However, today its shares rose by as much as 15% in afternoon trading, after the Kurdistan-focused oil producer reported its full-year results. Although Genel’s losses deepened on falling production and a further write-down of reserves, the market responded positively to the momentum behind the development of its Miran and Bina Bawi gas fields in the Kurdish region of Iraq.

Full-year results

Following hefty impairment charges to its exploration assets, Genel’s operating loss last year widened to $1.22bn, up from $1.04bn in 2015. Revenue fell to $190.7m from $343.9m in 2015, missing its much reduced target of $200m–$230m for 2016, as Genel’s share of production fell sharply from 84,900 barrels of oil per day (bopd) in 2015, to 53,300 bopd.

Encouragingly, though, the resumption of regular payments from the Kurdistan regional government in return for oil exports helped Genel to return to positive free cash flow in 2016. The company reported free cash flow after capital expenditures of $59m, versus an outflow of $179m in 2015.

Turnaround plan

Genel has been dogged by a series of reserve downgrades and exploration failures over the past few years, but analysts still see promising prospects in the company’s gas business.

Global natural gas demand is rising due to the structural shift away from coal, and Genel is attractively positioned to benefit from Turkey’s plans to build a pipeline extension to import gas from the Kurdish region. There’s almost 1,500 million barrels of oil equivalent (MMboe) of 2C reserves in its Miran and Bina Bawi gas fields, and Genel is currently in talks with farm-out partners to help fund its development. Outside of Kurdistan, Genel also has exploration assets in Morocco and Somaliland.

However, whether Genel can actually deliver a successful turnaround is still very much up in the air. With net debt of $241m, the company does not have very much financial flexibility. Additionally, uncertainties over the production outlook for its current production assets continue to overhang the shares. As such, investors should approach Genel with caution.

Better play?

Of course, Genel is not the only stock in the energy sector with turnaround potential. Oil services company Petrofac (LSE: PFC) is set to see a significant improvement in free cash flow this year as it refocuses on its core Engineering & Construction business.

Its business model appears to be more stable than that of its sector peers and evidence of this can be seen from its strong backlog of orders and relatively stable revenues. Petrofac’s focus on the Middle East has also spared the company from recent savage cuts to capital spending in the oil & gas industry. What’s more, the scaling back its Integrated Energy Services (IES) operations will reduce its exposure to production risks and allow Petrofac to maintain a leaner capital structure.

The company recently won a $1.3bn contract to design and build a gathering centre in the Burgan oil field in Kuwait, which will give its order backlog a significant boost. And as Petrofac’s backlog already stood at $14.3bn before this latest deal, the company has excellent visibility over future revenues.

Valuations also seem attractive, with shares trading at a forward P/E of 10.0 and currently yielding 5.7%.

The post Is it finally time to buy Genel Energy plc? appeared first on The Twelfth Magpie.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Petrofac. 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.

Strong order backlog

Shares in oil services company Petrofac (LSE: PFC) seem too cheap to ignore, with a forward P/E of 9.4 and a dividend yield of 6.2%.

Unlike many in the sector, Petrofac is attractively positioned due to its heavy exposure to the Middle East, where the relatively low costs of production in the region have shielded the company from savage cuts to capital spending in the oil & gas industry. What’s more, the company has adapted to lower energy prices by scaling back its Integrated Energy Services (IES) operations, which has helped to reduce its exposures to production risks.

As you might have guessed, Petrofac’s transformation isn’t without its difficulties. The company has made a number of writedowns and impairments, which resulted in it declaring a net loss of $349m in 2016. However, with cash flow from operations improving and steady revenue from new projects, Petrofac is delivering a strong operational performance across all its businesses and net debt is falling.

Additionally, Petrofac’s order backlog, which stands at $14.3bn (roughly double last year’s revenues), remains one of the most robust in the industry and gives it excellent revenue visibility over the next few years.

Overly cautious?

Housebuilder Redrow (LSE: RDW) may not be as well known as its larger rivals, but the company has been one of the most resilient in the sector since the Brexit vote last June. Shares in Redrow are currently trading near a post-recession high of 499p a share but they still seem undervalued.

Redrow is seeing business boom, thanks to a resilient residential property market in the South East and an increase in legal completions. In the six months to 31 December 2016, earnings per share (EPS) surged 35% to 31p a share. But City analysts expect earnings for the full-year to climb just 14% this year. This indicates that the market may be overly cautious on the stock, which opens up the possibility of earnings revisions over the next six months.

But even on those current estimates Redrow seems cheap, with shares trading at a forward P/E of just 7.5, which compares favourably to the sector average of 9.2.

First dividend payment?

Meanwhile, challenger bank Aldermore (LSE: ALD) seems poised to make its first dividend payment this year. The specialist mortgage and small business lender generated capital organically for the first time, and it has more capital than it needs to fund its growing loan book.

Looking ahead, Aldermore sees good tailwinds, with the bank expecting regulatory change to benefit smaller lenders and steady growth in buy-to-let lending. City analysts currently forecast its bottom line to have increased by 12% in 2016, with further growth of 11% expected for this year.

This gives it a forward P/E of just 8.2, which seems to offer excellent value for money for a stock which is soon to start making dividend payments. As such, I consider Aldermore a worthy buy at today’s price of 230p a share.

The post 3 bargain shares I’d buy in March appeared first on The Twelfth Magpie.

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• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

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

For this reason, the sector isn’t one to ignore out of hand, but for more cautious investors such as myself who are focused on protecting our downside, a very appealing option may be Middle Eastern services provider Petrofac (LSE: PFC).

It has exposure to much of the upside in the industry because when times are good and producers are pumping vast amounts of oil or gas, it has plenty of work and can charge higher prices. But in times like these, when oil prices are depressed and producers cut back on new projects, they still need Petrofac’s services to maintain current projects and remain locked into contracts signed during the boom times.

This relatively stable revenue is obvious when we look at Petrofac’s accounts. Back in 2013 when crude prices were regularly above $100/bbl, Petrofac brought in $6.3bn, while last year it grossed an even higher $6.8bn as previously-signed contracts fed through. Now it must be said that earnings have fallen off the proverbial cliff as squeezed margins on new projects and a disastrous foray into a new business line took their toll.

Turnaround time?

However, we’re beginning to see a slight turnaround as the company pulls back from its ill-advised expansion into integrated energy services (IES), which involved taking a cut of profits per barrel and understandably turned sour once crude prices tanked. And margins should be picking up too. A series of asset sales from the IES division and a 25% reduction in overall headcount during the past year has allowed the company to maintain guidance of $410m net profit for fiscal 2016.

The company’s ability to remain solidly profitable even while the industry as a whole suffers is immensely attractive. And much of this is due to the fact that its core customer base is made up of Middle Eastern national oil companies. These state-owned giants need to continue pumping high volumes of oil to sustain national budgets, so are less price-sensitive than oil majors. Likewise, many of these customers’ fields are relatively old, which means plenty of high-margin maintenance contracts for Petrofac.

Furthermore, it has a relatively healthy balance sheet, unlike many large oil producers. Net debt at year-end is expected to stand at $900m, which is quite low considering the firm posted $332m in EBITDA in the first six months of the year, even including a final $100m charge related to a poorly executed North Sea project that is now complete. Low debt and sustained cash flow means the company’s 5.1% yielding dividend is incredibly safe, even during the current industry downturn. And with the shares trading at just 12 times forward earnings there’s plenty of room for upward price movement should crude prices continue to rise. All in all, a stable revenue base, healthy cashflow and very safe, high-yielding dividend make Petrofac my pick in the turbulent oil & gas sector.

The post Why this is the only oil stock I’d ever own appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Petrofac. 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 its most recent update, for the last quarter of its financial year, the Luton-based carrier said it had delivered record passenger numbers and higher load factors during summer trading, with a significant reduction in its cost per seat over the three month period ended 30 September.

Passenger numbers over the period hit a record 22 million with a strong load factor of 93.9%. EasyJet said that its customers had benefitted from lower fares right across its network, with revenue per seat decreasing by 8.7% on a constant currency basis compared to the same period a year earlier.

Currency woes

The airline has, however,  grown capacity by 6.1% over the three month period and is continuing to deliver its strategy of enhanced long-term competitive advantage, through building leading positions at key airports in its core summer beach routes and its European City network.

EasyJet admits that strong currency fluctuations since the result of the EU referendum have had significant adverse effects on performance, with foreign exchange rate movements now expected to have a negative impact of around £90m compared to FY2015, an increase of £35m since the 23 June Brexit vote.

After hefty falls this year, the shares are trading on a cheap-looking price-to-earnings ratio of just nine, with bargain hunters perhaps looking to take a contrarian approach. But broker consensus suggests underlying earnings will shrink by 22% for fiscal 2016 and by a further 15% next year, and I would rather wait until growth starts to appear on the horizon.

Cheap, but not a bargain!

Oil and gas engineering firm Amec Foster Wheeler (LSE: AMFW) is another London-listed firm facing tough trading conditions of late. The FTSE 250 firm has been suffering a share price slump since the summer of 2014 when it reached all-time highs of 1,262p, but the shares are now changing hands at just 416p. The fortunes of oil and gas engineering firms are heavily tied to the oil price, with companies such as Amec feeling the effects of reduced capital investment in infrastructure after the recent oil price slump.

Amec is, however, taking positive steps to turn things around, such as making cost savings, and continuing its expansion into renewable energy, and this will no doubt help the company’s bottom line over the long term.

But, for now, analysts expect the firm’s profits to keep falling at least until a recovery in the oil price prompts the industry to significantly increase capital investment. In my opinion Amec’s battered shares still don’t represent good value given the gloomy outlook.

The post Why I’m avoiding these cheap shares appeared first on The Twelfth Magpie.

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Bilaal Mohamed 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.

Shares in Gulf Marine Services (LSE: GMS) dropped 6.6% today despite strong full-year results. With revenue up 12%, the supplier of self-propelled self-elevating support vessels to the offshore oil and gas business reported a 4% rise in adjusted net profit, with adjusted earnings per share (EPS) pretty much flat. The full year dividend was lifted 9% to 1.6p per share, ahead of forecasts.

In a year in which big oil companies have been tightening their belts on support spending, this looks like a pretty decent set of figures to me, and the firm seems to have no financing problems, with a new $620m debt facility in place in the final quarter and improved borrowing margins reported.

Chief executive Duncan Anderson called this a “solid set of results“, but he did say that last year’s turbulence in the markets is expected to “continue throughout 2016” — and that’s probably partly behind the price fall. Forecasts put Gulf Marine shares on a forward P/E for 2016 of only 3.8, dropping as low as 3.2 on 2017 predictions. With EPS growth expected to resume this year, I see that as far too cheap — even if the apparent oil price recovery takes a little longer to become established.

Wafers with that?

It was full-year results time for maker of semiconductor wafer IQE (LSE: IQE) too, although the share price has remained unchanged at 18.75p at the time of writing. After a slump towards the end of 2015, the shares are now down 19% in 12 months, and again we’re looking at a company on a very low P/E valuation — just 6.6 based on forecasts.

Chief executive Drew Nelson described 2015  as bringing in “another strong financial performance“, after adjusted EPS rose 7%. The firm managed to get its net debt down by 26% to £23.2m, and saw operational cash generation rise by 41%. IQE’s intellectual property portfolio is growing, with over 100 patents now in the field of advanced semiconductor design and manufacture.

Mr Nelson also says IQE is “on track to achieve our expectations for the full year“, and as far as I can see his optimism looks to be well placed.  I think we could be looking at another small cap bargain here.

Pills and potions

Finally, biotechnology specialist e-Therapeutics (LSE: ETX), whose shares gained 9% to 13.5p on the release of full-year results. CEO Professor Malcolm Young told us it was a “very productive year for our discovery platform which continues to exceed our expectations by generating high quality, potent compounds“, adding that some have “the potential to be game changers in immuno-oncology, cancer drug-resistance and anti-infection“.

That certainly sounds like a promising prospect, but the big risk I see is that e-Therapeutics still appears to be some years away from profit, with forecasts suggesting  losses continuing at around the current rate for at least two more years. For the year just ended, operating losses came to £11.6m, and I’m a little concerned that the company’s net cash of £24.8m might not last too long at that rate. However, the firm says is is “well funded to advance its programmes“, and top fund manager Neil Woodford bought some last year.

The post Should You Buy Gulf Marine Services PLC, IQE plc And e-Therapeutics plc 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 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.

For the year just ended in January 2016, analysts are expecting a total dividend return of 399p per share. At the first-half stage this year the firm announced a 53p interim ordinary dividend, and had revealed another 120p in special dividends. For much of the year buybacks were out as the shares have mainly been priced above the company’s limit. So the forecast is looking pretty good for the full year.

Since 2 December however, NEXT shares have fallen back by 16% to 6,600p, so the final quarter of the year might well see share buybacks accelerate. And it might have given us a nice buying opportunity too, dropping the P/E to 15.3 (and forecasts for the next two years would drop it further to under 14 by January 2018).

The drop also pushes up this year’s potential total dividend yield to 6%, with forecasts suggesting 6.2% and 6.5% for the following two years. Ace investor Neil Woodford counts NEXT among his high-yield investments, and it’s hard to argue with him.

Cash from houses…

Housebuilding and construction group Galliford Try (LSE: GFRD) has offered investors the best of both worlds in recent years — its share price has quadrupled over five years and it’s been paying out progressive dividends too.

The shares have actually fallen back by 20% since their 12-month peak in August 2015, to 1,443p, along with a slowdown in share price growth across the sector. But that’s lifted the forecast dividend yield for the year to June 2016 up to 5.6%, with analysts suggesting a whopping 6.8% in 2017.

At the halfway stage reported on 25 February, we heard of a 12% rise in revenue with earnings per share up 24%, and the interim dividend was lifted by 18% to 26p per share. That makes full-year forecasts look undemanding.

The shares are on a forward P/E of 11.4, dropping to 9.6 on 2017 forecasts, which sounds cheap to me for such attractive dividend yields.

…And from oil too

Shares in Petrofac (LSE: PFC) are down 38% since their May 2014 peak, to 890p. The falling oil price has been the culprit. Yet as a profitable oil services company, Petrofac is somewhat isolated from that. Its main customers in the Middle East are still pumping as much as they can, and they still need Petrofac’s services.

The shares are on lowly P/E multiples of around 10 based on forecasts for this year and next, and a decent rise in oil prices could see demand for services rising and earnings growing ahead of forecasts. For the year to December 2015, we’ve already heard of a 10% rise in revenue to $6.8bn.

The other tasty thing about Petrofac is its dividend, which is forecast to yield 4.8% this year and 5.1% next, and it would be a little over twice covered by forecast earnings each year. So we have a potential and relatively safe play on a recovering oil price, coupled with strong and well-covered dividends. How could you not like that?

The post Are Dividends From NEXT plc (6%), Galliford Try plc (5.6%) And Petrofac Limited (4.8%) Too Good To Miss? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Petrofac. 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 LSE’s earnings have been growing steadily since the recession, and there’s another 12% growth expected for the year just ended — followed by 9% forecast for this year and 15% for 2017. The shares are on a relatively high P/E of nearly 24 for the year just ended, and that would only drop to 19 by 2017, which is some way ahead of the FTSE 100 average of a little under 14. And dividend yields of only around 1% to 1.5% are way below the market average.

But the City’s analysts are very bullish about the company, presumably because growing economic strength and a return to company growth should provide a nice long-term boost for the LSE.

The best insurer?

Then on 10 March we should have 2015 results from Aviva (LSE: AV).

The full year is expected to bring an 18% drop in EPS, but it should be accompanied by a 4.7% dividend yield. The shares have lost 19% over the past 12 months to 436p, putting them on a P/E of 11. Forecasts for this year suggest a 17% rise in EPS and a dividend boost to 5.5%, with a further 10% growth in EPS and a 6.3% yield pencilled-in for 2017 — and those would give us P/E multiples of 9.5 and 8.5, respectively.

Aviva’s Q3 update, after the acquisition of Friends Life, told us of a 25% rise in new life insurance business with more than £2.2bn in net inflow in the nine months, with the firm’s general insurance and asset management divisions also doing well.

With chief executive Mark Wilson speaking of “maintaining the momentum of Aviva’s transformation with a further quarter of improved performance“, would I buy the shares? Yes, I would (and did).

An oil outsider

Thirdly, I have an intriguing prospect in Gulf Marine Services (LSE: GMS), which is set to report on 22 March. The shares are down 54% since their April 2014 peak, to 74p, so what’s the story?

Gulf Marine supplies things called jackup barges, which I believe are essential bits of kit in the offshore oil extraction business, and the oil price slump leading to the shelving of so many prospects has seriously damaged sentiment towards the firm. Perhaps unsurprisingly, there’s a 30% drop in EPS expected for the year just ended. But I think investors could be missing an opportunity here.

Gulf Marine might not be supplying much new kit, but it’s still making decent profits from maintenance work — and there’s a return to earnings growth forecast for 2016. And here’s the killer — the shares are on a P/E of only 4.5 based on 2015 expectations, dropping to a mere 3.7 on 2016 forecasts!

The post 3 Hot Picks For March? Aviva plc, London Stock Exchange Group Plc And Gulf Marine Services PLC appeared first on The Twelfth Magpie.

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Alan Oscroft owns shares in Aviva. 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.