Never one to follow the herd, it seems Woodford has found another value play in the form of greetings cards retailer Card Factory (LSE: CARD) — a stock that occupies positions in both his Equity Income and Income Focus funds. In a recent update to clients, Woodford revealed that he had increased his ownership of the company following the huge fall in its share price after poorly received interim results.

To recap, last month Card Factory reported revenue growth of 6.1% to very nearly £180m over the six months to the end of July, despite a reduction in the number of shoppers hitting the high street. Trouble was, the £1.1bn cap also said that pre-tax profit for H1 was just over 14% lower — at £23.2m — compared to same period in 2016 thanks to a mix of adverse foreign exchange movements, the national living wage and ongoing investment in the business. Despite evidence of like-for-like sales growth, new store openings and progress online, many investors responded by heading for the exits. Not even the promise of “another” special dividend of 15p per share was enough to convince some to stay.

Sensing an opportunity, Woodford has piled in. In his view, market leader Card Factory’s decision to refrain from passing on currency and living wage-related price increases to its customers makes “absolute sense from a long-term strategic perspective“.  The company, he believes, remains a “well-managed, highly-competitive and cash generative retailer“. As fans of investing for years rather than weeks, this chimes nicely with the Foolish investing philosophy.

Having recovered somewhat since September’s sell-off, shares in Card Factory now trade on a forecast 16 times earnings. That’s not exactly cheap, but nor is it screamingly expensive for a company with a progressive dividend policy and tendency to return surplus cash to holders. It won’t double in value overnight but as part of a diversified portfolio of income-generating shares, Card Factory is certainly worth considering.

An alternative…

Having said all that, Bedfordshire-based gifting and stationery manufacturer IG Design (LSE: IGR) might be a suitable alternative to those who — unlike Woodford — are put off from investing in a retailer at the current time or who would rather focus on building their capital through growth-focused companies rather than receiving income.

August’s Q1 trading update contained few surprises with the company confirming that it was performing in line with management expectations. Recent highlights include the unification of IG’s three UK businesses, excellent sales growth in Continental Europe and a major new contract to supply greetings cards to Australia’s largest discounter. According to CEO Paul Fineman, IG’s order is “yet again at record levels“, supported by “excellent product innovation” and improved relationships with customers. 

The post Neil Woodford’s just bought more of this dividend 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 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.

Encouragingly, all of its divisions traded profitably during the Christmas period and this reflects the company’s investment in staff and in fast pay-back capital equipment, with the new giftwrap manufacturing facilities in Wales and The Netherlands allowing high volumes to be produced quickly. Furthermore, the Chinese and US operations have performed relatively well, with record sales in the latter and further development taking place in the former.

Looking ahead, International Greetings is forecast to increase its bottom line by 7% in the current year. This is roughly in line with the wider market’s growth rate but with International Greetings’ shares trading on a price-to-earnings (P/E) ratio of 15.3, they appear to be relatively expensive. As such, it may be prudent to await a lower share price before piling-in.

Ready for take-off?

One stock that appears to be much more attractively priced at the present time is easyJet (LSE: EZJ). Its shares trade on a P/E ratio of just 10.9 and yet the budget airline is forecast to post an increase in earnings of 8% in the current year. This equates to a price-to-earnings growth (PEG) ratio of just 1.4 and, having beaten the FTSE 100 by 12% in the last year, easyJet looks set to continue to beat the index moving forward.

A key reason for that is the improving economic outlook, with consumer confidence being higher now than in recent years. This is being aided by real-terms wage growth in the UK as well as the potential for improving consumer demand in Europe following the ECB’s decision to implement quantitative easing. Additionally, a low oil price is likely to aid the wider sector and should allow for improved profitability and investor sentiment over the medium term.

Bright future?

Also offering a bright outlook is pharmaceutical company AstraZeneca (LSE: AZN). Its difficulties in recent years are gradually fading as its acquisition programme continues to turn its drug pipeline around. Most recently, AstraZeneca agreed to purchase a majority stake in Acerta Pharma for an initial consideration of $2.5bn, with a further $1.5bn payable by the end of 2018, or on receipt of the first regulatory approval for acalabrutinib (a potential cancer treatment) in the US.

As well as an improving pipeline, AstraZeneca also offers sound income prospects. Despite profit having fallen in recent years, dividends have been maintained and are currently covered a healthy 1.4 times by net profit. This indicates that there’s scope for AstraZeneca’s yield of 4.3% to move higher over the medium term, which should help to improve investor sentiment in the stock. And with it having a P/E ratio of 15.2, it appears to be attractively priced given its improving long-term outlook.

The post Are AstraZeneca plc, International Greetings plc And easyJet plc On Track To Beat The Index? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of AstraZeneca and easyJet. The Motley Fool UK has recommended AstraZeneca. 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 today’s article I’ll explain why the shares are down and also take a look at Taylor Wimpey (LSE: TW), which has outperformed most other housebuilders this year.

Iomart

Shares in cloud hosting provider Iomart fell by more than 10% this morning, after the group published its interim results.

Sales were up by 16% to £36.3m, while adjusted earnings per share for the first half rose by 11% to 6.75p. These figures suggest to me that when the impact of recent acquisitions is included, Iomart should hit full-year forecasts for earnings of 14.7p per share.

However, somewhat unusually, Iomart did not confirm that is was on track to meet full-year forecasts. The firm also warned that overheads will rise as new skilled staff and management are recruited to help support the company’s ongoing expansion.

Iomart appears to be facing increased competition from cloud hosting providers such as Amazon Web Services (AWS). To combat this, Iomart is planning to shift its focus towards offering software services for customers using hosting providers like AWS.

It’s not clear to me how this gradual change will affect Iomart’s profit margins.

Even after today’s fall, Iomart shares have risen by 59% so far this year. The shares now trade on a 2015/16 forecast P/E of around 18, falling to 16 in 2016/17.

I’m not sure now is the best time to buy.

International Greetings

This boring-sounding firm makes boring products like wrapping paper, gift tags and stationery. It hasn’t been boring for shareholders, though. The firm’s stock has risen by 127% so far this year, making this morning’s 6% dip seem pretty trivial.

As with Iomart, International’s shares fell after the firm’s half-year results were published. The numbers don’t suggest any particular problems, though. Sales were up 7% to £120m, while adjusted pre-tax profit rose by 32% to £5.2m.

I suspect that the reason for this morning’s fall was that today’s results confirmed that the company expects to meet full-year expectations — but not exceed them. After such a strong run, a round of profit-taking isn’t a big surprise. International’s earnings per share growth is expected to fall from 16% in the current year to less than 5% in 2016/17.

However, International’s balance sheet is improving, with net debt falling fast. The company’s management seems able and the shares are not outrageously expensive, on 15 times forecast earnings.

I wouldn’t bet against further gains over the next year or two.

Taylor Wimpey

Housebuilder Taylor Wimpey has delivered a solid 42% gain for investors so far this year. Shareholders are also expected to enjoy a huge dividend hike, from 1.6p per share last year to 9.6p per share for 2016.

Wisely, Taylor Wimpey has focused on repaying all of its debt and building up a cash buffer before increasing payouts to shareholders. The firm now has net cash of £88m and offers a 4.9% prospective yield for 2015.

Taylor Wimpey seems reasonably valued to me, with a forecast P/E of 13.3, falling to 11.5 in 2016. As long as the housing market remains strong, this stock seems likely to deliver further modest gains, plus a generous dividend yield.

The post Is It Too Late To Profit From Iomart Group Plc (+59%), International Greetings plc (+128%) & Taylor Wimpey plc (+43%)? 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.