiler builder Flowgroup (LSE: FLOW) has not fared as well in end-of-week trading, however, the stock recently dealing 12% lower from Thursday’s close. The business announced today that revenues galloped 21% higher during 2015, to £40.4m. But this could not prevent operating losses widening to £17.1m from £10m in 2014.

Flowgroup said that the adverse result reflected “increased investment in staffing levels and infrastructure in preparation for further growth across the business.” However, the engineer was also hampered by a delayed launch for its Flow boiler following a European Court of Justice ruling on energy-saving products, a move that could see VAT on the device increased to 20% from 5% from 2017.

Flowgroup completed first commercial installations of the product in April at the 5% rate, and believes that boiler sales and installations should continue to benefit from a reduced tax rate.

But of course this is not a certainty, and Flowgroup could see uptake of its cutting-edge tech slump should VAT charges soar. Such a scenario could see losses extended beyond 2017, as City forecasts currently suggest.

Driller dips

Shares in fossil fuel play Eland Oil & Gas (LSE: ELA) have continued to trade below recent five-month peaks in Friday’s session.

The company has announced plans to raise $15m through a book-build placing to accelerate the development of its assets in Nigeria. As well as funding the re-entry, completion and production of its Gbetiokun-1 well, Eland will also use the funds to build a supplementary export route for production. The remainder will be used for working capital purposes, Eland advised.

Positive testing results at the field have helped propel Eland’s share price in recent weeks, and the business hopes to produce 7,800 barrels of oil per day when production commences. Maiden oil is pencilled in for the second half of 2016.

The City expects Eland to bounce back into the black this year, and record earnings of 13 US cents per share. This projection leaves the firm dealing on a P/E rating of 3.1 times.

For some, this ultra-low reading may make the business an irresistible value pick. But I believe the uncertainty related to oil drilling — not to mention the wider supply imbalance hanging over the oil price — still makes Eland a risk too far at the present time.

The post Should you buy Ultra Electronics Holdings plc, Flowgroup plc & Eland Oil & Gas plc today? appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

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

Even if a takeover doesn’t happen, Entertainment One continues to be an excellent buy at the present time. Factoring-in today’s share price rise, it trades on a price-to-earnings (P/E) ratio of just 9.9 and with the company’s bottom line expected to rise by 16% next year, this puts it on a price-to-earnings-growth (PEG) ratio of just 0.6. This indicates that Entertainment One offers significant capital gain potential over the medium-to-long term and it could be about to reverse its disappointing share price fall of 40% during the last year.

Risky but rewarding?

Also in the news today is Eland Oil & Gas (LSE: ELA), with the company’s share price rising by around 20% after it announced an operational update on the Opuama-3 well re-entry. Notably, canal access clearing operations have been completed, providing the required access to the Opuama-3 wellhead. Furthermore, the mobilisation of contractor equipment, crude storage barges and the associated marine spread from Warri and Port Harcourt to the Opuama-3 wellhead has now been completed.

Looking ahead, Eland expects to complete flow-testing of Opuama-3 within the coming weeks. The company is upbeat about the prospect of perforating two new zones and it believes that they could be highly productive and could almost double reported production rates. As such, Eland could be a stock for less risk-averse investors to take a closer look at, although with the wider sector offering excellent value for money there may be lower risk opportunities elsewhere that offer high potential rewards.

Meanwhile, life sciences company OptiBiotix (LSE: OPTI) today released full-year results that showed it’s making progress on its strategy of delivering compounds to tackle obesity, high cholesterol and diabetes. Although its pre-tax loss increased versus the previous year, OptiBiotix was able to increase the size of its intellectual property portfolio and signed multiple commercial agreements, including one with Slimfast after the end of the year.

With OptiBiotix having successfully conducted a placing last year and also since the end of the year, its research and development programme appears to be well-funded. In fact, it has a cash position of £4m and this should also allow it to extend its technology platforms into new product and application spaces.

Clearly, with the company having made a loss of £1.4m last year, it remains a relatively high-risk play. But for less risk-averse investors who are seeking a smaller company to buy alongside a healthcare major, OptiBiotix could be worthy of consideration.

The post Will Entertainment One Ltd, Eland Oil & Gas PLC And OptiBiotix Health PLC Soar Following Today’s News? appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

Peter Stephens owns shares of ITV. 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.