Building rebound

If you want to see a great example of the kind of buying opportunity that can come from irrational over-selling, just look at housebuilding products supplier Marshalls (LSE: MSLH).

Marshalls shares plunged by 36% after the EU referendum, but a surge since then has seen them recover all bar a couple of pence of their pre-vote 324p share price. In fact, if you’d bought on 7 July when the price hit its lowest, today you’d be smiling at a 56% profit! That includes a 2.6% rise to 322p after interim figures were released today. So what do they say?

Revenue only rose slightly, by 2%, but pre-tax profit is up 21% to £25.1m, with earnings per share up 22% to 10.36p, and the interim dividend has been lifted by 29% to 2.9p per share. The full-year dividend should yield a bit under 3%, with 2017 forecasts suggesting a rise to 3.2%, so levels aren’t high compared to some out there — but a strongly progressive dividend can be worth a lot more in the long run.

Chief executive Martyn Coffey spoke of the EU referendum uncertainty, but assured us it “has not impacted underlying trading to date.“

The shares look perhaps a bit pricey on their current valuation, with a P/E multiple of 18, but strong expectations for earnings growth would drop that to 15.8 for 2017. While Marshalls looks like an attractive company and should provide reasonable long-term returns, I can’t help feeling the shares are fully valued now and that there are better bargains out there.

Power profits

Lavendon Group (LSE: LVD) shares have been in a bad patch, losing nearly half their value since March 2014. But they’ve been creeping back in anticipation of today’s interims from the supplier of powered access equipment, and are up a very nice 8.5% to 136p on the day.

We saw double-digit rises in underlying figures across the board, with revenue up 13%, pre-tax profit up 10%, earnings per share up 12%, and the halfway dividend got an 18% boost. It was nice, for a change, to see a company report not warning about post-referendum uncertainty — Lavendon does get some of its business from EU countries, but around half comes from the UK and it’s big in Africa and the Middle East.

A rise in net debt to £149.7m (from £119.9m) does concern me, though the company says that reflects its investment programme over the half. Still, such a high level compared to annual revenue does take a bit of the shine off an otherwise very low forward P/E of 7.3 this year, rising a little to 7.5 for 2017.

But on the plus side, in addition to that lowly P/E, we’re seeing 4.3% and 4.5% dividend yields forecast for this year and next, which would be more than three times covered by earnings. Lavendon is also a strongly cash-generative business, which is a good indicator that it should be able to handle its debt level. I’m inclined toward bullishness on Lavendon, and I can see the shares continuing their recovery over the next couple of years.

The post Should you buy these climbers after 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 recommended Marshalls. 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 power equipment provider — which collapsed to four-year lows last week — advised that total revenues leapt 15% during January-June, while rental revenues advanced 13% from the year-ago period.

Lavendon therefore “remains confident of delivering its expectations for the full year,” it advised, and with good reason: market share grabs are helping to drive sales higher in the UK, Lavendon’s largest single market.

Meanwhile, investors fearing a Brexit hangover can take heart from Lavendon’s hefty overseas exposure. The Middle East and Continental Europe are responsible for 29% and 27% of group revenues respectively, and sales in these regions continued to climb in the first half.

I believe a forward P/E rating of 6.8 times makes Lavendon an attractive stock selection looking ahead.

Medical marvel

Healthcare giant BTG (LSE: BTG) hasn’t fared so well in Thursday business however, the company dealing 3% lower despite a promising trading update.

But I view this as nothing more than profit-booking after recent strength — BTG had seen its share price explode 10% since the referendum as cautious investors piled-in to the relative safety of medical stocks.

BTG advised that “overall performance and trading since April 1st are in line with expectations,” adding that revenues guidance of £485m-£515m for the full-year is unchanged.

However, the firm advised that this is based on an exchange rate of £1/$1.45. Should sterling average £1/$1.35 for the remainder of 2016, revenues are likely to clock in at £510m-£540m, BTG said. However, higher R&D and other costs and currency hedging contracts would offset these gains.

While BTG changes hands on a P/E rating of 29.1 times for 2016, I believe the firm’s splendid product pipeline fully merits such a premium, and I expect earnings to surge as drugs demand rises in the coming years.

Shop around

Convenience store McColl’s (LSE: MCLS) has seen its share price jump 16% following hot acquisition news late on Thursday.

The retail play has snapped up 298 shops from The Co-operative Group for £117m in cash, it advised. McColl’s will raise £13.1m through a share placing in order to finance the deal.

Chief executive Jonathan Miller said: “This opportunity substantially accelerates our growth strategy and expands our neighbourhood presence for the benefit of our customers.” It adds to the 933 stores already McColl’s operates across the country.

While the convenience sector is seen as a hot growth channel for the grocery sector, question marks remain over whether recent success here may have peaked. Indeed, the Local Data Company (LDC) notes that 228 towns and cities reported a fall in the number of such outlets in 2015.

The impact of Brexit on consumer spending power could also pressure takings at McColl’s looking further ahead, particularly if the supermarket price wars heat up.

So while McColl’s deals on a cheap forward P/E rating of 9.9 times, I reckon growing competition in this marketplace makes the firm a risk too far at present.

The post Should you buy McColl’s Retail Group plc, Lavendon Group plc and BTG plc following recent 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 recommended BTG. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Books beauty

The Harry Potter franchise has become the gift that keeps on giving for Bloomsbury Publishing (LSE: BMY), with the recent launch of a new illustrated range helping to drive book sales. But the boy wizard is not the be-all-and-end-all for the firm — the publisher also boasts a range of top-level titles across the cookery and adult book divisions. And elsewhere, Bloomsbury is expanding in the digital publishing space to deliver long-term growth.

The City expects Bloomsbury to lift an anticipated dividend of 6.3p per share for the year to February 2016 to 6.7p in the current period, creating a chunky yield of 4.5%. And a predicted return to earnings growth in 2018 is expected to produce a 7p payment, yielding a splendid 4.8%.

Flooring it

I reckon that floor coverings specialist Headlam Group (LSE: HEAD) is also a great bet to deliver strong dividend expansion well into the future. Exceptional market share growth in the UK is helping to propel revenues steadily higher — like-for-like sales leapt 6.3% in the first eight weeks of 2016 — while an end to the current cycle of huge capital expenditure also bodes well for income seekers.

The number crunchers expect Headlam to raise last year’s 20.7p per share dividend to 20.9p in 2016, before hiking the payment again next year to 21.7p. Consequently the business boasts smashing yields of 4.2% and 4.3% for these years.

A financial favourite

Thanks to its abundant cash flows, I reckon insurance play Chesnara (LSE: CSN) should also provide excellent dividend growth this year and beyond. The company has made a variety of shrewd acquisitions like that of Waard Group to bolster its continental exposure, and remains on the hunt for further deals in the UK and The Netherlands to drive earnings.

The Square Mile expects Chesnara to raise 2015’s dividend of 18.94p per share to 19.5p in 2016, creating an eye-watering yield of 6.3%. And the yield jumps to 6.5% for next year thanks to projections of a 20p reward.

Reach higher

Thanks to its exceptional record of generating earnings growth, Lavendon Group (LSE: LVD) has long proved a winner for those seeking dividend growth year after year.

Indeed, demand for the firm’s ‘powered access equipment’ — equipment that enables people to work at height —  continues to shoot reliably higher around the globe. Lavendon saw group revenues surge 13% higher during January-March, the business announced today.

The City shares my bullish take, and expects Lavendon Group to raise 2015’s payment of 5.4p per share to 5.7p this year, and again to 6p in 2017. The hardware operator subsequently sports jumbo yields of 4.3% and 4.5% for 2016 and 2017 correspondingly.

The post 4 Small Caps For Explosive Dividends! Bloomsbury Publishing Plc, Headlam Group plc, Chesnara Plc & Lavendon Group plc 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.

City analysts believe that ITV’s earnings per share will expand a further 17.4% to 15.7p this year. Based on the fact that the company is currently trading at a forward P/E of 15.7, this indicates that ITV’s shares trade at a PEG ratio of 0.9 — a PEG ratio below one indicates growth at a reasonable price. 

What’s more, analysts believe that ITV will announce a 57% hike in its dividend payout this year as earnings charge higher. Based on these expectations the company is set to support a dividend yield of 3.1% for full-year 2015. 

Explosive growth 

Office outsourcer Regus (LSE: RGU) has been on a growth tangent since the end of the financial crisis. For full-year 2015 analysts expect the company to report earnings per share of 10.7p, compared to the figure of 1.9p reported for full-year 2010, a gain of over 400%. 

Regus’ growth is set to continue for the next two years. Analysts expect the company’s earnings per share to expand 44% this year and a further 36% during 2016.

Unfortunately, for this kind of growth you have to pay a premium and Regus currently trades at a premium forward P/E of 23.5. However, based on the fact that the company’s earnings are set to expand 44% this year, the company’s shares are trading at a PEG ratio of 0.5. 

Regus currently supports a dividend yield of 1.7%. 

Earnings upgrade

City analysts have become increasingly upbeat about Lavendon’s (LSE: LVD) outlook during the past 12 months. 

Specifically, analysts have raised their growth forecasts for the company four times since August last year. Now, analysts expect the company’s earnings to expand 12% this year. As the company is currently trading at a forward P/E of 10.4, and PEG ratio of 0.9, Lavendon looks to offer growth at a reasonable price. 

Lavendon supports a dividend yield of 2.8%, and the payout is covered three-and-a-half times by earnings per share. 

Growth and income 

Telecom plus (LSE: TEP) offers the rare combination of both an attractive growth outlook and solid dividend yield. 

Telecom’s earnings are forecast to expand 31% this year, which when compared to the group’s forward P/E of 16.5 gives a PEG ratio of 0.5. Also, at present levels the company supports a dividend yield of 4.9%. 

Over the next two years, analysts have pencilled in dividend growth of 15% per annum. The payout is covered 1.2 times by earnings per share. 

Dirt cheap

Gulf Marine Services (LSE: GMS) is without a doubt one of the cheapest stocks around. The company currently trades at a dismal forward P/E of 6 and analysts believe earnings per share will expand 22% this year. These numbers give a PEG ratio of 0.3.

At present, Gulf Marine only yields 1.6% although the payout is covered ten times by earnings per share which leaves plenty of room for growth. Group debt is low, so there’s no need to retain profit for reinvesting later. Shareholders could be in line for a special payout in the near future. 

The post 5 Defensive Growth Play For A Rocky Market: ITV plc, Regus PLC, Lavendon Group plc, Telecom plus PLC & Gulf Marine Services PLC appeared first on The Twelfth Magpie.

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Rupert Hargreaves 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.