Oxford Instruments (LSE: OXIG) featured in that article alongside estate agent Purplebricks Group. OXIG produces“high-technology” products and systems for industry and research. Today, it released its full-year results report.

Things are going well

Luckily for me, Purplebricks share price has fallen around 66% since my previous article and Oxford Instruments has risen 22%. Today, I’d still buy its shares and with the stock looking perky this morning, my guess is I’m not alone.

Today’s report reveals that things are going well. Currency adjusted revenue rose almost 11% compared to a year earlier, cash from continuing operations jumped up nearly 69% to just over £56m, and adjusted earnings per share lifted a little higher than 15%. The directors confirmed their confidence in the outlook by slapping 8.3% on the total dividend for the year.

Currency adjusted order inflow for the year scored an increase of 12% to more than £353m, which pushed the order book around 9.4% higher to almost £172m, providing decent forward visibility. There was a bit of currency headwind during the year, but the operating margin still came in at almost 15%, down just under 1%.

The work is profitable, and to prove the point “good” cash generation allowed the company to turn net debt of £19.7m on the year-ago balance sheet to net cash of £6.7m with this balance sheet made up to 31 March. I reckon cash is the acid test of business success, so I find the firm’s cash performance to be encouraging.

Long-term fundamental growth drivers

My observation is that some research-driven university spin-offs remain profitless always, and can be disaster-investments for their shareholders. That’s not the case with Oxford Instruments. Chief executive Ian Barkshire explained in today’s report that the firm serves “attractive markets with long-term fundamental growth drivers.” 

The company’s strategy involves focusing on segments where it can “maintain leadership positions.” 

Looking forward, Barkshire is “mindful” of geopolitical and market uncertainty, but the company is “focused on improving the business.” He expects “further progress” during the current trading year.

Meanwhile, City analysts following the company have pencilled in mid-single-digit percentage increases in earnings for the current trading year and for the year to March 2021.

With the shares close to 1,152p, you can pick up a few on a forward-looking price-to-earnings multiple of around 17 for next year. The anticipated dividend yield is running near 1.3%, with the cover from earnings likely to be around four and a half times.

High cover like that suggests to me the directors see plenty of growth potential still in the tank. I admit the valuation is punchy, but I like this one and would be happy to top up with a few shares on dips and down-days.

The post I’d still dump Purplebricks for this small-cap appeared first on The Twelfth Magpie.

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• How much should a 45-year-old put in a SIPP each month to try for a million?
• Closing in on £33 and around an all‑time high, is this FTSE 250 favourite seriously mispriced?

Kevin Godbold has no position in any share 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.

With this in mind, here are two shares that may be worth avoiding at present. Neither seems to offer the best opportunity to help you generate high returns so that you can retire before 65.

Positive outlook

Reporting on Tuesday was provider of high technology products and systems for industry and research, Oxford Instruments (LSE: OXIG). The company’s results for the year to 31 March saw it deliver adjusted profit before tax growth of 34.3%, to £42.3m from £31.5m in the previous year. And with its reported order book of £134m, 5% higher than at the same time last year, it seems to be in a strong position to deliver further growth.

The company’s current strategy seems to be performing well. It has invested heavily in research and development, while transitioning to a more commercially-focused operation as it seeks to address a broad range of industrial and academic markets.

Looking ahead, Oxford Instruments is expected to report a 5% rise in earnings for the current year, followed by further growth of 7% next year. While impressive, this rate of growth appears to have been fully factored in by the market, with the stock trading on a price-to-earnings growth (PEG) ratio of 3.6. As such, it seems to be a stock to avoid, despite its improving financial performance.

Uncertain outlook

Also seemingly overpriced at the present time is accounting and payroll software specialist Sage (LSE: SGE). The company’s share price has been volatile in recent months, with it warning in April that sales for the current year would be lower than previous guidance. Its operational execution, as well as a slowdown in its French business, have caused challenges in the recent past, with investor sentiment declining in response.

Still, the stock has a price-to-earnings (P/E) ratio of around 23 at present. This is despite a reduction in its growth outlook, with the stock now expected to report a rise in earnings of 8% in each of the next two financial years.

Clearly, Sage has a solid track record of growth. Its business model, while evolving towards a subscription-based focus, has remained robust in recent years and this has allowed it to generate positive earnings growth in each of the last five years. However, with a high valuation and a narrow margin of safety, it appears to be another company to avoid at the present time.

The post Want to retire before 65? Here are 2 overvalued shares I would avoid appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended Sage Group. 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.

Shares in the company really took off at the beginning of 2010, rising 800% over four years, and the business peaked in 2012 when profits hit £25m. Unfortunately, since then the firm has been grappling with rising competition for its products, which has pushed it to restructure the business. 

In June of last year, management announced its ‘Horizon Strategy,’ which the company hopes will allow it to return to growth. The strategy is focused around two key “anchors” of returning to sustainable growth and improving margins by “concentrating on market segments with long-term growth drivers where we have the potential to become the market leader.” 

Pushing ahead

According to a trading statement issued by the business today, this strategy seems to be paying off. For the year to 31 March 2018, earnings are expected to be in line with market projections and for fiscal 2019, management is expecting to “see an improvement in performance on a reported basis.” City analysts have pencilled in earnings per share growth of just under 8% for fiscal 2018, followed by a similar rate of growth for 2019. And based on these projections, as well as the company’s progress, I believe shares in Oxford could be worth up to 50% more than they are today.

Specifically, shares in the company are currently trading at a forward P/E of just 14, a high multiple compared to some sectors, but not that dear for a highly specialist technology and research business. Oxford’s peer, Judges Scientific for example, trades at a forward P/E of 17.7 and other non-medical peers such as Renishaw and Gooch & Housego trade at an average forward P/E of 25. If Oxford trades up to the same valuation, the shares could be worth as much as 1,425p, 73% above current levels.

Proving its worth 

Another business that I believe is worth significantly more than the current valuation attributed to it is Plus 500 (LSE: PLUS). 

It is something of an anomaly. For as long as I can remember, analysts have been questioning the sustainability of the company’s income, and even the legality of its operations. However, despite these concerns, year after year the firm has produced results for investors. 

So, as the company continues to produce profitable growth, I believe that it is only a matter of time before the market re-rates the stock. Right now shares in the group are trading at a forward P/E of just 8.5, and support a dividend yield of 7.1%, compared to the valuation of 15 times forward earnings for its larger peer, IG Group.

As IG is the sector leader, I believe that it deserves a premium valuation, but even if shares in Plus 500 traded up to 13 times forward earnings, the shares could be worth as much as 2,015p, or 54% above current levels.

That being said, not everyone holds the same view as me. My Foolish colleague G A Chester is avoiding the business because it’s difficult to figure out why it is so much more profitable than its larger peers.

The post Two growth monsters I believe could jump 50% or more appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Gooch & Housego, Judges Scientific, 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.

Who can resist the lure of a company that aims to disrupt the cosy world of the commission-guzzling estate agency sector? Purplebrick’s hybrid approach uses online technology and on-the-ground local experts to deliver a service with fixed fees, typically lower than the commissions many estate agents charge.

Volatile share price

The stock market saw the potential, catapulting the shares from around 97p in January 2016 to a little over 500p by August 2017. But there’s a problem. Despite big advances in annual revenue figures, profits remain elusive. Since the summer, it seems to have dawned on many that enthusiasm for the stock has been bubbling ahead of events and the share price has been falling.

Even mid-morning’s 324p level puts the company on a forward price-to-earnings (P/E) ratio around 137 for the year to April 2019 – the year that City analysts expect virgin earnings to materialise. That’s high, although earnings could ramp up quickly if the firm keeps posting hefty annual revenue rises.

But what of the share price? I reckon that it could go anywhere over the next couple of years, perhaps down by 50% or more, or maybe doubling from here. Until earnings are a regular and growing feature of the accounts, Purplebricks remains a highly speculative proposition, so I’d rather take my chances with an earnings-producing growth story such as Oxford Instruments (LSE: OXIG).

An agenda for growth

The firm provides technology tools and systems for industry and research. Today’s interim results show that things are going well with the order book 1.8% higher than a year ago at constant currency rates. Profit before tax from continuing operations also came in at £12.7m, which compares to a loss of £0.6m at this stage last year.

The directors held the interim dividend firm, but the company used the proceeds from the sale of its Industrial Analysis business in July to pay down debt, from more than £141m last year to around £45m today, which I reckon bodes well for future dividend payments. Meanwhile, the firm has its sights fixed on expansion, saying that it’s repositioning itself for long-term growth and margin improvement by building on its “world-class nanotechnology expertise”.

Chief executive Ian Barkshire tells us that Oxford Instruments is “enjoying increasingly collaborative commercial relationships,” which helps the firm to deliver to its customers “solutions that enable them to succeed at the frontiers of science and within applied R&D and commercial applications.”

City analysts following the firm expect earnings to rise 13% during the current trading year to March 2018, and by 8% the year after. And that growth comes a lot cheaper than what’s on offer at Purplebricks. At today’s 972p share price, Oxford Instruments’ forward P/E ratio runs just below 18 for the current year and a little under 17 for next year. I reckon the firm is well worth your further research right now.

The post Why I’d dump Purplebricks Group plc for this small-cap appeared first on The Twelfth Magpie.

More reading

• How much should a 45-year-old put in a SIPP each month to try for a million?
• Closing in on £33 and around an all‑time high, is this FTSE 250 favourite seriously mispriced?

Kevin Godbold 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.

Indeed, after hitting a high of 38p per share at the beginning of 2014, shares in Ekf slumped to a low of 8.8p at the beginning of 2016 as losses rose fivefold. 

But it now looks as if the firm is back on track. According to its half-year report published today, the medical diagnostics and testing company saw revenues expand 22.8% for the six months to the end of June. Gross profit for the period rose 40.6% to £11.8m. Adjusted earnings before interest, tax, depreciation, and amortisation more than doubled from £2m to £4.6m and the company moved into a net cash position of £4.4m, up from a net debt balance of £4.3m at the end of the same period last year.  

Simplify and streamline

These figures reflect management’s efforts to simplify and streamline the business following its previous problems. The number of manufacturing facilities has been reduced from 12 to seven and a rise in orders has helped accelerate profit margin expansion. For the full year, City analysts have pencilled in earnings per share of 0.9p on a pre-tax profit of £3.8m and revenues of £41.6m. Based on these estimates the shares are trading at a forward P/E of 29.4. 

Some investors might be discouraged by Ekf’s valuation, but I believe that the shares deserve a place on my watchlist because of the company’s strong growth, rapidly growing cash balance and plans to return cash to investors. Management has recently announced plans to buy back up to 15% of the company’s outstanding shares to reward shareholders and celebrate Ekf’s return to profitability. 

Undervalued 

Another British diagnostic company I’m keeping an eye on this month is Oxford Instruments (LSE: OXIG). Oxford specialises in nanotechnology tools and services that enable materials characterisation and sample manipulation at the nano scale. 

Oxford grew rapidly until 2015 when growth went into reverse and the shares lost around two-thirds of their value in a year. Nonetheless, growth has now returned and investors are starting to trust the company again. For the fiscal year ending 31 March 2018 City analysts are expecting the company to report earnings per share of 53.6p, up 12% year-on-year on a pre-tax profit of £40.5m. Earnings growth of 9% is projected for the following year. 

Unfortunately, like Ekf, Oxford also trades at a high valuation, but I believe this is warranted as management’s decision to sell its industrial analysis unit would leave the group more focused on the higher-margin nanotechnology and services, and this specialist focus deserves a premium valuation. 

The shares currently trade at a forward P/E of 21. I believe as the market wakes up to Oxford’s more focused business, which should be able to produce higher profit margins, the shares should re-rate to an even higher valuation. For example, shares in specialist engineering group Renishaw trade at a forward P/E of 32. 

The post 2 under-the-radar stocks on my watch list this September appeared first on The Twelfth Magpie.

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• How much should a 45-year-old put in a SIPP each month to try for a million?
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended 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.

The buzz about Abzena

This is the first time Fool UK has covered the £91.85m life sciences group and you have got off lightly, with the share trading 50% lower than two years ago. However, it is up a thrilling 25% in the last month, helped by May’s news that development partner True North Therapeutics Inc was acquired by Bioverativ Inc for $400m.

Today’s 2017 results show revenue increased 89% to £18.7m, up from £9.9m in 2016. However, a growing company like this also has plenty of expenses, notably the administrative cost of expanding in the US, and research and development expenditure. It reported a loss of £9.1m, down 6% on 2016’s £9.7m. Cash at year-end also fell sharply, from £13.7m to £4.1m.

Bought the biopharm

Chief executive John Burt describes the past 12 months as a combination of integration and preparing the group for significant growth. The business has a solid platform after raising £23.9m to fund investment and growth which “will accelerate our progress towards profitability”.

City analysts predict another pre-tax loss of around £9.71m in 2018, with earnings per share down 41%, then a smaller loss of £3.87m in 2019. The direction of travel is good, but the road may be bumpy. You don’t need me to tell you that early stage biopharmaceutical stocks can be risky. However, Abzena could be worth a place on your watchlist.

First class at Oxford

Oxford Instruments (LSE: OXIG) is a commercial spin-off from the university and its results got top marks today, with the share price up more than 6% at time of writing. The smart science company, whose products include atomic force microscopy, microanalysis systems and, er, nanomanipulation thingies, is up 50% in the past 12 months, so momentum is building nicely.

Today’s preliminaries reveal a 9.1% rise in revenues to £348.5m, although down 3.7% at constant currency. Adjusted profit before tax rose 7.1%, in line with company expectations. Net debt reduced from £128.2m in 2016 to £109.3m, with leverage falling from 2.3 to 2.1 times thanks to good cash conversion and the sale of Oxford Superconducting Technology. The full-year dividend was maintained at 13p, offering a yield of 1.3%. This £620m company is clearly a growth rather than income play and boasts a stronger order book, up 9.3% over the year.

Musical instruments

Like Abzena, Oxford Instruments is also a company in transition. Chief executive Ian Barkshire said it had delivered a stable performance and remained positive despite uncertain academic and R&D funding levels. “Fundamental improvements to our structure, operations and strategy are under way and give us a solid platform to return to sustainable growth, at improved margins over the medium term.” 

City forecasters are positive, with 2017’s pre-tax loss of £25.5m forecast to turn into a £40.98m profit in 2018 and £42.52 in 2019. A valuation of 20.73 times earnings may reflect an exciting growth prospect.

The post 2 top growth stocks I’d consider buying right now appeared first on The Twelfth Magpie.

More reading

• How much should a 45-year-old put in a SIPP each month to try for a million?
• Closing in on £33 and around an all‑time high, is this FTSE 250 favourite seriously mispriced?

Harvey Jones has no position in any 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.

Since the mid-point of April the business has seen its share price detonate 11%, St James’s Place striking fresh record peaks just today. And I reckon the stage is set for the stock to keep on charging.

Funds favourite

Appetite for the company was done no harm by latest trading numbers released in late April.

The London business announced that gross inflows jumped 32% during January-March, to £3.23bn from £2.45bn a year earlier. And group funds under administration clocked in at £79.84bn versus £62.02bn previously, thanks also to the manager’s exceptional customer fund retention rate (this clocked in at 95% during quarter one).

Net inflows in the first quarter rose to £1.99bn, with inflows of £1.02bn across its pensions suite accounting for the lion’s share. And the company sees plenty of scope for its financial products to keep surging.

Indeed, chief executive David Bellamy commented that while “political and macro uncertainties persist, the more immediate concern for many people relates to personal financial matters, particularly in relation to long-term savings, protecting and preserving wealth, tax and intergenerational planning.”

In this environment the City expects earnings to continue surging for some time yet. Growth of 97% and 20% is forecast for 2017 and 2018 respectively.

And while a forward P/E ratio of 27.8 times may look a tad heady on paper, a PEG reading of 0.3 actually suggests the stock is priced attractively relative to its projected earnings performance. I reckon St James’s Place is a stock worthy of serious consideration from value-geared growth seekers.

Oxford don

Although impressive, the recent share price gains over at St James’s Place pale into insignificance compared with those of Oxford Instruments (LSE: OXIG), however.

The FTSE 250 business has jumped 29% in value during the past month, the engineer leaping after news it had shorn off its Industrial Analysis business to Hitachi High-Technologies for £80m. The move marks the latest step in massive restructuring at Oxford Instruments and, pending regulatory approval, is expected to complete during the second fiscal quarter.

The scientific tool builder had also reassured investors earlier in April with news that “trading in the second half of the year was consistent with the expectations disclosed in our interim results,” with strength at its NanoTechnology Tools arm offsetting difficulties at OI Healthcare.

And I believe Oxford Instruments can look forward to sales picking up further out as research spending across the globe steadily improves. The business saw its order book climb a healthy 5.1% at constant currencies between April and September, to £162.2m. And its vast global footprint puts it in the box seat to exploit this phenomenon to its fullest (the firm has manufacturing bases across the US, Asia and Europe).

The number crunchers expect earnings to rev to 12% in the year to March 2018 from an anticipated 1% advance in fiscal 2017. And a further 7% rise is predicted for next year.

I reckon a prospective P/E ratio of 19.6 times is very decent value for a stock of Oxford Instruments’ calibre, and reckon the share price should keep charging as trading conditions improve.

The post 2 stunning growth shares with brilliant momentum appeared first on The Twelfth Magpie.

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• How much should a 45-year-old put in a SIPP each month to try for a million?
• Closing in on £33 and around an all‑time high, is this FTSE 250 favourite seriously mispriced?

Royston Wild has no position in any 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.

Does that mean the new share price offers better value for investors or is the drop a warning sign that we should keep away?

Rising costs and delayed savings

The negative in the update is that the directors expect full-year profits for the year to 31 July to be 10%-15% below its prior expectations. There was no mention of missing expectations in the firm’s trading update for the six months to 31 January, which Gattaca delivered on 2 February, so I’m assuming that trouble emerged since then, suggesting a rapid deterioration, or maybe a sudden ‘realisation’.

The directors say that tougher UK trading conditions affected first-half performance after the Brexit vote, driven by “near-term uncertainty which led to elongated hiring decisions and some projects being delayed.”  However, that was known back in February. The new information is that costs have ballooned as the firm invests for growth and administration cost savings that were expected have been “delayed”.

The directors remain optimistic about the medium-term outlook, saying there are “some signs of a return of confidence in recent weeks.”

What kind of beast is Gattaca?

Recruitment firms are cyclical, and Gattaca’s shares are down about 57% from a peak of around 632p achieved during April 2014. Meanwhile, the price-to-earnings (P/E) ratio runs just over a low-looking seven or so.

When cyclical firms have low P/E ratings after a period of buoyant macroeconomic activity, it can often serve as a warning to investors that difficult trading could be on the way. I consider the shares to be dangerous right now, so I’m avoiding, rather than fighting the trend by buying.

Meanwhile, high technology tools and systems provider Oxford Instruments’ (LSE: OXIG) update today suggests the firm could be a better buy than Gattaca.

Growth expected

The company reckons its full-year results to 31 March will come in flat, so no earnings growth compared to the year before, but no decline either. The outcome conceals a varied result from operations with strong performance from the NanoTechnology Tools division offsetting a deterioration in OI Healthcare.

City analysts following the firm expect earnings to advance 14% for the year to March 2018 and 5% the following year. The expectation of growth is on the table and Oxford Instruments occupies a specialist niche in the market, which strikes me as a better basis for an investment than the conditions we see at Gattaca now.

I think it is a good idea to keep an eye on the firm’s debt levels. The company says it has reduced net debt but gives no figures. The last available balance sheet showed net debt running at almost six times the level of annual operating profit, which is on the high side, but the directors are focusing on bringing it down.

At a share price of 850p, the forward P/E ratio runs at just over 14 for the year to March 2019, which seems fair.

The post Is Gattaca plc a falling knife to catch after dropping 10% today? appeared first on The Twelfth Magpie.

More reading

• How much should a 45-year-old put in a SIPP each month to try for a million?
• Closing in on £33 and around an all‑time high, is this FTSE 250 favourite seriously mispriced?

Kevin Godbold has no position in any 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.

In this article, I’ll ask whether the potential rewards of Cape’s high yield outweigh the risk of an investment. I’ll also ask whether it’s time to buy technology firm Oxford Instruments (LSE: OXIG), following the group’s latest disposal.

Asbestos claims could sink dividend

Cape’s latest trading update had two parts. The first section indicated that recent trading has been in line with expectations. Full-year profits are expected to be slightly better than expected, thanks to recent exchange rate movements.

The latest consensus forecasts show that Cape is expected to report full-year adjusted earnings of 24.4p per share. This puts the stock on a forecast P/E of just 6.6, with a forecast dividend yield of 8.7%.

Extremely high yields and low valuations are usually a warning that the market expects problems. Cape is no exception. The group said this morning that it has increased the provision made against industrial disease claims by £9.6m. That’s not great news, but it isn’t the reason for today’s dramatic slump.

The final part of today’s update warned shareholders that new product liability litigation relating to Cape’s historic use of asbestos could lead to “an extended period of uncertainty.” Management warned that if the case goes against Cape, the dividend could be suspended.

This case was previously reported in last year’s results, but the tone of today’s statement is more negative than previously. Although Cape believes “the merits of our defence are persuasive,” the group admits that there’s no certainty about the outcome.

Markets hate uncertainty, and this is why Cape shares are so cheap, despite the group’s solid trading. In my view, the stock is too speculative to buy at the moment.

Oxford could be a better choice

Shares of Oxford Instruments are worth 20% less than they were at the start of the year, but I believe the outlook is improving for this maker of hi-tech industrial tools.

The company said today that it had sold its superconducting wire business (OST) for $17.5m. Trading had been difficult for some time, and while OST is profitable, Oxford’s figures show that OST’s operating profit fell by 33% during the first half, to just £1.1m.

Cash from this sale will be used to reduce Oxford Instrument’s net debt, which was £141.1m at the end of September. This represents a level of 2.6 times earnings before interest, tax, depreciation and amortisation (EBITDA). Net debt of more than two times EBITDA is generally considered high, so I’m pleased that the group is focusing on debt reduction.

November’s interim results suggest Oxford Instruments’ trading has stabilised. Adjusted earnings from continuing operations were just 1.4% lower, at 21.4p per share. The interim dividend was left unchanged at 3.7p.

This year’s results are expected to be broadly unchanged from last year, but consensus forecasts suggest earnings could rise by about 10% in 2017/18.

The shares currently trade on a 2016/17 forecast P/E of 12, and offer a 2.1% yield. I believe this could be a good time for turnaround investors to start buying.

The post Are Cape plc and Oxford Instruments plc today’s top turnaround buys? appeared first on The Twelfth Magpie.

More reading

• How much should a 45-year-old put in a SIPP each month to try for a million?
• Closing in on £33 and around an all‑time high, is this FTSE 250 favourite seriously mispriced?

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.

In mid-morning trading the companies’ shares are up 6%, 4% and 5%, respectively. Could the time be ripe to buy a slice of these three stocks?

Experian

Global information services group Experian — probably familiar to most readers as a consumer credit score firm — is a FTSE 100 blue chip, valued at £12bn based on a current share price of 1,170p.

In today’s half-year results, Experian posted a 6% fall in revenue from continuing operations, and a 7% fall in underlying earnings per share (EPS), reflecting foreign exchange headwinds during the period. However, at constant exchange rates revenue was up 4% and underlying EPS rose 5%.

Experian reported “good growth momentum” in the business, and full-year EPS should be helped by today’s news that the company is extending a $600m share buyback programme by a further $200m as it recycles proceeds from recent non-core divestments.

A full-year EPS outturn of 60p may be achievable. That’s a little above the analyst consensus ahead of today’s results, but still leaves Experian on a highish price-to-earnings (P/E) ratio of 19.5. The dividend yield is only modest at 2.2%, so the stock does not appear particularly cheap at the present time.

Aveva

Engineering software company Aveva also reported currency headwinds in the first half of the year. However, even at constant exchange rates, revenue was marginally down year-on-year, while profit before tax dived 20%. The reason is that Aveva has significant customers in the struggling oil & gas sector.

Given the heavy de-rating of companies exposed to this sector — either directly or indirectly — you may be surprised to learn that Aveva, with its shares currently trading at 2,085p, is on a sky-high current-year forecast P/E of 28, with a prospective dividend yield of just 1.4%.

However, Aveva — a FTSE 250 firm, valued at £1.3bn — has agreed to acquire Schneider Software to create “a global leader in industrial software”. The deal, a reverse takeover, would give Schneider Software’s parent (Schneider Electric) a 53.5% ownership of the enlarged Aveva.

The parties to this complex deal have been working towards finalising due diligence since July. Aveva said today that they expect to reach definitive terms in December, with completion anticipated to occur by mid-2016. I find it hard to put a value on Aveva at present, and to weigh up the potential risks and rewards, but City analysts are largely positive, rating the stock as either a Buy or a Hold.

Oxford Instruments

Last year was disappointing for Oxford Instruments, which supplies high technology tools and systems for industry and research. Macro headwinds in Japan and Russia, and weaker trading than expected in the company’s Industrial Analysis business, took their toll, and EPS fell 29%.

This year is looking brighter, with the company today reporting an uptick of 2% in first-half EPS, and a 21% rise in the order book since the start of the year. Margins have improved, as the group addresses its cost base, and management is confident the performance for the full year will be in line with expectations.

EPS of above 50p is expected by the City, giving an attractive-looking P/E of 12 at a share price of 605p. This smaller company — currently valued at around £350m — was rated considerably higher by the market not so long ago. I see the shares as very buyable at their present level, with the business looking set to return to growth.

The post Should You Buy Experian plc, AVEVA Group plc & Oxford Instruments plc On Today’s Results? appeared first on The Twelfth Magpie.

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G A Chester 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.