Strong performance

That company is JRP (LSE: JRP). Formerly called Just Retirement Group, it specialises in retirement products and services. Its results for the 18 months to the end of December 2016 show that it is making progress with its current strategy. For example, adjusted operating profit grew 58% in the 2016 calendar year, with 82% growth in new business profit being the main driver. Alongside this, the company’s new business margin more than doubled, with a focus on profit rather than volume. This enabled price improvements, enhanced risk selection and unusually high mortgage spreads, all of which contributed to higher margins.

JRP’s merger integration also progressed relatively smoothly. Around £30m of run rate synergies were achieved in 2016 from the 2018 target of £45m. This is one year ahead of schedule, while an increase in the Solvency II coverage ratio of 17 percentage points to 151% puts the business on a stronger financial footing. This could allow for greater investment in its product offering, as well as higher profitability in future years.

Growth potential

Looking ahead, JRP is forecast to record a rise in its bottom line of 51% this year, followed by growth of 13% next year. Despite this high-growth outlook, it trades on a price-to-earnings growth (PEG) ratio of just 0.7. This indicates that its shares could move significantly higher. In fact, assuming the company meets its forecasts over the next two years, its price-to-earnings (P/E) ratio will be 9.2 by 2019. Therefore, capital gains of 25% seem relatively likely over the next two years, since they would lead to a still relatively low P/E ratio of 11.4.

Sector opportunities

Of course, JRP is not the only company within the insurance sector that offers price appreciation potential. Sector peer Prudential (LSE: PRU) is forecast to grow its bottom line by 14% this year, and by a further 8% next year. This puts it on a PEG ratio of only 1.4, which indicates that its share price could move higher.

Prudential may also offer a relatively low risk profile. Its business is highly diversified in terms of the products it provides and the geographies it covers. This may enable it to overcome any slowdown in one region of the world, or in any specific product category.

Furthermore, its strong position within emerging economies across Asia means that while its earnings growth may lag that of JRP in the next two years, in the long run Prudential could deliver higher profit growth than its sector peer.

Both stocks could be worth buying, but Prudential may have the more favourable risk/reward ratio.

The post This dirt-cheap growth stock could rise 25%+ within 2 years appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Prudential. 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.

Retirement products in demand

Specialist retirement company JRP Group (LSE: JRP) released half-year results today, which sent the shares up nearly 20% to 115p. The group was formed through the merger of Just Retirement and Partnership Assurance in April this year. Synergies from the merger have already totalled £15m and the synergy target for the end of 2018 has been increased 13% to £45m. This is obviously a huge saving over the next few years and much higher than initial expectations. 

The company is doing well and reported an operating profit of £51m along with a £226m profit after tax for the first six months of the year. Group CEO Rodney Cook stated that “our new business margin is starting to demonstrate the opportunity we have for potential further improvement as we deliver the cost synergies.” 

The stock received another boost this morning as Numis reiterated its 200p price target on the stock, which indicates that there’s a significant amount of upside from its current 115p valuation. If the business continues to perform well and more synergies can be squeezed out of the merger then the 200p valuation could become a reality. 

Governmental co-operation

Rockhopper Exploration (LSE: RKH) received some great news today that goes a long way in de-risking the Falkland Islands from a political standpoint. The British Government and the Government of Argentina have agreed to an improved relationship through closer co-operation on various matters. The governments “agreed to work toward removing restrictive measures around the oil and gas industry, shipping and fishing affecting the Falkland Islands in the coming months.” This will provide a great boost to the company as hostile rhetoric from the Argentinian government was becoming worrying. 

This news provides a further cause for celebration after Rockhopper’s half-yearly results. Yesterday the company announced that 2C oil resources in the Sea Lion Complex are now thought to be 517 mmbbl. The amount of investment required for first oil has also fallen to US$1.5bn (gross), which in turn has reduced the project’s break-even price to US$45 per barrel. This is good news for Rockhopper and shares are up 9% since the updated figures were released to the market yesterday morning. 

JRP and Rockhopper both seem to be on an upward trend and both have seen a great response to positive news. There’s a lot of upside in the shares and I think that both could be worth buying in the not too distant future. In the case of JRP it may be best to wait for a fall-back after the huge rise today. Rockhopper on the other hand has fallen over the last three months and it may be worth buying the shares if it suits your risk profile. 

The post Should you buy these stocks after today’s news? appeared first on The Twelfth Magpie.

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Jack Dingwall 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.

Profit from pensions

Annuity provider JRP Group (LSE: JRP) shares jumped 18% this morning, to 104p, after a pre-results trading update. Formerly Just Retirement Group, JRP is the result of April’s merger with Partnership Assurance, and the integration of the two companies is in progress.

JRP expects to report embedded value of over 200p per share, with the current share price a considerable discount to that — but we’d need to see how it’s calculated before we get too excited. Targeted cost savings of at least £40m would also be welcome, but do we know enough to buy the shares now?

Since the company’s initial flotation in late 2013, we’ve seen a 47% share price fall, and a couple of years of somewhat erratic results. There’s a return to profit forecast for the year just ended (after a loss last year), followed by a 44% EPS rise forecast for 2017, giving us P/E multiples of 9.7 and 6.7 respectively. We’ll need to see what the results say, but JRP is certainly worth closer attention on that valuation.

Retirement housing

Retirement figures in the business of McCarthy & Stone (LSE: MCS), a builder of retirement homes, but upbeat interim results from Persimmon will be behind today’s 6.3% share price rise to 191p. The shares, along with the building sector, slumped after the EU Referendum — and today they’re still 20% down from that fateful event.

But since a low on 7 July, we’ve seen an impressive rebound of 36% as the likely effect of the Brexit vote increasingly appears to have been overestimated. Persimmon has seen no falling off of customer interest, and I really can’t see leaving the EU having any detrimental effect on UK demand for retirement homes.

Expectations for the year ending this month suggest a P/E of 11, dropping to 10.5 on 2017 forecasts, and dividends are modest at 2.5% to 3%. That’s not as cheap as the major housebuilders, but McCarthy & Stone’s customer profile should make it less risky. Looks good to me.

Demand for carpets

People who buy homes want to install carpets, right? OK, I know the link is tenuous, but shares in flooring supplier Carpetright (LSE: CPR) are up 2.5% to 226.5p as I write. Could it be the start of some respite for shareholders, who are sitting on a 62% loss since the end of June 2015?

Carpetright shares are on a forward P/E of 10.4 based on forecasts to April 2017, dropping to nine a year later — and with double-digit EPS growth, we’re looking at PEG ratios of around that magic 0.7 level. Predicted dividend yields are low at 1.1% and 1.8% respectively, but on the face of it that’s still an overall valuation that looks reasonably attractive.

The only problem I have is that every time I’ve looked at Carpetright over the years, it’s been struggling through some sort of crisis, rebuilding itself, refocusing… or whatever. And that’s led to a share price fall of more than 60% over the past 20 years. Carpetright might finally be over its long history of woes, but with better bargains out there, why take the risk?

The post Can you afford to miss these 3 rising shares? 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?

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.