Three quarters of UK companies cut or suspended their shares in the second quarter of this year, including this pair. However, my stock picks here are the first to restore their dividends AND make up all lost payments in full. That’s impressive, and explains why I think they’re among the best shares to buy now.

Defence specialist BAE Systems (LSE: BA) crashed by more than a third in March. Unlike many stocks on the FTSE 100, the BAE share price has scarcely recovered since. That seems odd, given that in July, it reinstated the £460m dividend payout it deferred in April. It also declared an interim dividend of 9.4p a share.

BAE is one of the best shares to buy now

Chief executive Charles Woodburn said demand for BAE’s weaponry remains high, unsurprising given today’s uncertain world. On the other hand, it’s civil aerospace division has been hammered. That isn’t surprising either, given that BAE makes parts for Boeing passenger aircraft.

Woodburn said full-year profits will be lower due to the pandemic, but the second half should be better and I think there is an opportunity here. The BAE share price is trading at just 10.5 times earnings, a modest valuation. It now offers a forecast yield of 5.1%, covered 1.7 times by earnings. Analysts expect earnings to drop 7% this year, but jump 15% in 2021.

The FTSE 100-listed group has a market-cap of £15.09bn, but relatively low net debt of £2.04bn. Better still, it’s winning new business. In September, it secured an £87m contract with the US Navy, while its Tempest programme should support 20,000 jobs a year for decades. That’s why I reckon BAE Systems looks like one of the best income and growth shares to buy now.

I’m also tempted by IMI (LSE: IMI), another top stock to put on your watchlist. The engineering group crashed in March (along with almost everything else) but has made a striking comeback since. The IMI share price is now up 40% in the last six months. Clearly, I’m not the only one who thinks it’s one of the best UK shares to buy now.

I’d buy the FTSE 250 dividend hero

It was lifted by a positive set of interims in July, which saw adjusted pre-tax profits rise 5% to £116m, boosted by a temporary surge in demand for ventilator parts due to the coronavirus pandemic. However, total revenues fell 5% to £867m, due to lower volumes across most of its business.

IMI gave loyal investors a major boost by reversing its decision to suspend the 2019 final dividend payment. It’s being made in full now, with chief executive Roy Twite saying it’s now affordable due to “robust” first-half profit and cashflow.

The FTSE 250-listed company’s current 1.3% yield is forecast to rise to 2.1% next year, generously covered 2.9 times by earnings. My biggest concern is that you’ve missed the best of the post-crash share price recovery. However, the IMI share price isn’t too expensive at 15.9 times earnings. It’s another top dividend growth share that you might consider buying today.

The post Looking for dividends and growth? I reckon these are 2 of the best shares to buy now appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended IMI. 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.

Indeed, many FTSE 250 firms keep growing and eventually end up in the FTSE 100 index. I think the following two firms are attractive and offer some diversification between sectors.

Infrastructure

HICL Infrastructure (LSE: HICL), as its name suggests, invests in infrastructure projects and businesses. The firm’s portfolio includes public-private partnerships, regulated and demand-based infrastructure. Some 117 investments are spread across countries such as the UK, Australia, Canada, France, Ireland and the Netherlands. We are talking about things such as schools, hospitals, roads, rail and facilities for the fire and police services.

I reckon the sector is likely to be steady in the years to come and one of the main things I like about the share is the dividend yield, which is running close to 5% with the share price at 157p. The firm has a good record of raising the payment a little each year.

In May, the directors said in the annual report that despite the current political and regulatory uncertainty in the UK infrastructure market, they think the company’s business model will deliver further returns for shareholders in the coming years. Right now, you can pick up a few of the shares on a price-to-earnings (P/E) ratio around 11 and a price-to-book rating near one, which strikes me as fair value.

Engineering and manufacturing

IMI (LSE: IMI) is a specialist engineering company that designs, manufactures and services products for controlling the movement of fluids. The firm works with industrial customers in “high-growth” sectors such as energy, transportation and infrastructure. It has manufacturing facilities in more than 20 countries and operates a global service network. 

I find the dividend yield running near 4% to be attractive and the firm has a good record of raising it a little each year. There is a strong focus on quality and the directors are aiming for excellence in the execution of the company’s operations. I reckon such an approach could drive further returns for shareholders in the years to come.

This summer, a new chief executive is due to get his feet under the desk in the top office. I think a change at the head of any business can be a positive thing, often marking the start of new drive and determination in the board room, which could serve shareholders well.

With the share price at 1,032p, the P/E rating is running around 14. I don’t think the valuation is excessive given the quality of the enterprise. I’d be happy to add both of these shares to a diversified portfolio because of their dividend-paying credentials and growth potential.

The post Building a second income? 2 FTSE 250 dividend stocks I’d buy and hold today appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended IMI. 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.

The business — which provides a range of engineering products and services for the control of fluids — declared: “Results in the first quarter of 2018 reflect a continuation of the improved trading experienced across the group through 2017, albeit with continuing uncertainty in some segments.”

While it added that trading remains consistent with expectations at the moment, investors have taken fright over the uncertain outlook for some of its segments.

But this was not the only item of concern as guidance around the issue of severe foreign exchange tailwinds also prompted some to cash out. IMI said that, should sterling’s value against the euro and US dollar stand at the average rate seen during January-March, this would create an exchange rate headwind of some 4% for both sales and profits in 2018.

Self-help scheme on track

The news from the Birmingham firm was not all worrying, however. Organic revenues in the three months to March were up 2% year-on-year, prompting IMI to comment that sales on a comparable basis should still be up for the first half of the year from the corresponding 2017 period.

What’s more, the engineer continued to laud the impact that its self-help measures are having, commenting: “Our new product pipeline is developing well, the operational performance of our manufacturing facilities has further improved and the new systems and processes we are putting in place are enabling us to do business more efficiently.” 

It added that “reorganisation activities across the business are progressing well and according to plan.”

Sure, the outlook in some of IMI’s markets may remain patchy for a little while longer, but I believe this is reflected in the company’s low forward P/E rating of 15.1 times, a multiple created by expectations of a 7% earnings rise in 2018 (a 9% profits advance is forecast for 2019 too).

And with its raft of operational improvements clicking through the gears nicely, I reckon this low ratio provides plenty of upside in the years to come.

Predicted dividends of 40.6p and 42p for this year and next, figures that yield 3.9% and 4% respectively, add a very tasty sweetener.

In the fast lane

National Express Group (LSE: NEX) is another FTSE 250 bargain I’d be happy to splash out on today.

With earnings expected to keep booming at double-digit percentages — a 10% advance is forecast for 2018 — the transportation titan can be picked up on a forward P/E ratio of 12.5 times. What’s more, a predicted dividend of 14.9p per share, yielding a chubby 3.7%, gives share pickers further reason to invest.

An extra 4% profits rise is estimated for next year, while an anticipated 16p dividend moves the yield to 4%.

As I commented recently, National Express’s rolling expansion programme abroad is really delivering the goods, and revenues in its North American and Spanish ALSA divisions rose by a chunky 10.1% and 3.6% respectively last year. I am confident that the bus giant is on course to deliver strong shareholder returns long into the future.

The post 2 dirt-cheap FTSE 250 stocks I’d buy with £2,000 today appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended IMI. 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.

This is the conundrum likely to be facing many holders of metrology specialist Renishaw (LSE: RSW). Stock in the Wotton Under Edge-based business more than doubled in price over 2017, even if some of those gains have been given up in recent weeks following the release of its latest set of first-half numbers. 

Over the six months to the end of 2017, revenue grew by 20% at constant exchange rates to just under £279.5m with adjusted pre-tax profit rising 73% to £62.3m.

Renishaw saw growth in all of its metrology product lines over the reporting period with its additive manufacturing and measurement and automation lines the standout performers. Elsewhere, the adjusted operating loss of £1.9m in the company’s healthcare business was far better than the £6m loss in the previous year thanks to growth in its spectroscopy and neurological lines.

Clearly in something of a purple patch, the company now expects revenue for the full year to be “in the range of £575m to £605m” and adjusted pre-tax profits to come in somewhere between £127m and £147m. A “further reduction in losses” in the aforementioned healthcare division is also anticipated. 

With a solid balance sheet (£69m net cash position at the end of 2017) and history of generating consistently high returns on the capital it invests, there can be little doubt that the £3.5bn cap is a quality operation. Right now however, I’d be tempted to shave some profit.

With shares changing hands for 29 times forecast earnings, a lot of positive news and future growth appears priced in. There’s not much in the way of dividends and the departure of co-founder David McMurty as the company’s CEO, despite retaining his role as executive chairman, is an unwelcome if inevitable development.

“Good progress”

With Renishaw’s valuation looking frothy, fellow engineer IMI (LSE: IMI) could be a better option at the current time.

Today’s final results were in line with expectations, despite “mixed market conditions“. In addition to making “good progress” on its strategic initiatives (which included improving operational performance and launching new products), the Birmingham-based business also disclosed further progress in tackling its global pension liabilities. 

While unspectacular, the numbers were still fairly positive. Revenue rose 6% to £1.75bn with adjusted pre-tax profit climbing 8% to £224m. Net debt fell from £283m in 2016 to £265m by the end of last year.  

According to CEO Mark Selway, IMI now expects organic revenues to be higher in the first half of 2018, with a “modest improvement” to margins. The recent acquisition of Bimba —  a manufacturer of pneumatic, hydraulic and electric motion solutions — should also help facilitate the growth of the company’s Precision Engineering division in North America. 

Clearly, this wasn’t enough for the market, with IMI’s stock falling 8% in early trading this morning. Nevertheless, at 16 times expected earnings, I think the company represents better value than Renishaw at the current time. A 3.7% dividend yield for 2018 is also far more attractive than the 1.2% offered by its industry peer.

The post Time to ditch this high-flying FTSE 250 growth stock? 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 recommended IMI and Renishaw. 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.

As you’d expect, such stocks aren’t usually cheap. But they can still outperform the market for long periods of time.

One example is specialist engineer Renishaw (LSE: RSW). This FTSE 250 firm’s share price has doubled over the last year, thanks to a 97% increase in earnings per share and strong forecasts for the year ahead.

From what I understand, the group’s precision measurement and healthcare technology is specialised and has relatively few competitors. The firm’s financial results certainly suggest that it has good pricing power.

Renishaw’s operating margin has averaged 23.5% since 2012, and was 21.7% last year. This helped to generate a return on capital employed of 21%. That’s well above the 15% level that I use as a benchmark for highly profitable companies.

Irresistible numbers?

This Gloucestershire firm certainly has my vote when it comes to profit margins. And the outlook seems to be improving as well. Broker consensus forecasts for 2017/18 earnings have doubled over the last year, suggesting very strong growth momentum.

However, this focus on growth and profitability doesn’t mean we can completely ignore valuation. The stock’s rapid growth has left it looking quite pricey. Renishaw currently trades on a forecast P/E of 35, with a dividend yield of just 1.1%.

Although this valuation might look reasonable if earnings rose by perhaps 50% over the next year, this isn’t expected to happen. Broker forecasts for 2018/19 suggest earnings growth will slow to around 10% next year.

In my view, the potential return from these shares isn’t high enough to outweigh the risk of a correction if the market decides the shares are overpriced. I’d continue holding, but I wouldn’t buy any more.

One stock I might buy

Another engineering stock that’s caught my eye recently is Birmingham-based IMI (LSE: IMI). The group’s main focus is products which control the movement of fluids. As you can imagine, the firm’s customers include many of the world’s largest industrial concerns, as well as the energy and power sectors.

In a trading update today, IMI said that its sales rose by 3% during the third quarter, or by 11% when exchange rate tailwinds were included. The group now expects full-year earnings at constant exchange rates to be “slightly ahead of expectations”.

IMI has many of the same attractions I see in Renishaw. The group’s return on capital employed has averaged 22% over the last five years, and cash generation is very strong.

Indeed, this means that it’s able to offer a well-covered dividend yield of 3.2%, even though its shares trade on a forecast P/E of 19.8.

In my view, IMI’s valuation could still leave room for growth. And although this business might slow in a major recession, I think it’s a quality stock that would be worth buying on the dips, rather than selling.

Averaging down on quality stocks during difficult periods gives you the chance to increase your dividend yield on cost, and boost your long-term capital gains.

The post One dividend stock I’d buy and hold for the next decade appeared first on The Twelfth Magpie.

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• 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?

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended IMI and Renishaw. 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.

Cheaper fuel

Operating profit before exceptional items for the six months to 30 June rose by 37% to €975m, on the back of cheaper fuel and strong passenger demand in the second quarter of 2017. Passenger unit revenue, a key measure of performance in the industry, increased by 1.5% in Q2, the first quarterly gain in almost three years. The company said it expects a double-digit percentage improvement in operating profit for the full year.

These figures were achieved in spite of the IT failure at British Airways in May, which cost the company €65m in additional compensation fees and baggage claims, and a €44m hit from adverse foreign exchange movements that was mainly down to sterling’s recent weakness.

Looking ahead though, I’m concerned about growing capacity in the short-haul market. Just this week, Ryanair and easyJet both warned of the risk of a late-summer price war among European budget carriers. Although IAG is somewhat protected by its greater focus on long-haul, the airline is hardly immune to market forces.

Still, IAG seems attractively valued, with shares trading at a forward price-to-earnings ratio of just 6.9, based on analysts’ 2017 forecasts. As such, now may be a great time for value investors to consider the airline group.

Earnings beat

Elsewhere, shares in specialist engineering group IMI (LSE: IMI) fell by as much as 4% on Friday after the company announced its interim results.

Although statutory pre-tax profits jumped by 26% to £89m in the six months to 30 June, beating analysts’ estimates, CEO Mark Selway warned about challenging market conditions ahead.

“In the remainder of the year, organic revenue is still expected to be below last year, principally driven by order phasing in Critical Engineering. However, second half margins will show a modest improvement compared with the same period in 2016, supported by both rationalisation savings and improved market conditions in Precision Engineering. Based on current market conditions, we expect full-year 2017 results will be modestly above current market expectations,” he said in today’s announcement.

Revenue was also 11% higher at £848m, while adjusted earnings per share rose by 16% to 28.4p, as its first-half figures were given a big boost by the sterling’s weakness. Excluding currency effects, IMI’s revenue in the first half would have been broadly flat — although that would still have been better-than-expected given the slowdown in capital spending in the energy sector, which has affected sales of its fluid control systems.

Reassuringly though, IMI raised its interim dividend by 1.4% to 14.2p, which indicates management’s confidence in future earnings. The shares currently yield 3%, with a payout ratio of less than two-thirds of earnings.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended IMI. 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

The company in question is industrial engineering specialist Spirax-Sarco (LSE: SPX). Its financial performance in 2016 represented a significant step up from its 2015 numbers. For example, revenue increased by 14% and adjusted operating profit was 18% higher. The latter benefitted from an increased operating margin, with it rising by 100 basis points. This allowed the company to increase dividends by 10% and with cash conversion of 101%, 2016 was an excellent year for the business.

This came at a time when the company’s operating conditions were challenging. Global industrial production was low in 2016, and Spirax-Sarco was generally able to outperform its markets. Its investment in improving margins and delivering robust organic growth of 4% proved to be a sensible strategy to pursue. As such, it seems to be well-positioned to deliver higher growth in future years.

Investment potential

In 2017, Spirax-Sarco is expected to record a rise in earnings of 10%, followed by further growth of 6% next year. While this rate of growth is slightly higher than the expected growth rate of the wider index, it does not indicate a particularly strong performance lies ahead for the company.

Despite this, its shares trade on a premium valuation. They have a price-to-earnings (P/E) ratio of 26.8, which is in excess of their four-year average P/E ratio of 21.6. Therefore, there seems to be scope for a major derating of Spirax-Sarco’s shares over the medium term. If their P/E ratio reverts to the long-term average then a share price fall in the high single-digits could be on the cards. That’s assuming the company is able to continue to outperform the wider global industrial production sector, which is not guaranteed.

Higher growth potential

Within the same industry as Spirax-Sarco is specialist engineering company IMI (LSE: IMI). It is forecast to record a rise in earnings of just 1% this year, but is due to follow that up with growth of 12% next year. As well as offering superior growth potential than its sector peer, IMI trades on a lower valuation. It has a P/E ratio of 20.2. When combined with its forecast growth rate, this equates to a price-to-earnings growth (PEG) ratio of just 1.7. This compares to a PEG ratio of around 3.3 for its sector peer.

Clearly, the industrial sector is an uncertain industry in which to invest at the present time. Both Spirax-Sarco and IMI seem to be performing better than their wider industries, which is encouraging for their investors. However, since the latter offers a significantly lower valuation than the former, it seems to be the only one of the two companies worthy of investment at the present time.

The post Why I think this FTSE 250 stock looks overvalued and ready to slump 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 recommended IMI. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Bodycote’s sales when the effects of a falling pound are excluded were somewhat disappointing. They fell by 3.1% even though they were up against weak comparables from the same period of the previous year. For example, Aerospace revenue grew 2.5% on a constant currency basis, with higher levels of growth in Europe partly offset by weaker revenues in the US. Car and light truck revenues increased by 3.8% as the firm continued to benefit from its investment in new capacity, especially in North America.

However, there was also significant disappointment, with its Oil & Gas sector recording a near-halving of revenue compared to the same period of last year. And its Heavy Truck revenues declined by 14.9%, with both divisions likely to see their sales come under additional pressure due to operating conditions that are highly uncertain.

For example, in the oil and gas sector there’s the potential for price falls unless supply can be brought under control. That’s because demand growth is likely to remain sluggish throughout much of 2017. Similarly, Bodycote’s Heavy Truck ops are likely to be hit by the continuation of a trend that has seen a wide range of industrial sectors hit by ongoing weakness in the last 18 months.

Downbeat prospects

Due to its weak trading period and uncertain outlook, Bodycote’s earnings prospects are somewhat downbeat. Although it’s on track to meet full-year guidance, the bottom line is due to fall by 7% in the current year. Even though it’s expected to recover next year to post a rise in earnings of 7%, its price-to-earnings (P/E) ratio of 16 lacks appeal. It doesn’t appear to offer a sufficiently wide margin of safety to merit investment – even if sterling continues to weaken and its reported performance gains a further boost.

Also lacking appeal within the industrials sector is industrial engineering specialist IMI (LSE: IMI). It trades on a P/E ratio of 16.7 and yet is expected to record a fall in earnings of 10% in the current year. As with Bodycote, this is set to be followed by a return to growth next year. But IMI’s earnings growth forecast of 6% for 2017 seems inadequate to justify its current valuation. Either its outlook would need to improve, or its share price would be required to fall considerably before it becomes a worthwhile purchase for long-term investors.

As such, neither Bodycote nor IMI seem to be worth buying at the present time. Their risks remain high, while the potential rewards on offer are limited due to their high valuations.

The post Why Brexit has pushed Bodycote plc’s sales 13% higher 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 recommended Bodycote and IMI. 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 specialist

The Birmingham-based engineering company designs, manufactures and services highly engineered products that control the precise movement of fluids. I for one would regard its activities as fairly niche, and I see that as a good thing. When it comes to investing, I like niche, because it usually means less competition, and very often higher profit margins.

IMI’s management admitted that economic and market conditions continued to be challenging during the three months to the end of September, with organic revenues actually 8% lower than for the same period in 2015. The company does however, expect both organic revenues and margins to be better in the second half, compared to the first.

Cutting costs

Despite difficult market conditions, the group continues to invest in new product development to fuel growth, while also trying to improve operational performance to increase competiveness, and remains committed to modernising its IT infrastructure. Like many firms, IMI is trying to mitigate the impact of current market weakness by considering cost-cutting initiatives, but what I like in particular is that it’s trying to achieve this without compromising its long-term growth strategy.

IMI’s financial year doesn’t end until 31 December, but analysts reckon that full-year revenues will come in higher at £1.62bn, with a further improvement to £1.67bn predicted for next year. But what I like the most about the Midlands engineering firm is its superb record of dividend growth, with the company increasing its dividend payouts without fail for the last 15 years. This year’s expected payout of 38.69p per share is adequately covered by future earnings, giving a prospective yield of 4.2%, with the prospect of further growth in the future.

Rise of the dividends

Another mid-cap firm with an excellent record of dividend growth is specialist materials manufacturer Morgan Advanced Materials (LSE: MGAM). The Windsor-based firm designs and supplies a range of products made from carbon, ceramic and magnetic materials used in industries as diverse as transport, telecoms, fire protection and medical instruments.

The specialist manufacturer formerly known as Morgan Crucible remains on track to deliver revenue growth of around £45m this year to £957m, with the figure expected to hit almost £1bn by the end of next year. Those all-important dividends have been rising steadily since 2006, and at current levels this year’s estimated payout of 11.05p per share means a healthy 4.1% for those looking for dividend growth from outside the well-trodden FTSE 100 index.

The post 2 ‘hidden’ income shares to boost your wealth 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?

Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended IMI and Morgan Advanced Materials. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

What does Foxtons say?

Who shot Foxtons Group (LSE: FOXT)? Once again, it was Brexit that pulled the trigger as the EU referendum becomes the perfect blame-all for any business with a disappointing story to tell. The group’s half-year profits are certainly disappointing, down 42.2% to £10.5m due to a slowing property market with little hope of recovery this year. Revenue fell 3.1% to £68.8m.

The London property market, where Foxtons is focused, had to slow at some point, and there were signs it was doing so well before Brexit. What the result may do is stretch out the pain that little bit further, although the 10% drop in Sterling may also attract foreign buyers. The second quarter was much weaker than the first and this was as much down to the 3% stamp duty surcharge introduced on 1 April as the Leave victory.

Foxtons remains a big player in the London sales and lettings market and is looking to expand to 100 branches, despite current uncertainties. The shares are down nearly 7% today leaving Foxtons trading at 10.08 times earnings and yielding 4.34%, which may tempt buyers who believe the capital can boom again.

Profits down, shares up

Engineering firm IMI (LSE: IMI) has seen its share price leap more than 3% in early trading, despite reporting a 19% drop in first-half pre-tax profits from £107m to £86m as revenue fell in challenging conditions. Net debt rose from £289m to £334m, partly due to an adverse currency impact of £70m.  

IMI expects more favourable currency impacts over the full year as it generates more than 90% of sales outside the UK and a weaker pound could boost revenues and operating profits. The business faces challenging conditions in a number of key sectors but chief executive Mark Selway claims he can drive growth through operational efficiency, enhancing processes and launching new products. Given the challenges, IMI looks pricey at 16.64 times earnings, despite the respectable 3.59% yield.

Less than bullish

Multi-platform business information and events group Centaur Media (LSE: CAU) has had a tough year, its share price falling 54% from 81p to 37p. It has seen its advertising and sponsorships revenues squeezed in recent months, yet recent updates show revenues rising at a fairly convincing pace, and this continues in today’s update.

Reported revenues grew by 8% to £39.9m in the six months to 30 June with underlying revenue growth of 4%. Premium content and live events revenues was up, more than offsetting a 6% drop in advertising revenues. Unfortunately, this was offset by a dip in adjusted operating profits to £5m, down from £6.1m in 2015, while adjusted operating margins of 12.5% were down from 16.6% in 2015. Lower advertising revenues, the cost of building premium content products and commercial team capability all hit reported operating profits, which slumped to £3.1m, down from £4.8m last year.

Centaur’s 170% cash conversion for the first four months of the year may convince some, as will its rock bottom valuation of 6.73 times earnings and sky-high 8.33% yield. Tempting, but risky.

The post Should you shun these 3 stocks after today’s results? appeared first on The Twelfth Magpie.

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