Looking ahead, further outperformance of the FTSE 100 could be ahead. The company appears to offer good value for money, as well as an improving financial outlook. As such, it could be worth buying alongside a sector peer which reported positive results on Thursday.

Positive outlook

The company in question is animal genetics specialist Genus (LSE: GNS). Results for the year to 30 June showed further improvements in sales and profitability, with revenue up 6% to £470.3m, while profit before tax moved 9% higher to £75.9m. The company experienced strong bovine revenues, rising 11% in constant currency. Porcine revenues moved up 1% in constant currency as the business continued to deliver its growth strategy.

Looking ahead, the company continues to see growth opportunities. The successful launch of its sexed semen product, Sexcel, in September 2017 has the potential to improve its financial performance in the medium term. And while there have been challenging operating conditions for some of its customers due to trade disputes, its overall outlook appears to be positive.

With Genus forecast to post a rise in earnings of 6% in the current financial year, it appears to have a bright outlook. With demand for its products likely to increase in the coming years, it could benefit from a tailwind which helps to boost its sales and profitability. As such, now could be a good time to buy it.

Growth potential

Prospects for the GlaxoSmithKline share price also seem to be positive. Although the pharma stock has risen significantly in recent months, it continues to offer a wide margin of safety. For example, it has a dividend yield of 5%, and a price-to-earnings (P/E) ratio of around 15. These figures suggest that it could offer further growth potential due, in part, to the strategy it’s being pursuing.

The company is seeking to restructure in a bid to make itself more efficient. It intends to focus on a more limited range of potential treatments within its pipeline, where it believes the risk/reward ratio is more appealing. It’s aiming to reduce costs by around £400m per year, which could help to deliver a rising bottom line over the medium term.

With GlaxoSmithKline’s dividend having been frozen since 2014, it now has a dividend coverage ratio of around 1.4. This suggests that dividend growth could be ahead for the company over the next few years, which could act as a catalyst on investor sentiment. With strong defensive characteristics (should the world economy’s growth rate slow down), the prospects for the stock seem to be bright.

The post Is the GSK share price primed to beat the FTSE 100? appeared first on The Twelfth Magpie.

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

My first stock has risen by 211% over the last 10 years. Animal genetics company Genus (LSE: GNS) released its half-year results today, giving us a chance to see whether this momentum is being maintained.

Double-digit gains

Revenue at the Basingstoke-based firm — which breeds genetically-modified pigs and cows — rose by 7% to £238.6m during the six months to 31 December. Adjusted operating profit including joint ventures rose by 18% to £31.5m, implying a respectable adjusted operating margin of 13.3%.

Cash generated by operations improved, rising to £22m. That’s nearly double the £13.5m generated during the same period in 2016. The interim dividend was increased by 9.5% to 8.1p, reflecting higher profits and stronger cash flow.

These figures all seemed fairly positive to me, but they weren’t enough to stop the shares falling by around 5%. Do investors need to be worried?

Headwinds could slow growth

Last year, Genus benefitted from unusually high pig prices in China. The firm says that pig prices are now “returning to a more normal level,” reducing profits from this region.

Currency movements could also put pressure on profits. Commenting today, chief executive Karim Bitar said that shifting exchange rates are expected to reduce reported profits by around £3m this year.

Broker consensus forecasts indicate that Genus is expected to report adjusted earnings of 71.5p per share for 2017/18. This is only 3% more than last year’s adjusted figure of 69.4p per share.

Although the headwinds described today sound like short-term issues to me, I’m not convinced now is the right time to buy. With the shares trading on a forecast P/E of about 30, I think there might be better buying opportunities later this year.

I’m tempted by this stock

Shares of pharmaceutical services firm Clinigen Group (LSE: CLIN) have also fallen this week following the firm’s interim results. But I’m more inclined to see this as a buying opportunity.

Clinigen specialises in providing unlicensed medicines to doctors and other healthcare professionals. These might be used in trials or to treat a patient with specific requirements. It’s a bigger business than you might think. The group ships 3.5m units for patient treatment each year to more than 111 countries. In 2017 it provided access to 1,700 unlicensed medicines.

Expansion has come through organic growth and acquisitions. Two acquisitions were made during the first half of the year, including a £143.5m deal to buy AIM-listed firm Quantum Pharma. These deals should expand its geographical footprint and its product portfolio.

This could be the right time

Sales rose by 28% to £167.8m during the six months to 31 December, while adjusted earnings rose 13% to 21.2p. Cash generated from operations rose from £7.7m to £34.3m, giving me confidence that the group should quickly be able to repay the debt used to buy Quantum.

My feeling is that after a period of major investment, Clinigen is now well positioned for further growth.

Analysts expect the group’s adjusted earnings to rise by 11.5% to 46.6p per share this year, putting the stock on a forecast P/E of 20. Earnings are expected to accelerate by a further 18% in 2018/19. I believe this stock could be a profitable growth buy at current levels.

The post 2 stunning growth stocks you might regret not buying 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.

Despite this, there are still some companies which appear to be undervalued. Here are two examples which could provide high returns in the long run and help to make you a millionaire.

Improving performance

Reporting on Thursday was animal genetics company Genus (LSE: GNS). Its results for the year to 30 June showed that it is making good progress with its strategy. Evidence of this can be seen in a revenue rise of 18%, with strong porcine revenues. They increased by 20%, with notable growth in Asia and from royalties. There was also improving performance from bovine revenues, which were 13% higher than in the previous year.

The effect of increasing sales meant that the company’s adjusted profit before tax moved 13% higher. Its growth was offset to some extent by a planned increase in R&D investments, but they should help the company to deliver further growth in future years. In fact, R&D investment increased by 27% as key initiatives in genomic selection, gender skew and gene editing made considerable progress.

Looking ahead, Genus is forecast to post a rise in its bottom line of 7% in the current year, followed by further growth of 12% next year. Although it trades on a price-to-earnings (P/E) ratio of 29, its mix of high and sustainable growth means it could perform relatively well in the long term.

Defensive profile

With the FTSE 100 facing a number of major risks such as geopolitical challenges in North Korea and political risks in the US, companies with defensive profiles could become more popular in future. Of course, relatively few companies with defensive characteristics offer high and dependable growth. That’s why medical technology company Smith & Nephew (LSE: SN) could prove to be a worthwhile investment in the long run.

The company looks set to capitalise on the opportunities created by an ageing population. For example, it provides knee and hip replacements alongside its woundcare and sports medicine operations. Together, these businesses provide it with a degree of diversity, as well as lack of exposure to the boom/bust patent cycle which is a feature of a number of healthcare companies. As such, its earnings growth tends to be steady and highly sustainable.

Over the next two years, Smith & Nephew is expected to post a rise in its bottom line of 6% per annum. While it has a P/E ratio of 20.6, it seems to be trading at a fair price given its diverse and robust business model, as well as its long-term growth potential.

The post Two growth stocks that could make you a millionaire appeared first on The Twelfth Magpie.

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• 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.

Trading well and expansion overseas

Indeed, the headline figures are impressive with revenue up 22% compared to a year ago, adjusted earnings per share ticked 14% higher and the directors increased the interim dividend by 23%.

Tristel reckons its lead technology is a proprietary chlorine dioxide formulation, which the firm uses to addresses hospital infection prevention, control of contamination in critical environments, and veterinary practice infection prevention. I find the growth proposition compelling here as Tristel expands abroad with overseas sales up 45% and representing 43% of total sales.

In August, Tristel made an acquisition in Australia, which delivered positive trading results during the period, and according to chief executive Paul Swinney,  the company is making satisfactory progress with its planned entry into the North American hospital market. The potential for further growth seems huge.

Quality, growth and momentum

With the return on capital running at 17% or so, Tristel scores well on quality, growth and share-price momentum. However, you’ve got to pay up to own the shares. At today’s share price of 162p, the forward price-to-earning (P/E) ratio sits at just under 21 for the year to June 2018 and the forward yield is around 2.2%. Given the firm’s ongoing progress, I’d be happy to buy a few of the shares following today’s update.

But with FTSE 250 animal genetics company Genus (LSE: GNS) I’m more cautious. The firm’s headline figures today include adjusted earnings per share down 9% on a constant currency basis and net debt ballooning by 24%. The company says planned increases in research and development expenditure drove strategic progress but also contributed to a 10% decline in adjusted profit before tax. 

A rich valuation

Given the firm’s rich valuation, I think operational progress seems slow. At today’s 1,747p share price, the forward P/E rating for the year to June 2018 runs at just over 24 and the forward dividend yield is around 1.5%. City analysts following the company expect forward earnings to cover the payout around 2.8 times.

Over the last 10 years the share price has risen around 190% but the compound annual growth rate of normalised earnings, including forecasts for the next two years, runs at just 9%. I wonder if that growth rate justifies such a rich valuation.

That said, Genus operates in a defensive sector and cash generation is good, generally supporting and rising in line with profits. The firm’s return on capital runs around 9% and the operating profit margin at 15% or so. Perhaps the quality of the operation will keep the stock travelling with the momentum we’ve seen over the last few years. However, if it does, it will be without me aboard. 

The post Why I’d buy Tristel plc and avoid Genus plc after HY results appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
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Kevin Godbold 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.

Genus’s customers endured a rather mixed period from July to November. Strong pig production volumes in some markets such as the US caused substantially lower pig prices in those regions. However, in other regions such as Europe and China, pig prices either improved or remained strong. This supported robust demand for Genus’s PIC genetics as well as volume growth.

Meanwhile, dairy prices began to improve on a global basis. However, they remain at levels where a significant proportion of dairy farmers are unprofitable. Beef prices in the US declined throughout the period, which meant that Genus’s customers adopted a more cautious approach to demand. These challenging conditions led to lower semen volumes for Genus ABS, while IVB continued to grow embryo volumes.

Looking ahead, Genus is forecast to increase its earnings by 6% in the current year. While this rate of growth is roughly in line with that of the wider market, Genus trades on a high-growth valuation that its forecasts don’t reflect. For example, Genus has a price-to-earnings (P/E) ratio of 29.8 and when this is combined with its rating, it equates to a price-to-earnings growth (PEG) ratio of 5. This indicates that Genus is overvalued at the present time.

Small is beautiful?

That’s a key reason why fellow healthcare company Eco Animal Health has huge appeal in comparison. Unlike Genus, Eco Animal Health is expected to record strong growth in both the current and next year. Its earnings are expected to rise by 34% this year and by a further 17% next year. When combined with its P/E ratio of 51.2, this equates to a much more appealing PEG ratio of 2.

Certainly, Eco Animal Health is a smaller business and lacks the size, scale and financial firepower of Genus. However, it has an excellent record of delivering above average growth over a long period. For example, in the last five years Eco Animal Health’s earnings have risen by 130% and it’s not unreasonable to expect them to record a similarly strong growth rate over the next five years.

While Genus is a high quality company that has excellent long-term growth prospects, its valuation is too high to merit purchase at the present time. That’s especially the case since an upgrade to its guidance may not be on the cards as the pig and dairy markets offer rather mixed outlooks. Therefore, for long-term investors buying Eco Animal Health is the logical solution, while also waiting for an improved share price for Genus before buying a slice of it.

The post Why I’d buy this small-cap over Genus plc despite today’s positive results appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of ECO Animal Health Group. 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.

Breeding success

Shares in Genus (LSE: GNS) have almost doubled since April 2014, to 2,003p, and since 2001 they’ve managed a 1,500% return.

The firm describes itself as “the world’s leading provider of bovine genetics and reproduction services,” which does sound nicer than saying it mainly sells bull semen. It’s actually cleverer than that sounds, and there’s a lot of genetics wizardry behind the firm’s breeding research. It’s big in the pork business too, and its technology is applicable to other areas.

Earnings have been strong over the past few years, and though dividend yields are low at just 1.4% last year, they’re well covered and are strongly progressive — the annual handout has been growing at around 10% per year.

A downside is that the shares are currently highly rated, on a forward P/E multiple of a fraction under 30 for the year to June 2017. However, with a 10% rise in EPS forecast, further growth in the years ahead could see returns rising steadily.

With September’s full-year results, chief executive Karim Bitar said: “We established gene editing as a core strategic longer-term growth platform … that offers considerable opportunity in disease resistance,” pointing out that the “GSS technology is ready for commercial launch and we expect to have legal clarity in the coming months on when we will be able to bring it to market“.

I admit I’m torn over the stock’s high current valuation, but I do see a potentially lucrative future for Genus.

Gut feeling

4D Pharma (LSE: DDDD) isn’t yet profitable, and the AIM-listed researcher’s shares are out of favour — after climbing to a peak at the end of March, they’ve retreated by 19% to today’s 790p. But the firm does have some enthusiastic supporters — ace investor Neil Woodford has a 24% stake in the company through his Woodford Investment Managements firm, and Invesco owns 14%.

4D is delving into the human gut, specifically looking for drug candidates among the hordes of bacteria to be found therein. And it’s making some solid progress.

In July the firm reported encouraging phase 1 results from its single strain live bio-therapeutic for the treatment of Irritable Bowel Syndrome, Blautix, with a better-than-placebo response. These are early days, and phase 1 is really about safety and tolerability rather than efficacy, but hopefully the company will move on to phase 2 trials in 2017.

Phase 1 trials are also under way on the firm’s candidate for the treatment of Paediatric Crohn’s disease, Thetanix, also a live bacteria extracted from the human gut.

These are widespread and often debilitating conditions, and success in these fields could be very profitable indeed. 4D has so far built up a library of around 3,000 bacterial strains and plans to extend its research into other diseases, including cancer.

The company is burning through around £10m a year, but at the 30 June interim stage there was cash and equivalents on the books of £75.4m, so there’s plenty of funding there for a few years yet. As blue-sky hopefuls go, 4D Pharma could be a winner.

The post Are these two hot biotechnology shares to buy today? appeared first on The Twelfth Magpie.

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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.

The last six months have been hugely disappointing for investors in Shire (LSE: SHP). That’s because the pharmaceutical company has posted a fall in its share price of 27% and, with its deal to merge with Baxalta creating a considerable amount of uncertainty regarding its future prospects, many investors are now wary about buying a slice of the business.

Certainly, Shire is of the view that the deal will be a good one and that the combined entity will assume a much more dominant position within the pharmaceutical space. However, others argue that the potential synergies are limited and that the two companies are simply not a good fit. As such, Shire’s valuation has come under pressure even though its long term sales growth potential remains high.

With the company currently trading on a price to earnings growth (PEG) ratio of 1.4, it appears to be attractively priced. However, with other healthcare stocks offering less risk and enticing valuations, there appear to be better options available elsewhere.

Not without risk

Also engaging in major M&A activity recently is Alliance Pharma (LSE: APH). It has purchased the healthcare products arm of Sinclair IS Pharma for around £130m. This includes 27 products which will greatly diversify Alliance Pharma’s sales in future, while also increasing its non-UK exposure.

Clearly, the deal is not without risk, but Alliance Pharma has an excellent track record of successfully integrating acquisitions in the past. This deal is a major one for the company it is likely to positively stimulate its top and bottom line over the medium to long term.

With Alliance Pharma trading on a price to earnings (P/E) ratio of just 13.8 it appears to offer excellent value for money at the present time. Although it yields just 2.5%, dividends per share are expected to rise by 10% this year and with Alliance Pharma having a payout ratio of just 34%, there is clear scope for further double-digit rises in shareholder payouts which could make it a very appealing income play in the coming years.

Lacking appeal

Meanwhile, Genus (LSE: GNS) continues to offer a relatively unappealing risk/reward ratio. Certainly, it is a high-quality company which has a very bright future, but much of this potential appears to have already been priced in. For example, Genus trades on a P/E ratio of 24 and yet is only expected to increase its bottom line by 3% in the current year. This equates to a PEG ratio of 8 and indicates that its share price could come under pressure over the short to medium term.

Furthermore, Genus lacks dividend appeal due in part to its high share price. It yields only 1.5% and with its shares having fallen by 9% since the turn of the year, now does not appear to be the right time to buy them.

The post 3 Healthcare Stocks With More Downside Than Upside? Shire PLC, Alliance Pharma plc And Genus plc appeared first on The Twelfth Magpie.

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• 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 owns shares of Alliance Pharma. 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.

Furthermore, with health care spending across the globe rising as populations in the emerging world grow in size and wealth, while in the developed world an ageing population becomes a reality, the profitability of health care companies appears to be heading northwards.

Of course, some health care companies also provide stability and resilient earnings figures, too. For example, wound management and surgical devices company Smith & Nephew (LSE: SN) has posted a rise in its bottom line in each of the last five years and, looking ahead, is expected to do the same in 2016. This highlights the consistency that the health care space can offer and, with Smith & Nephew trading on a price to earnings growth (PEG) ratio of 1.9, such resilience appears to be very reasonably priced.

Undoubtedly, Smith & Nephew remains a relatively low-yielding stock at the moment, with its yield currently standing at just 1.7%. A key reason for this is its low payout ratio, with just 37% of profit being paid out as a dividend. This provides an opportunity for the company to boost investor sentiment with strong dividend growth at a time when interest rates are set to remain low. And, with Smith & Nephew set to raise shareholder payouts by 8.7% next year, it could become a sound income play over the medium term.

When it comes to dividends, though, AstraZeneca (LSE: AZN) appears to hold more appeal than Smith & Nephew. That’s because it currently yields 4.1% and, with its bottom line expected to record positive growth over the medium term as its acquisition strategy begins to make a real impact on its financial performance, dividend rises could be on the horizon.

Clearly, AstraZeneca is a far less stable investment opportunity than Smith & Nephew. That’s because of the nature of the pharmaceutical segment, where patent expiries and generic competition equate to large ups and downs in profitability. However, even taking this risk into account, AstraZeneca’s price to earnings (P/E) ratio of 16.1 indicates excellent value for money. With an improving pipeline, excellent cash flow and a strong balance sheet, AstraZeneca appears to be a long term buy.

Meanwhile, animal genetics company Genus (LSE: GNS) has enjoyed a very positive 2015, with its shares rising by 16% since the turn of the year. This puts them on a relatively high P/E ratio of 24.8 and, with Genus forecast to increase its bottom line by just 3% this year, its valuation may not move upwards at the same rate as it has done in the past.

Furthermore, Genus yields just 1.5% and, while dividends per share have risen by 10% per annum during the last five years, it appears to lack the income appeal of AstraZeneca as well as the stability of Smith & Nephew. For example, Genus’ bottom line has declined in two of the last five years. As such, and with the likes of its two health care peers being highly appealing at the present time, there appear to be better options available elsewhere, even though its recent AGM statement indicated that it is trading in-line with expectations.

The post AstraZeneca plc, Smith & Nephew plc And Genus plc: Buy, Sell Or Hold? appeared first on The Twelfth Magpie.

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In addition, GlaxoSmithKline initiated a review of its ViiV Healthcare division (which specialises in HIV drugs) to decide whether a spin-off would be beneficial to shareholders. While this now appears unlikely to happen, the fact that GlaxoSmithKline is focused on adding shareholder value bodes well for its medium to long term performance.

Clearly, it still has some way to go before its bottom line reflects its current strategy. For example, this year is set to be the fourth in a row of profit declines, with the company’s net profit due to fall by 21%. This, in itself, is not a major surprise: global pure play pharmaceutical companies on both sides of the Atlantic have endured a tough few years, with generic drugs taking away sales of treatments that have now lost patent protection.

However, with the aforementioned cost savings set to boost margins, next year should see GlaxoSmithKline make a comeback, with bottom line growth of 12% being forecast for 2016. Furthermore, GlaxoSmithKline continues to yield over 6%, making it one of the higher yielding stocks in the FTSE 100. And, with an excellent pipeline and sound strategy, it seems to be an excellent long term buy at the present time.

Also offering excellent future potential is Alliance Pharma (LSE: APH). It specialises in the purchase of off-patent drugs that continue to offer relatively appealing margins and this strategy looks set to deliver excellent results. For example, Alliance Pharma is due to record a rise in earnings of 7% next year and, while the company’s share price has soared by 47% since the turn of the year, Alliance Pharma still trades at a multiple of net assets of just 2.1. This indicates that there is plenty of scope for further rises in its valuation – especially with the company having remained profitable in the last five years, having a sound business model and an experienced management team.

Meanwhile, cattle breeding specialist, Genus (LSE: GNS), has posted a superb and relatively consistent share price performance in recent years. In fact, it is up 75% over the past five years, which equates to an annualised return of almost 12% per annum. However, while the company has a very appealing business model and is well-run, its share price rise may have fully factored in its future prospects.

That’s because it trades on a price to earnings (P/E) ratio of 23.2 and yet is forecast to record a rise in earnings of just 2% this year. As such, now may be the right time to watch Genus, but for investors seeking to find value within the healthcare space, GlaxoSmithKline and Alliance Pharma seem to be preferable  choices.

The post GlaxoSmithKline plc, Genus plc And Alliance Pharma plc: 3 Of The Best Health Care Stocks? appeared first on The Twelfth Magpie.

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• 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 owns shares of Alliance Pharma and GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

It has risen a lot in the last two months of trade, and there’s reason to believe that its stock could continue to outperform Genus (LSE: GNS) and SDL (LSE: SDL) in weeks ahead.

Here’s my quick take. 

Sepura (Market Cap €400m)

What you are buying: the company designs, develops and supplies digital radio systems, accessories and other related tools. It’s forecast to grow revenues at an astonishing compound annual growth rate (CAGR) of 19% into 2017, which will likely yield rapidly rising earnings and dividends. 

Bullish brokers forecast upside of up to about 30% from its current level of 160p a share. Earlier this week, Panmure’s price target rose to 190p a share from 170p, while at the end of May Liberum said that the business could be worth 202p a share.

I think analysts may well be right. 

Its balance sheet is strong, and based on forward earnings for cash flows and net earnings, its shares could indeed rise from its current level if it keeps up with its current strategy — on 26 May, it completed the acquisition of Teltronic, a €127.5m deal that was announced on 1 May, and contributed to a +24% performance since.

Genus (Market Cap £900m)

What you are buying: This is a biotech company with focus on animal genetics. I am not a big fan of biotech companies: they can deliver huge returns, but that comes at a high risk — Genus fell 30% in 1Q14, for instance, although it has recovered most of its value since. Genus could be added to your wish list now, however.

Its stock is up 13% this year and 40% since June 2014. Admittedly, it doesn’t trade in ‘bargain territory’, one of the reasons being that its forward earnings multiple stands at 28x, while its forward dividend yield is in the region of 1.3%. But if forecasts are correct, Genus may be able to grow earnings per share at 10% a year or more, which would render its stock cheaper, on a relative basis. 

Much of its fortunes hinge on cash returns, in my view; the good news is that Genus has room to boost returns by deploying more capital. 

SDL (Market Cap £330)

What you are buying: SDL offers information management solutions and software applications, a sector where consolidation is on the cards . SDL stock is essentially flat in 2015, and has been looking for direction for a couple of years now. It looks a tad expensive, based on key financial metrics, trading multiples, and in the light of a lowly forward dividend yield. 

Its balance is strong, but core operating margins are not incredibly enticing. I think management would do well to announce a more aggressive corporate strategy with regard to capital allocation — its core free cash flow yield is low, but there’s room for action, if it exploits its balance sheet. 

Until then, investors would do well to give it a pass. 

The post Does Sepura Plc Offer More Value Than Genus plc & SDL plc After A 24% Rally? appeared first on The Twelfth Magpie.

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Alessandro Pasetti 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.