The Hastings share price is down by 15%, following a trading update that the market has taken as a profit warning. I can see why. I think Friday’s numbers have highlighted some worrying trends.

Rising losses

Hastings boss Toby van der Meer says he’s “really pleased” with the company’s progress. But although premium income rose by 4% to £235.5m during the first quarter and policy numbers climbed 3%, the underlying news isn’t great.

The group’s net revenue, which excludes amounts paid to reinsurers, fell by 1% to £183.1m. And claims costs continued to rise, thanks to rising car repair costs and property damage claims.

As a result, this year’s loss ratio will be at the upper end of its 75%-79% range. An insurer’s loss ratio measures how much of its premium income is used to settle claims. Hastings’ costs have been rising steadily, as this table shows:

I’ve also included Hastings’ expense ratio in this table. This measures the insurer’s operating expenses, relative to income from insurance premiums.

As you can see, expenses have been rising as well as claims costs. The company cautioned today that changes to VAT rules and other industry-specific costs mean that “certain expenses” are expected to increase in 2019.

Is Hastings’ 6%+ dividend safe?

Today’s figures suggest to me that the insurance operations will remain profitable this year, but at a slightly lower level. This isn’t a disaster.

However, the update was widely seen as a profit warning, a view I share. Such warnings often mark the start of a period of weak performance.

Hastings shares could be cheap at this level, but they could have further to fall. We’ll know more later this year. In the meantime, I wouldn’t take the risk. If I owned the shares I’d hold, but I wouldn’t buy more after today’s news.

This 8% payout looks safe to me

Insurers are struggling with costs. But one sector that’s delivering bumper returns for investors is mining. One of my top picks in this sector is Anglo-Aussie giant BHP Group (LSE: BHP).

After being traumatised by the 2015 mining crash, mining bosses are being very careful with their cash. Spending on major new projects is being tightly controlled, as are operating costs. Against this backdrop, strong commodity prices mean that profits have risen fast.

BHP is expected to report a full-year profit of more than $10bn in 2018/19, compared to $3.7bn in 2017/18. This strong growth means that the firm’s operations are producing a lot of spare cash.

Shareholders are expected to receive dividends totalling $2.04 per share this year, which gives the stock a yield of 8.8%. Although this includes a one-off return from the sale of the group’s US shale operations, dividend forecasts for 2019/20 still indicate a hefty 6.1% dividend yield.

My view: BHP’s mix of iron ore, copper and petroleum assets are all large scale and fairly low cost. I see this diversified group as one of the best ways to make money from mining. I’d buy the shares for income today, and then wait for the next market slump to buy more at a lower level.

The post Why I’d ditch big faller Hastings and buy this FTSE 100 8% dividend 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.

To help you get started, here are three dividend stocks I’d be happy to buy for my Stocks and Shares ISA today.

Defensive dividends

FTSE 100 defence giant BAE Systems (LSE: BA) has fallen out of favour recently. Investors are worried that aircraft sales to Saudi Arabia could be disrupted by export restrictions on parts made in Germany.

I’m not too concerned. This kind of problem is business-as-usual for BAE, which has faced similar issues many times in its long history. Indeed, despite various problems over the years, BAE’s dividend hasn’t been cut since 1999.

For me, such a long dividend history is a powerful buy signal. Another thing I like about this business is that the group’s order backlog rose by 25% to £48.4m last year, securing future revenue.

With the shares trading on just 10 times 2019 forecast earnings and offering a yield of 5%, I reckon BAE looks like a decent buy.

A high-flying bargain?

Another stock I’ve been watching with interest is British Airways owner International Consolidated Airlines Group (LSE: IAG). Shares in the firm — which also owns Aer Lingus and Iberia — have fallen by about 25% over the last six months.

One reason for this is Brexit. Depending on the terms of our departure from the European Union, UK airlines wanting to fly within the region may need to ensure that at least 50% of their shares are owned by EU nationals. If UK shareholders are no longer included, then IAG is expected to breach this limit.

Chief executive Willie Walsh hasn’t yet revealed a clear plan to solve this problem, causing some concern. However, airlines would have six months to comply with this rule, post Brexit. I suspect a solution will be found.

Perhaps a bigger worry is that IAG’s profits are expected to be flat this year, as rising costs put pressure on margins. A sector downturn is a risk. But with the shares trading on just five times forecast earnings and offering a 5.5% yield, I think the shares are cheap enough to be worth the risk.

Earn 6.6% from this household name

Another sector of the market that’s out of favour at the moment is insurance. One reason for this is that tough competition in motor and home insurance is limiting growth. However, most companies seem to be performing fairly well, despite this pressure.

Motor and home insurer Hastings Group (LSE: HSTG) is a good example of this. The number of customer policies climbed 2.5% to 2.7m last year, while gross written premiums — cash collected — rose by 3% to 958.3m.

The group’s return on equity — a key measure of profit for financial firms — was stable at about 21%. This helped to support a 4% increase in adjusted operating profit, which rose to £190.6m.

Hastings’ full-year dividend rose by 7% to 13.5p per share last year, giving a yield of 6.3%. City analysts expect a similar increase this year, giving the stock a forecast yield of 6.6%. I’d rate this as a buy for income.

The post 5 days to ISA deadline. Three dividend stocks I’d buy 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.

But £5 per day is £150 per month. And as I’ll explain, I think this could be enough to build a profitable stock market income fund.

How does this work?

A typical dealing charge of £10 would wipe out 6.6% of your £150 monthly budget in one trade alone. That’s no good. The secret to investing small amounts in stocks is to use regular investing plans. These allow you to buy the same stocks on a scheduled day each month, for a much lower fee.

Of course, this discount doesn’t apply to selling stocks, where the full dealing charge will apply. So our mission is to buy stocks we’re unlikely to want to sell. Difficult, but not impossible.

Here are three stocks I’d be happy to spend £50 on each month, to build a long-term passive income.

Generous payout funds 6% yield

My first choice is home and motor insurer Hastings Group (LSE: HSTG). Like most insurance companies at the moment, growth is slow but the business generates plenty of spare cash. Most of this is returned to shareholders through generous dividends.

Hastings’ 2018 results show that the number of active customer policies rose by 2.5% last year, while net profit rose by 3% to £130.6m. The company expects more of the same in 2019, and has decided to increase its dividend payout ratio to reflect limited growth opportunities.

For 2019, the dividend payout ratio will increase to between 65% and 75% of earnings. Based on current forecasts, I estimate that this will gives the stock a forecast yield of 6.6% for 2019. I’d be happy to buy and hold the shares for income at this level.

Profit from China growth

My next pick is luxury fashion brand Burberry Group (LSE: BRBY). This company can trace its history back to 1856 and remains popular and highly profitable today. One particular attraction is that investing in this business provides direct exposure to growing wealth in Asian markets, especially China.

Another attraction is that this firm’s upmarket appeal means that historically, it’s always bounced back quickly after recessions.

The final reason why I’d buy is that this business is very profitable, with a return on capital employed of about 25%. This helps to secure strong cash generation to support dividend growth.

The shareholder payout has grown by an average of 7% each year since 2013, well above inflation. Although the starting yield seems low at 2.2%, I expect continued long-term growth.

A drink that’s loved by millions

My final pick is soft drinks group Nichols (LSE: NICL), which makes Vimto, Sunkist and a range of other popular soft drinks. Vimto was invented 110 years ago by the grandfather of company chairman John Nichols.

Like Burberry, this family firm enjoys high profit margins thanks to the strength of its brands. An operating margin of 22% helped to lift pre-tax profit by 4% to £31.8m in 2018. Strong cash generation meant that the company was able to increase the dividend by 14% to 38.1p per share last year.

If people have been drinking Vimto for 110 years, I suspect they will continue to do so. The starting dividend yield of 2.5% may seem modest, but this payout has doubled in six years. A stock I’d buy and tuck away.

The post 3 dividend stocks I’d buy with just £5 per day 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 recommended Burberry and Nichols. 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.

While things certainly look peachy, I’m not sure I’d build a position now. Here’s why.

Frothy valuation

With CEO David Stevens talking of “substantial growth across almost all our businesses”, you know the numbers are going to be pretty good. And it proved to be the case. 

At £1.66bn, turnover was up 14% in the first six months of the year compared to over the same period in 2017. The total number of customers on the company’s books grew by the same percentage, to 6.23m, by the end of June.

Separated out, UK customer numbers rose 17% to a little over 5m. With over 4m cars now covered, Admiral reported an 11% rise in motor profits to £249.5m. The only fly in the ointment was a £1.9m loss at the company’s Household arm due to “weather events“.

Admiral’s International Insurance businesses also performed decently with customer numbers up 17% to 1.12m. A loss of £600,000 may still disappoint some but this was far better than the £10.1m recorded the year before. 

This performance, when combined with the continued success (although relatively small contribution) of Admiral’s price comparison business, led the company to report a 9% rise in group share of pre-tax profits to £211.7m.

Income investors will also be happy. Having announced a 7% increase to the interim dividend (to 60p per share, which includes a special payout of 19.2p), it seems likely the company will yield the massive 5.7% expected by analysts in 2018.

So, what’s my issue with Admiral? In a word, ‘valuation’. At 16 times forecast earnings before today, the stock already looked pricey compared to peers. 

Admittedly, this premium can be justified. The company’s return on equity and operating margins are consistently high, even if the former slipped slightly over H1. What’s more, its finances look in good order, with a net cash position of £103m at the end of 2017.

Nevertheless, I don’t think investors should get carried away. While further growth (and share price gains) are possible, the competition Admiral faces, coupled with the potential impact of a ‘no deal’ Brexit, make me more inclined to shop around for value in the sector. Speaking of which…

Better value

With its share price almost 20% lower than at this time last year, things haven’t been so great for holders of stock in £1.7bn cap Hastings Group (LSE: HSTG). This does, however, leave the company’s stock on a far more compelling valuation of a little less than 12 times earnings. 

There are also indications that its fortunes may be turning. Last week’s interim results revealed a 9% rise in net revenue and stonking 22% increase in adjusted operating profit. Encouragingly, management also appeared confident in the company’s ability to meet expectations for the full year. 

In addition to the recent improvement in trading, Hastings is also likely to yield of 5.2% in 2018, rising to 6.5% in 2019. Although these payouts aren’t massively different to those offered by Admiral, the extent to which they are covered by profits appears better, at 1.7 and 1.5 times respectively. 

So, while I still rate both companies, Hastings gets my nod at the current time.

The post This cheap FTSE 250 dividend stock looks a better buy than Admiral appeared first on The Twelfth Magpie.

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Paul Summers 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.

Personally I don’t sell dividend stocks based on share price movements alone. Unless I feel something serious has gone wrong, such as a major profit warning, I’ll sit tight. I may even buy more shares.

A potential bargain

The share price of motor and home insurer Hastings Group (LSE: HSTG) fell by 7% in early trade, after the company issued a first-quarter trading update.

Despite this poor reaction, the figures seemed quite good to me. Live customer policies rose to 2.67m, a 10% increase on one year ago. Net revenue rose by 12% to £184.5m during the first three months of the year. This increase in sales left the group’s share of the UK private car insurance market at 7.4% at the end of March, up from 6.7% one year earlier.

Although a surge of collisions in snow and ice during the quarter added to claims costs, management expects full-year claims levels to be within its target range.

Why I’d buy this fall

One reason for today’s slump could be another warning of “continued price competition”.

However, my reading of the figures suggests the group’s pricing power is still quite good. Net revenue per customer has risen from £257 to £275 over the last year. New digital technology is helping to cut costs and should help to speed up the claims process.

Hastings’ shares have now fallen by nearly 20% from their December highs of 320p. The stock now trades on 11 times 2018 forecast earnings with a prospective yield of 5.2%. This dividend looks safe enough to me. I believe the shares are a good buy for income at current levels.

Another 5% yield I’d buy and forget

Another company whose shares have fallen steadily this year is sweetener and ingredients specialist Tate & Lyle (LSE: TATE). Shares in this 150-year old firm have lost 25% of their value over the last year, even as trading stabilised and the dividend was maintained.

This company’s products are used in a wide range of processed and packaged foods, such as soups, sauces, cakes and soft drinks. Its customers include many of the world’s largest food producers.

If demand for this kind of convenience food ever changes dramatically, the firm could be wrong-footed and suffer falling sales in the future. Personally, I’m not too concerned by this risk. Tate & Lyle has adapted and survived for more than 150 years. I suspect it will continue to do so.

A sticky income

What interests me is that the stock looks like a low-risk dividend buy. Debt is low and cash generation is generally good. Profits have now stabilised after a difficult few years, and the group’s adjusted earnings are expected to rise modestly this year. 

Broker forecast put the stock on a forecast P/E of 12 with a well-covered yield of 5%. This dividend hasn’t been cut since at least 1997, the earliest date for which I could find records. In my view these shares could be an excellent buy for investors wanting a buy-and-forget income.

The post 2 FTSE 250 5% yielders I’d buy today and hold forever 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.

A difficult year

Of course, the recent news that the government was making a large change to the discount rate used for personal injury claims (the Ogden discount rate) came as a surprise to the motor insurance industry. It caused investor sentiment in Direct Line’s shares to decline and also meant that its profitability for the 2016 financial year was lower than expected. Despite this, the company was able to increase its final dividend by 5.4%, to 9.7p per share. This meant total dividends for 2016 were 24.6p per share, which included a special dividend of 10p per share.

Dividend growth prospects

Looking ahead, Direct Line will only pay one special dividend per year in order to better align its spending requirements. While a change in the Ogden discount rate means that the company’s future dividend payments are now less certain than they once were, the reality is that any higher costs incurred in claims by insurers such as Direct Line and peers such as Hastings (LSE:HSTG) are likely to simply be passed on to consumers. This will be in the form of higher premiums, which means that the overall effect on the company’s bottom line and its ability to pay dividends may be zero.

In fact, in the 2017 financial year Direct Line is due to pay total dividends of 26p per share. Following its recent share price fall, this means that it now has a forward yield of over 7.5%. Since it trades on a price-to-earnings (P/E) ratio of 11.9 versus a historic average over the last five years of 12.8, it seems to offer a margin of safety.

Sector peer

Direct Line’s attraction as an income stock is perhaps best evidenced when compared to a sector peer. Motor insurance specialist Hastings currently yields 4.7%. This is around 100 basis points higher than the FTSE 100’s dividend yield, but still lower than its sector peer. As with its industry rival, Hastings is likely to pass on to consumers the higher costs resulting from the change to the Ogden discount rate. Therefore, its forecast growth rate in earnings of 27% this year and 9% next year has a reasonable chance of being met.

However, since Direct Line is forecast to record a rise in its earnings of 34% this year and 4% next year, there is little to choose between the two stocks when it comes to earnings growth. But with such a large difference in yield and a similar prospects in terms of passing higher costs on to consumers, Direct Line seems to be the superior income stock for 2017.

The post Direct Line Insurance Group plc could yield 7.5% in 2017 appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Direct Line Insurance. 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.

Synthomer’s results were given a boost last year by the weaker pound. But the firm’s performance was impressive without this. Volumes rose by 9%, and underlying pre-tax profit at constant exchange rates rose by 16.4%.

The firm has announced a modest-sized acquisition today which should provide a further boost to earnings. In this article I’ll consider the case for buying Synthomer and look at another mid-cap growth opportunity.

This stock could outperform again

Synthomer makes specialist chemicals used in a wide range of manufacturing applications. This diversity helps to insulate the group from the sector-specific problems we’ve seen at companies that depend on the oil industry, for example.

Net debt of £150.3m is very low relative to the group’s profits. Shareholders benefit from strong cash generation. The dividend was increased by 31.6% to 11.3p per share last year. I estimate this payment should be covered comfortably by free cash flow.

As you’d expect from a high-quality growth stock, Synthomer shares aren’t cheap. They currently trade on a 2017 forecast P/E of 16.5, with a prospective yield of 2.4%. But it’s worth remembering that earnings forecasts for this firm were increased nearly every month in 2016.

If Synthomer continues to outperform expectations in 2017, the firm’s current share price could look cheap by the end of the year. I’d be happy to buy this stock at current levels.

The pick of the bunch?

Home and motor insurance group Hastings Group (LSE: HSTG) only floated on the London market in October 2015, but it’s already made a strong impression. The firm’s shares have risen by 40% so far, but the stock doesn’t look expensive to me.

The total value of premiums written last year rose by 25% to £768.0m. Market share for private car insurance increased from 5.8% to 6.5%. Adjusted operating profit would have risen by 21% to £152.1m, if it wasn’t for a £20m one-off charge following the so-called Ogden rate change.

This legal change will mean that Hastings (like all insurers) has to pay out more in compensation payments to allow for lower interest rates. But the firm doesn’t expect the change to have a material impact on 2017 profits, as insurance rates will be adjusted to reflect the higher costs. Nor should this change result in an increase in borrowing — Hastings’ multiple of net debt-to-adjusted operating profit fell from 2.1 times to 1.9 times last year, despite the impact of the Ogden change.

Hastings earnings per share are expected to rise by a 65% to 19.6p this year. This puts the stock on a forecast P/E of 12, with a prospective yield of 4.8%. In my view this is an undemanding valuation, given that the group’s strong record of growth.

I’d be happy to add Hastings to my portfolio at current levels for both income and growth.

The post Two FTSE 250 growth stocks you may want to buy in March 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.

Hastings said gross written premiums surged 28% during the six months to June, to reach £360.6m, with live customer policies up 17% to 2.2m. This drove operating profit 20% higher from the corresponding 2015 period, to £70.8m.

The firm’s core motor division continued to tear higher, and Hastings’ market share rose to 6.2% in the first half from 5.5% a year earlier. But the Bexhill-on-Sea business is also making inroads in other markets — home insurance sales surged by more than two-thirds between January and June.

And Hastings believes it has what it takes to keep this momentum going, the firm noting that “the UK leaving the EU is not likely to impact the need for UK motorists and households to obtain insurance and is therefore unlikely to significantly affect demand for the Group’s products.”

I reckon a forward P/E multiple of 13.9 times makes Hastings a great-value growth stock.

London stalling?

Property investment trust Derwent London (LSE: DLN) hasn’t fared so well following its own update, the stock recently dealing 3% lower from Wednesday’s close.

Derwent advised that letting activity hit record highs during January-June, the firm letting 267,700 square feet during the period.

But investors have headed for the exits after the capital-focused business downgraded its rental growth forecasts for 2016, Derwent commenting that “the outcome of the EU referendum may lower activity.” The company now expects rental incomes to expand between 1% and 5% this year versus its prior estimate of between 5% and 8%.

Given the huge uncertainty swirling around the UK economy in the near-term and beyond — and consequently demand for Derwent’s office space — I reckon the stock is an unappealing buy at present, particularly due to the stock’s huge forward P/E rating of 35.8 times.

Financial flailer

Insurance leviathan Old Mutual (LSE: OML) also worried investors on Thursday with a patchy first-half update of its own. The stock was last dealing 6% lower on the day.

Old Mutual — which had surged to 12-month peaks of 225p per share this week — advised that “the macro-environment has been challenging with a weaker rand against the first half of 2015 and lower average market levels.”

Adjusted pre-tax profit slumped 22% between January and June, to £708m. And the insurer warned that “an uncertain environment continues in our three largest markets of South Africa, UK and US which may lead to further challenges.”

On the plus side, Old Mutual advised it remains on track to complete massive restructuring by 2018 that will see it split into four separate divisions.

I remain convinced that Old Mutual’s focus on fast-growing African nations should deliver sterling returns in the years ahead, and that the firm remains decently-priced despite recent share price gains — Old Mutual deals on a prospective P/E ratio of 11.8 times.

Still, I reckon the prospect of extra currency-related road bumps ahead, allied with further market troubles and possible separation problems, makes Old Mutual an unsuitable pick for risk-averse investors.

The post Are these stocks ‘brilliant buys’ after today’s news? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has 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.

Looking ahead, BBA is forecast to increase its bottom line by just 1% this year and this may lead some investors to avoid the company’s shares at the present time. However, with BBA due to return to much stronger growth next year, its shares could deliver capital gains of 20%-plus. That’s because BBA is due to post a rise in earnings of 18% next year and with its shares having a price-to-earnings-growth (PEG) ratio of just 0.7, there seems to be significant upside potential on offer.

Happy Hastings

Also reporting today was Hastings Group (LSE: HSTG), with the insurance company delivering strong operating performance in the three months to 31 March. Encouragingly, live customer policies increased by 17% to 2.1m, while Hastings’ market share of UK private car insurance policies increased from 5.3% one year ago to 6% at the end of the period. And with net revenue rising by 22%, Hastings seems to be delivering on its targets from the IPO and looks to be well-positioned to improve on its financial performance.

With Hastings trading on a price-to-earnings (P/E) ratio of just 11.9, it seems to offer excellent value for money. That’s especially the case since it’s forecast to increase its bottom line by 17% next year, which could act as a positive catalyst on investor sentiment. And with Hastings having a dividend yield of 4.3% that’s covered around twice by profit, its long-term outlook as an income play remains very sound. As such, 20% gains are on the cards, with Hastings having the potential to be a very strong performer in 2016 and beyond.

Long-term pick

Meanwhile, Capital & Counties (LSE: CAPC) today reported that its strategy to deliver value creation from its two central London estates continues. The development at Covent Garden is on track to achieve an estimated rental value of £100m, while demolition to ground level at Earls Court continues to be on target with completion expected by the end of the year. With Capital & Counties having a balance sheet containing a loan-to-value ratio of just 18%, it appears to be financially sound.

While the outlook for the UK property market is somewhat uncertain, Capital & Counties appears to offer a sufficiently wide margin of safety to merit investment at the current time. It trades on a price-to-book (P/B) ratio of just 0.85 and while its shares could come under pressure in the short run due to political risk, in the long run it could prove to be a sound buy that offers over 20% upside.

The post Will today’s results thrust BBA Aviation plc, Hastings Group Hldg plc and Capital & Counties Properties plc 20% higher? appeared first on The Twelfth Magpie.

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

Encouragingly, Hastings has seen its market share rise by 20 basis points to 5.3% during the last year. With it investing heavily for future growth, it also appears to be in a good position to record further strong growth numbers moving forward. For example, Hastings has witnessed a continued upward trajectory in home and telematics, with policy numbers increasing by 87% and 58%, respectively, in 2015.

Looking ahead, Hastings is forecast to grow its bottom line by as much as 41% in the 2016 financial year. And with its shares having a price-to-earnings (P/E) ratio of just 10.1, this equates to a price-to-earnings growth (PEG) ratio of only 0.25. As such, now seems to be an opportune moment to buy a slice of it for the long run.

Bright long-term future

Also reporting today was Gym Group (LSE: GYM). Although its loss for the 2015 financial year widened from £9.4m in 2014 to £12.4m, the budget gym operator has a bright long-term future. That’s because low-cost gyms continue to become increasingly popular among consumers, with Gym Group having increased its membership numbers by 28.3% in the last year alone. Furthermore, its loss for the year includes one-off IPO finance costs and other exceptional items.

Gym Group’s adjusted pre-tax profit is expected to rise in 2016 to £8.9m from 2015’s £5.3m. A key reason for this is the rapid rate of openings, with six new sites planned for the first half of 2016. And with the company having a business model which appears to be proving popular among consumers, its shares could continue their rise of 13% since its IPO last year. That’s especially the case with adjusted profit set to grow at a rapid rate and the company’s somewhat disruptive business model having the potential to prove popular in new locations.

Strength in emerging markets

Meanwhile, car distributor Inchcape (LSE: INCH) also released results today, benefitting from strength in emerging markets. Revenue rose by 7.8% in 2015, while operating profit increased by 10.3% at constant exchange rates. The latter was helped by an increase in underlying operating margins of 20 basis points, while Inchcape’s after-sales operations also delivered an upbeat performance in 2015.

Looking ahead, Inchcape is forecast to grow its bottom line by 8% in 2016 and by a further 6% next year. This is roughly in-line with the outlook for the wider index, but with Inchcape trading on a P/E ratio of 13.2, it appears to offer good value for money. That’s especially the case when its highly diversified business model is factored in, with it operating across multiple regions and having different revenue streams. This is a key reason why it has recorded profit growth in each of the last five years and for long-term investors, it seems to be an excellent buy at the present time.

The post Today’s Updates Make Me Bullish On Hastings Group Hldg PLC, Gym Group PLC And Inchcape 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.