Tullett Prebon generates 60% of its earnings in US dollars, so the pound’s 15%-plus drop versus the greenback since the EU referendum has been a major positive for the company. However, even when the impact of the falling pound is excluded, the firm was able to increase its top line by 4% in the quarter, while its revenue in the first nine months of the year was 7% higher than in the same period of the previous year.

Tullett Prebon has also benefitted from the above average volatility that has been a key feature of financial markets in recent months. Its acquisitions have also positively impact on its revenue, with its Energy and Commodities division recording a rise in revenue of 10% at constant exchange rates. And with the company making progress towards its acquisition of the hybrid voice broking and information part of ICAP, its medium-term outlook is upbeat.

In fact, Tullett Prebon is expected to deliver a rise in earnings of 1% in the current year, followed by further growth of 12% next year. This shows that the company is moving in the right direction after five years of falling earnings. Its share price doesn’t yet appear to factor-in the improved outlook for the company, since it trades on a price-to-earnings growth (PEG) ratio of 0.8. This indicates that it has a wide margin of safety as well as significant upside potential.

Good track record

However, Tullett Prebon isn’t the only appealing stock in the financial services sector. Wealth management company Henderson (LSE: HGG) trades on a price-to-earnings (P/E) ratio of 12, which is only slightly higher than Tullett Prebon’s P/E ratio of 11.7. However, Henderson has a more stable track record of earnings growth, with its bottom line having risen in four of the last five years. This shows that it may have a lower risk profile than Tullett Prebon and could be less volatile in future years.

Furthermore, Henderson has a higher yield than Tullett Prebon, with the former’s yield being 4.7% versus 4.4% for Tullett. Both companies have scope to raise dividends at a faster pace than profit in future, since Henderson’s dividends are covered 1.7 times by profit and Tullett Prebon’s shareholder payouts are covered 1.9 times by profit. Therefore, either would make a sound income investment over the medium to long term.

However, with Tullett Prebon likely to benefit from volatility in financial markets to a greater extent than Henderson, it seems to be the superior buy ahead of the US election and a potential US interest rate rise.

The post A weak pound makes this stock even more appealing 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.

Troubled estate agent

Shares in Countrywide (LSE: CWD), the UK’s largest estate agency group, gained 13% on the release of first-half figures, to 289p. The shares are, admittedly, still down 48% over the past 12 months, having received a bit of a kicking following the EU referendum result. But could today’s response suggest they’re oversold?

The company reported a 25% fall in adjusted pre-tax profit from a year ago, to £21.8m, and a 22% fall in adjusted earnings per share to 8p as the London market has stalled. We heard of a “market slowdown evident in May/June 2016 in the run up to the EU referendum,” with chief executive Alison Platt telling us that “since the referendum result this has become more marked in London, the South East and expensive prime markets.“

The company warned it won’t be able to match last year’s earnings levels, so the analysts’ consensus of an 8% rise in earnings per share now has to be scrapped. But even a 10% fall in EPS would still leave the shares on a low forward P/E of 10. With dividends likely to be healthy, Countrywide looks like a decent long-term candidate.

Computer security

Meanwhile, Sophos (LSE: SOPH) shares are up 5.8% to 242p after the computer security specialist reported a “strong first-quarter performance,” with “significant cash generation.“

With billings up 25.2% to $141.9m, revenue grew by 12.2% to $127.4m and by 11.9% at constant currency rates (CCR). Cash EBITDA was up 55.2% (48.6% CCR). Free cash flow of $28.8m was far more impressive than the $3.7m outflow recorded at the same stage last year.

Chief executive Kris Hagerman spoke of “our confidence in the outlook for the full financial year,” as the company “expects to deliver mid-teens percentage billings growth on a like-for-like basis” for the full year.

The shares are on a lofty forward P/E of 38 for the full year, but it’s still early days for a company that only floated in July 2015 and it’s surely a strong growth prospect — but difficult to value right now.

Brexit bargain?

Investment manager Henderson Group (LSE: HGG) suffered a sharp fall as a result of the EU referendum, but its shares have started to come back a little, and first half results today have pushed them up another 2% as I write, to 227p.

Henderson told us “retail outflows accelerated considerably in the immediate aftermath of the UK’s referendum on EU membership,” but that was mitigated to some extent by the diversity of the firm’s product range. The result was a net outflow of £2bn, though assets under management of £95bn were up 3% since the end of December.

Underlying pre-tax profit dropped 14% to £100.5m, with underlying earnings per share falling 20% to 7.1p. But the company’s capital easily exceeded its regulatory needs, and the first-half dividend was lifted by 3.2% to 3.2p per share.

Henderson shares are valued at 15 times forecast earnings, and there’s a dividend yield of 4.6% on the cards. That’s probably a fair valuation, but with the uncertainty ahead I think there are better financial services options out there.

The post Three risers to buy on today’s results? 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.

Asset manager marches lower

Emerging market-focused Ashmore Group (LSE: ASHM) has seen its share price move steadily lower in recent times. The stock is now dealing at a 44% discount to levels seen a year ago, the shares conceding a further 5% on Thursday following a worrying trading update.

Ashmore saw assets under management slip 16% between July and December, to $49.4bn, the result of chunky net outflows of $5.7bn and negative investment performance of $3.8bn. And worryingly, the business advised that “sentiment is likely to continue to be affected by the lower oil price and ongoing concerns about slowing global growth, particularly with respect to China.”

In this environment, the City expects Ashmore to endure a 23% earnings dip in the year to June 2016, although this still creates a reasonable P/E rating of 16.1 times.

It’s in the dividend stakes where the investment managers really stand out from the crowd, however. A projected payment of 17p per share creates a storming 6.8% yield, obliterating the FTSE 100 average around 3.5%.

Still, I reckon the risks over at Ashmore outweigh the potential rewards at the present time, and I reckon a combination of developing market weakness and renewed US dollar strength is likely to keep hitting fund performance.

Financial favourite urges caution

Fellow asset manager Henderson Group (LSE: HGG) also saw its share price rattle lower from Wednesday’s close, the business last dealing 6% lower on the day.

This is despite the company releasing broadly-positive full-year results. Henderson saw net retail inflows clock in at a record £8.5bn in 2015, a result that propelled total assets under management 13% higher to £92bn.

The number crunchers expect Henderson to record a 5% earnings advance in 2016, slowing down from the double-digit advances of previous years but still creating a decent-enough P/E multiple of 15.9 times. And an estimated dividend of 11.4p per share produces a meaty 3.8% yield.

But like Ashmore, shaky investor appetite could throw up troubles further down the line at Henderson, prompting the firm to announce “we will review our short-term plans if difficult market conditions persist.” While the firm’s global expansion drive is currently paying off handsomely, I believe difficult trading conditions could easily throw Henderson off course.

Drugs giant ready to rock

In times of extreme macroeconomic turbulence such as these, I believe medicines mammoth GlaxoSmithKline (LSE: GSK) could prove a canny stock selection for defensively-minded investors.

The Brentford firm hasn’t proved immune to the wider tsunami smacking global indices in Thursday trade however, and the business was last down 0.7% in Thursday’s session.

But sales of essential drugs like Dolutegravir for HIV and Nucala for asthma aren’t something that declines in line with wider movements in the global economy. Rather, a backcloth of rising populations and increased healthcare investment across the world is likely to keep fuelling medicines demand in the near term and beyond.

And with GlaxoSmithKline having chucked vast sums at its R&D operations to offset crushing patent losses, the City expects the company to get earnings moving again from 2016 onwards. Indeed, a 12% earnings rise is predicted for 2016, resulting in a P/E rating of 15.8 times. And a pledged yield of 80p per share gives an impressive 5.9%.

The post Are GlaxoSmithKline plc, Ashmore Group plc & Henderson Group Plc Today’s Barnstorming Buys? appeared first on The Twelfth Magpie.

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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
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• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild has no position in any shares mentioned. 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.

Looking ahead, with Santander relying on Europe for 53% of its earnings, the improved economic situation within the Eurozone could boost its future performance. With the ECB undertaking to increase quantitative easing should the current programme prove to be inadequate, Santander’s future could be relatively bright. And, with the UK now being its major market, the improving UK economy is likely to have a positive impact on its income moving forward.

Meanwhile, Santander’s efficiency continues to be highly impressive, with its cost:income ratio standing at just 47%. And, with its common equity tier 1 ratio rising to 9.85% in the quarter, it continues to make progress regarding its financial standing.

Surprisingly, Santander trades on a price to earnings (P/E) ratio of just 10, which indicates that there is significant upward rerating potential. Furthermore, it is forecast to increase its bottom line at a similar rate to the wider index in the next two years, with growth of 5% this year and 7% next year being pencilled in. So, while Brazil is likely to continue to cause the bank a number of short term challenges (such as above average loan defaults and a lack of new business), Santander appears to be a strong long term buy.

Meanwhile, asset manager Henderson Group (LSE: HGG) also released an encouraging update today. It has reported net inflows of £1.3bn in the most recent quarter, with over 80% of its funds outperforming over the last three years. However, with global stock markets experiencing major falls during the quarter, Henderson’s assets under management have declined by £600m to £81.5bn, which means that its fees have also fallen.

Clearly, this is disappointing, but is a fact of life for asset managers who benefit from rising markets and experience reduced incomes during downturns. Looking ahead, Henderson expects the level of regulatory oversight to intensify and, with the outlook for the global economy being uncertain, it would be of little surprise for its financial performance to come under pressure in the short run.

However, in the longer term it has real upside potential. For example, Henderson trades on a price to earnings growth (PEG) ratio of just 1.2, which indicates that its shares offer good growth prospects at a reasonable price. And, with it yielding 4% from a dividend which is covered 1.6 times by profit, it appears to be a sound income play, too.

The post Do Q3 Results Change The Outlook For Banco Santander SA & Henderson Group Plc? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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

Equity analysts usually use the five-year time period when analysing the beta of particular stock. But, as the beta for a particular stock can vary quite significantly over time, it is also important to look at beta over shorter time periods. A stock which has seen a fall in its beta is not as volatile or as responsive to changes in the market as they were in the past.

Here, we shall take a look at the five stocks with the highest five-year betas in the FTSE 350. Surprisingly, quite a few of these stocks have seen rather dramatic shifts in their betas in recent years.

With a beta of 2.59, Thomas Cook‘s (LSE: TCG) stock has the highest five-year beta in the FTSE 350. But, on a one-year and two-year time period, Thomas Cook’s betas are -0.14 and -0.18, respectively. This dramatic shift in its beta means Thomas Cook has shifted from being a very cyclical stock to one that is slightly counter cyclical.

There are many reasons for these recent shifts, and the main explanation is the recapitalisation and restructuring of the company back in 2012. Because of this, Thomas Cook has transformed itself from being an unprofitable and highly indebted business into one that is both profitable and financially sound. And as these changes seem to have structurally changed the nature of the business, the reduction in its beta will likely be long lasting.

Although the travel business is very cyclical, the determinants of travel spending is much more dependent on the local economic conditions of where the tourist originates, rather than global economic factors. In Thomas Cook’s case, its largest customer base is in the UK, Germany and the rest of Northern Europe, where economic conditions have been relatively benign. The weakening outlook for emerging market actually benefits Thomas Cook, as the associated falls in the value of their currencies have decreased the relative cost of foreign holidays in many so-called “sunny” locations.

International Personal Finance (LSE: IPF) has seen similar downward shifts in its betas. In this case, the reduction IPF’s betas is likely due to changing way investors look at the company. The focus of uncertainty for the short term loan lender has shifted away from the economy to legal and regulatory issues. And as the outlook of IPF’s earnings is increasingly determined by non-cyclical factors, IPF has become a less cyclical stock.

Kaz Minerals (LSE: KAZ) and Vedanta Resources (LSE: VED) have also seen unusual downward shifts in their beta (although Kaz Minerals did see an increase in its beta in the two-year period). This is all the more surprising, given that many mining groups, most notably Glencore, have seen their betas increase.

The shift in the beta of these two mining companies is likely due to the earlier falls in their share prices in 2014, as both companies have long been dealing with relatively high production costs and slow production growth. This should mean these shifts in their betas will only persist in the short term.

Global investment manager Henderson Group (LSE: HGG) has seen more limited shifts in its betas, reflecting the minimal structural change that has affected the company in recent years. The relative stability in Henderson’s beta should mean the stock would continue to perform in a reliably highly cyclical manner. Thus, this makes Henderson’s stock one of the best high-beta stocks to buy in anticipation of a market recovery.

The post What To Expect From These 5 High-Beta Stocks: Thomas Cook Group plc, International Personal Finance Plc, KAZ Minerals plc, Vedanta Resources plc and Henderson Group plc appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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

In the case of Moneysupermarket.Com, the key takeaway is that it expects full year profitability to be slightly ahead of previous guidance, with a strong first half of the year delivering increased profitability. In fact, Moneysupermarket.Com delivered a rise in net profit of £9m, with it reaching £30m in the first half of the year versus £21m in the same period last year. As such, its shares are up around 1.5% at the time of writing.

Meanwhile, Henderson saw its assets under management rise by 10% versus the first half of 2014, with net inflows of £5.6bn being a major positive for the company. And, with its underlying pretax profit from continuing operations soaring to £117m from £90m in the first half of last year, it appears to be moving in the right direction. As such, a £25m share buyback is to be initiated in the second half of the current year, with Henderson’s shares now trading 27% higher than they were at the turn of the year.

Despite their encouraging financial performance, though, there are a number of stocks that I would purchase before Moneysupermarket.Com and Henderson. In the case of Moneysupermarket.Com, the reason for that is the company’s valuation. Certainly, today’s improved guidance is highly encouraging for investors and shows that, while saving money may not be quite as important to individuals as it was a year ago (due to increasing incomes in real-terms), it is still able to increase profit at a brisk pace. However, this already seems to be more than adequately accounted for by the company’s valuation, with it trading on a very high price to earnings growth (PEG) ratio of 2.9.

Of course, Henderson offers excellent value for money at the present time. It trades on a PEG ratio of just 0.9 and, with management appearing to have considerable confidence in the company’s future prospects (as evidenced by the initiation of a share buyback programme), now could be a great time to buy a slice of it. That’s especially the case since Henderson is expected to yield as much as 4.1% next year.

However, even though Henderson is appealing, Barclays (LSE: BARC) is much more attractive at the present time. For starters, it is incredibly cheap despite having an excellent track record of profitability – especially when it is considered just how challenging recent years have been for the banking sector. For example, Barclays has been profitable throughout the credit crunch and even though it is due to deliver double-digit earnings growth in each of the next two years, it trades on a PEG ratio of just 0.5. This indicates that its shares are hugely undervalued and offer superb capital gain potential.

Looking ahead, Barclays may be without a permanent CEO for some time. However, it has a strong management team and, as such, investor sentiment is unlikely to be hurt by this fact. And, with Barclays set to yield as much as 3.7% next year, it is quickly becoming a very appealing income stock that is set to deliver stunning total returns in the long run.

The post Why I’d Buy Barclays PLC Instead Of Moneysupermarket.Com Group PLC And Henderson Group Plc appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Barclays. The Motley Fool UK has recommended Barclays and Moneysupermarket.com. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

One stock that appears to offer a good mix of both income and growth is fund management company, Henderson (LSE: HGG). Its fortunes are clearly closely correlated to the performance of the wider index, since investors tend to be more willing to invest during settled periods and also when the wider macro outlook is positive. And, while the Greek debt crisis is only just drawing to a conclusion, Henderson is already guiding the market towards impressive growth numbers during the next couple of years.

For example, Henderson is expected to increase its earnings by 6% in the current year, followed by a further rise in its net profit of 16% next year. That’s an impressive rate of growth and puts Henderson on a price to earnings growth (PEG) ratio of just 0.9, which indicates that capital gains are very much on the horizon.

Furthermore, Henderson is expected to yield as much as 4.3% next year which, while impressive, is still some way behind Vodafone’s (LSE: VOD) (NASDAQ: VOD.US) yield of 4.9%. Certainly Vodafone’s financial performance has been poor in recent years, with its focus on the slow-growing Eurozone being a major drag on its profitability. However, Vodafone’s move into a more diversified product offering bodes well for its future growth, as well as its relative stability.

In fact, Vodafone’s move into pay-tv and broadband in the UK, as well as across parts of Europe, should provide the company with a renewed growth platform. This could easily spark investor sentiment and change the view among many investors of Vodafone being a slow-growing, utility-like stock. As such, Vodafone’s share price could continue to gain in popularity and move higher as it has done in the last year, where it has risen by 25%.

Meanwhile, the insurance sector continues to offer huge potential for long term investors. A notable stock within the space is Jardine Lloyd Thompson (LSE: JLT). It has delivered a hugely impressive financial performance over the last five years, with its bottom line increasing in each of these years and averaging growth of 10.6% per annum during the period. And, looking ahead, more growth is on the horizon, with JLT’s bottom line set to be around 14% higher in 2016 than it was in 2014.

Furthermore, JLT is expected to yield 3.1% next year despite paying out just 51% of its profit as a dividend. As such, it could become an excellent dividend stock, with a combination of a rising payout ratio and a growing bottom line making its shareholder payout potential very impressive.

The post Boost Your Returns With Vodafone Group plc, Henderson Group Plc And Jardine Lloyd Thompson 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 owns shares of Jardine Lloyd Thompson. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.