Unfortunately, it’s not possible to buy shares in Aldi or Lidl, not because they’re German, but because they’re privately owned and not publicly traded. Shame. Earlier this year Poundland was bought by South African holding company Steinhoff International, so it’s also off the table. And up until a couple of years ago you couldn’t buy shares in B&M either, but now you can snap them up at less than their June 2014 initial public offering (IPO) price of 270p.

B&M looks good value

The shares did well initially, soaring to 358p last summer, but then the valuation started to look very demanding at 30 times earnings for FY2015. Investors who decided to take profits were proven right when the shares began their descent to today’s levels of around 235p. In my view the sell-off isn’t justified as B&M will soon grow into its lofty valuation and prove to the market that it can still demonstrate strong growth even after the rapid expansion of the last few years. The company’s revenues surpassed £2bn for the last financial year while underlying earnings increased by a healthy 26%.

There’s plenty more to come from B&M as the company aims to increase the number of UK stores from 511 to 850, with further openings in Germany too. City analysts are projecting 10% earnings growth this year, with an even better 11% improvement pencilled-in for next year, leaving the once-expensive shares trading at a very agreeable 15 times earnings for FY2018. I’m expecting more consumers will turn to B&M once the effects of Brexit start to bite, and investors might want to do the same.

Grab a slice of Just Eat

Online food delivery service Just Eat (LSE: JE) last week upgraded its guidance for the full year after reporting a strong third quarter. The mid-cap firm lifted guidance for full-year revenues from £368m to £371m after it revealed total orders for the three months to the end of September had grown to 33.3m, a 34% rise on the previous year on both a reported and like-for-like basis.

Just Eat has been investing in a number of technology and marketing initiatives and is beginning to see the benefits in many of its markets as it continues to grow both organically and through worldwide acquisitions. The valuation might look excessive at 50 times earnings for the full year, but this falls to a more palatable 33 times earnings by the end of 2017. I think Just East has plenty more growth potential, particularly abroad, and should easily grow into its lofty valuation in the coming years.

The post Don’t ignore these FTSE 250 shares with explosive growth potential appeared first on The Twelfth Magpie.

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Centamin’s share price has shed 21% of its value since hitting record peaks of 180p per share in mid-August. Some retracement can be expected following the gold digger’s stunning ascent — Centamin still remains more than 140% up from levels seen at the start of the year

But the mining giant’s recent reversal coincides with investors increasingly ploughing their cash into the FTSE 100 and away from the ‘safe-haven commodities’ suite, a factor that has driven gold values sharply lower again.

Indeed, the yellow metal was last at $1,250 per ounce, a significant discount from above $1,300 at the beginning of October and some way off this summer’s peaks of $1,370. This was the most expensive level since early 2014.

However, I believe there’s enough mud in the macroeconomic waters to prompt a fresh surge into the precious metals complex, and provide Centamin’s share price with fresh fuel.

Indeed, gold exchange-traded fund (ETF) holdings rose to 2,335.6 tonnes in September, according to World Gold Council data, up another 38.1 tonnes from August. And gold demand is likely to keep bubbling as Brexit bothers continue and wider concerns over slowing global trade persist.

Recent share price weakness leaves Centamin dealing on a forward P/E rating of 8.7 times, some way below the London blue-chip average of 15 times. I reckon this gives plenty of room for a significant share price upgrade should — as I expect — global economic indicators continue to toil.

Cut-price colossus

Budget retailer B&M European Retail (LSE: BME) is another FTSE 250 (INDEXFTSE: MCX) stock caught in a severe sell-off in recent weeks. The Liverpool company has seen its share value collapse 18% since the eve of Britain’s European referendum.

Of course the painful EU withdrawal process could play havoc with much of the high street as shoppers tighten their pursestrings. But I believe this could play into the hands of ‘discounters’ like B&M as their cut-price goods come increasingly into fashion.

The spat between Unilever and Tesco last week due to sterling pressures could present similar troubles for B&M’s margins. But the business has proved effective at tackling these issues in prior years. And, as Credit Suisse notes, many of B&M’s single-price rivals like Poundland will have to undergo massive transformation to switch to a multi-price model.

Meanwhile, B&M’s new store rollouts are proving extremely successful, and further progress here should light a fire under the bottom line — the retailer plans to unveil 50 new stores in the UK in the year to March 2017, and another 19 in Germany.

Recent share price weakness leaves B&M delaing on a forward P/E multiple of 16.7 times. I believe this is very reasonable value given the company’s compelling  growth case.

The post Have these FTSE 250 stocks been massively oversold? appeared first on The Twelfth Magpie.

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The Vienna-based business is a leading supplier of sports betting software for sports and betting companies, and is a major supplier of proprietary software for self-service betting terminals (SSBTs).

Indeed, BGT provided around 24,000 SSBTs with software as of the end of 2015, and counts bookmakers such as Betfred, Coral, Ladbrokes, Paddy Power Betfair and William Hill among its clients.

The deal is likely to give PlayTech’s already-explosive revenues outlook a further shot in the arm, in my opinion. And I believe the gaming giant’s forward P/E rating of 15.9 times represents great value given its splendid upward momentum.

Low-cost lovely

The acquisition of Poundland by South Africa’s Steinhoff International on Wednesday for £597m underlines the likely surge in discount retailers in Brexit Britain.

A range of consumer confidence gauges and retail spending reports in recent days have revealed the extent to which shoppers have already altered their spending patterns in anticipation of significant economic turbulence in the months ahead.

This landscape is likely to significantly boost footfall at value retailer B&M (LSE: BME), in my opinion.

And the Liverpool-based business is putting itself in the box seat to enjoy robust sales growth as its store expansion scheme clicks through the gears — B&M plans to open a further 50 stores in the period to March 2017, adding to the record 79 new outlets unveiled last year.

Given these factors, I reckon B&M’s forward P/E ratio of 18 times represents fair value.

Stuck in a hole

Rampant demand for digger and driller Rio Tinto (LSE: RIO) shows no signs of slowing as investors desperately seek ports in which to weather the Brexit storm. There are plenty of defensive options for cautious investors, in my opinion, but the commodities sector isn’t one of those I’m afraid.

Indeed, latest trade data from China overnight again casts a pall over the demand outlook for metals and energy looking ahead. Exports from the Asian powerhouse slumped 4.8% in June on a dollar-denominated basis, worse than broker consensus and speeding up from the 4.1% annualised drop in May.

And import data underlined Beijing’s travails as global trade cools and domestic demand remains sluggish. Inbound shipments of key commodities like iron ore, copper and crude oil all slipped month-on-month in June.

I believe that the likes of Rio Tinto remain a risk too far given this worrisome demand backcloth, and reckon that a forward P/E rating of 20.1 times fails to adequately reflect these problems.

The post Should you buy Rio Tinto plc, PlayTech plc and B&M European Value Retail SA following today’s news? appeared first on The Twelfth Magpie.

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Encouragingly, Speedy Hire’s overhead costs are significantly lower than in the prior year, while utilisation rates have risen to 50%. And with the firm having adequate headroom against its banking facilities as well as reduced net debt versus the same time last year, its financial outlook appears to be positive.

The problem, though, is that the UK economic outlook is highly uncertain and Speedy Hire’s share price has moved 8% lower since the EU referendum in response. It now trades on a price-to-earnings growth (PEG) ratio of just 0.3, which indicates that while its future may be somewhat uncertain, its margin of safety seems to be sufficiently wide to merit purchase at the present time.

Non-UK focus

Also reporting today was GVC Holdings (LSE: GVC). The e-gaming operator reported upbeat growth in the first half of 2016, with its performance boosted by the acquisition of bwin.party as well as increased customer engagement due to the European Championships. And with the integration of bwin.party progressing well and set to deliver €125m in synergies by the end of next year, GVC’s short-to-medium term outlook is positive.

With GVC trading on a PEG ratio of just 0.2, its shares appear to offer strong upside potential. And with the company stating that the EU referendum result will have little or no material impact on its operations due to 90% of its customer base being outside the UK, its future growth prospects may be more certain than is the case for UK-focused operators.

Certainly, its restructuring is incomplete and there’s a risk this will not progress as expected, but for long-term investors GVC seems to be a strong buy – especially for those individuals who are unsure about the prospects for the UK economy.

Generous offer?

Meanwhile, Poundland (LSE: PLND) has risen by 12% today after it announced details of a deal for Steinhoff Europe to acquire it for 222p per share. This is made up of 220p in cash plus a final dividend of 2p per share for the full year to 27 March 2016. This values Poundland at £597m, with it representing a premium of 13.3% to the closing price of Poundland shares before the offer was made.

The deal is being backed by Poundland’s directors as well as major shareholder Canada Life Investments. This means that Steinhoff has received irrevocable undertakings to vote in favour of the deal from around 9% of shareholders.

The offer price equates to a price-to-earnings (P/E) ratio of 18, which may appear to be rather generous. However, with Poundland forecast to record a rise in earnings of 6% this year and 13% next year, the 222p per share offer could prove to be a good deal for Steinhoff, should investors in Poundland decide to vote to accept it.

The post Should you buy these mid-caps on today’s news? appeared first on The Twelfth Magpie.

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Poundland’s uncertain results are likely to get an easy ride today, given yesterday’s news that South African group Steinhoff is considering a cash bid for the firm. However, I imagine Steinhoff’s analysts will be taking a very close look at the results.

In my view, the outlook is fairly positive. Although Poundland shares look superficially expensive on an underlying P/E of 17.5, cash generation and profits should improve significantly this year.

Poundland expects capital expenditure to fall from about £45m last year to £25m in 2016/17, now that the conversion of the 99p Stores acquisition has been completed. Sales are also rising strongly — revenue rose by 19% to £1,326m last year.

I suspect any offer from Steinhoff will be at a reasonable premium to the current share price of 205p, so in my view shareholders should hold on.

A bargain oil stock?

Shares in Norwegian North Sea specialist Faroe Petroleum (LSE: FPM) rose by 7% this morning, after the firm announced an oil and gas discovery at its Brasse exploration well.

Faroe said that the well found an 18 metre gas-bearing interval and a 21 metre oil-bearing interval. The firm is now drilling a sidetrack well to confirm the extent of the discovery. A successful sidetrack could help confirm the commerciality of this discovery.

Faroe flies under the radar of many oil and gas investors, but I believe this stock could deliver significant further gains. After recovering strongly earlier this year, Faroe shares have fallen back from a high of 92p to just 66p. The firm has production of around 10,500 boepd with an average operating cost per barrel of just $23. Faroe also has no debt and had net cash of £68m at the end of 2015.

In my view, this could be a good stock to buy and tuck away for a year or two.

Sell before it’s too late?

Unfortunately the outlook is much grimmer for shareholders of Faroe’s North Sea peer, Xcite Energy Limited (LSE: XEL).

Xcite shares fell by 19% after the firm issued a statement this morning making it very clear that existing shareholders are likely to face further losses. It’s been clear for some time that Xcite would be unable to meet scheduled debt repayments of $139m at the end of June.

Today’s statement confirms that a meeting of the firm’s bondholders has been called for June 30. Xcite says it has already been in discussions with the bondholders regarding restructuring options. It’s clear that Xcite hasn’t been able to find a buyer or partner for its Bentley field. The firm says that “it is likely” that Xcite’s refinancing will involve swapping a portion of the bonds for new shares in the company.

As the amount outstanding on the bonds ($139m) is much greater than the current market cap (about $41m), I believe significant dilution is likely for existing shareholders. I’d expect the new shares to be issued in large numbers at a much lower price than the current value of 9p.

In my view, Xcite remains a strong sell.

The post Are Poundland Group plc, Faroe Petroleum plc and Xcite Energy Limited must-buy stocks after today’s news? appeared first on The Twelfth Magpie.

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Shares in Poundland (LSE: PLND) haven’t done too well since the cut-price shopping chain came to market in March 2014. The timing didn’t seem unreasonable, with the UK coming out of recession and a bit of optimism appearing, but Poundland shares started to fall in August 2015, and now they’re down 55% to 174p since flotation.

The company’s acquisition of 99p Stores looks set to contribute to a 37% fall in EPS this year, but I think any downgrading of the shares on that basis is short-sighted. I know forecasts are hard to evaluate at this early stage, but the 59% rebound predicted for the year to March 2017 followed by a further 22% growth penciled in for the following year would drop the P/E down to around 10.5. It would also provide PEG ratios of 0.2 this year and 0.5 next, with growth investors typically seeing 0.7 and below as a good indicator.

So, on growth fundamentals, Poundland now looks attractive, and there’s a progressive and well-covered dividend to be had too. The yield based on expectations for the year ended in March this year would only be around 2.5% — results are due on 16 June, with the firm’s Q4 update calling it a “transformative” year. But the yield is set to reach 3.9% in two years time. Worth tucking away for a decade? I think so.

No more paper?

Shares in Trinity Mirror (LSE: TNI) seem to be perpetually cheap, and are currently on a forward P/E of only around 3.5. Of course, fears for the future of actual printed newspapers weigh heavily on the company, especially after the failure of The New Day which only lasted nine weeks before the plug was pulled.

But the company has been on the acquisition trail, owns an increasing stable of online publications, and its fundamentals actually don’t look too bad at all. Earnings are expected to grow this year and next, albeit slowly, and dividend yields (which would be covered more than fivefold by earnings) of 4.7% and 5.3% are predicted for the two years.

I reckon reports of the demise of the company are greatly exaggerated, and for long-term investors I think there’s profitable life in Trinity Mirror shares yet.

Change of focus

Helical Bar (LSE: HLCL) is a property investment and development group, and it has recently switched its focus towards the London market — and in results released on Tuesday it reported record pre-tax profits of £120.1m for the year ended in March. The company’s property portfolio is now apparently valued at £1.23bn, which is a 21% improvement on a year previously.

As he ends his 32-year tenure as chief executive, Michael Slade said that

“Since 2012, we have targeted an income producing investment portfolio representing at least 75% of our total property assets with our development programme making up the remaining 25% which is capable of producing exceptional profits“

and told us the firm has exceeded its targets.

Mr Slade did point to a possible Brexit from the EU as presenting risks, but Helical Bar looks like one of those companies that is genuinely looking at the long-term prospects for its business, and that can only be a good thing.

The post 3 small cap shares for the next decade: Poundland Group plc, Trinity Mirror plc, Helical Bar plc? appeared first on The Twelfth Magpie.

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1. Unilever

With its global reach and excellent product diversification, Unilever(LSE: ULVR) is a top-quality growth stock. Management has a great track record of delivering steady year-on-year earnings growth, and the company’s wide economic moat is reflected by its impressive 14.8% operating margins.

City analysts expect Unilever’s underlying earnings per share to grow by 13% this year, and a further 7% in 2017. What’s more, the stock has a tempting dividend. Its shares currently yield 2.8%, but steady dividend growth could see its prospective dividend yield grow to 3.4% by 2017.

Trading on 21.6 times forward earnings, the stock is not cheap, but Unilever is a perennial out-performer and quality stocks are always more expensive. Nevertheless, I’m still waiting for shares to dip below 3,000p before investing.

2. Whitbread

You may still think of Whitbread (LSE: WTB) as primarily a brewing company, but its beer-making days are long behind it. However, I’m sure you’ll recognise several of the company’s current brands, which include Premier Inn, Costa Coffee, Beefeater and Brewers Fayre.

Shares in Whitbread have dropped 11 percent since the beginning of the year, following results of weaker than expected like-for-like sales growth of 3% in 2015. However, the revenue slowdown was mainly related to one-off weather and seasonal factors, and management is sticking to its 2020 growth targets. By 2020, the company plans to increase its number of hotel rooms by nearly a third, and increase Costa sales by almost 60%.

On a valuation perspective, Whitbread trades at a forward P/E of 15.4. This seems very attractive given that the average forward P/E in its peer group is currently 18.1, while its 3-year historical average forward P/E is 21.0. Underlying EPS is forecast to grow 4% this year, and 10% in the following year.

3. Poundland

Poundland (LSE: PLND) just had a rough quarter. Like-for-like sales fell 3.9% in the fourth quarter and trading losses from its troubled acquisition of 99p Stores are forecast to drag underlying EPS for the full year 37% lower than last year.

However, the earnings impact is only expected to be temporary, and the outlook for growth in the discount retail sector remains robust. In the longer term, Poundland’s acquisition of 99p Stores should see it emerge as a more dominant player in the sector. Its greater scale should help the combined company to negotiate better deals with suppliers and enable it to expand its product range, which would in turn drive higher sales and improve margins.

Shares in Poundland have fallen 48% over the past year, and it currently offers a dividend yield of 2.7%. The company has an estimated P/E of 20.8 for this year, but forecasts of a rebound in underlying EPS growth of 59% in 2016/7 could see its forward P/E drop to a very reasonable 12.3 times.

The post 3 top consumer stocks for growth: Unilever plc, Whitbread plc and Poundland Group plc appeared first on The Twelfth Magpie.

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One of the interesting developments in the UK retail scene over the last decade has been the increasing popularity of discount stores such as Poundland (LSE: PLND). They have benefitted from an economic tailwind that has seen consumers shun purchases of brands in favour of cheaper and better value options.

Of course, this situation is perfectly understandable, since disposable incomes have fallen in real terms during the period. Now, though, wages are rising faster than inflation, and it could be argued that shops such as Poundland will become less popular, as consumers become less price-conscious and more interested in convenience and quality than they have been in recent years.

Despite this, Poundland is still forecast to increase its bottom line by 59% this year and by a further 22% next year. With its shares trading on a price to earnings growth (PEG) ratio of just 0.5 they seem to offer excellent value for money and the possibility of substantial capital gains. As such, they look set to beat the FTSE 100, even if interest in discount stores does begin to fade.

Top-notch growth prospect

Also having the potential to beat the FTSE 100 is Tesco (LSE: TSCO). It has been somewhat the opposite of Poundland in recent years because a shift to no-frills, cheaper supermarkets such as Aldi and Lidl has hurt Tesco’s top and bottom lines.

However, with the company’s new strategy of improving efficiencies and disposing of non-core assets repositioning Tesco for long term growth, it looks set to deliver improved financial performance in future.

With Tesco trading on a PEG ratio of 0.4, it appears to offer a very wide margin of safety. This means that it has an excellent chance of beating the FTSE 100, with its top-notch growth prospects not appearing to be fully priced in by investors. And with Tesco expected to increase dividends fourfold in the next financial year, there seems to be a clear catalyst to cause its shares to rise at a rapid rate in future.

With interest rates set to remain low, Tesco could gradually become a viable income play, with its value and growth potential already being high and more appealing than those of the wider index.

Forecast to fall

While Tesco and Poundland could beat the FTSE 100 over the medium to long term, funeral services provider Dignity (LSE: DTY) may underperform the wider index. That’s because it is forecast to post a fall in its bottom line of 3% in the current year and with its shares trading on a price to earnings (P/E) ratio of 22.7, they appear to be rather overvalued.

Certainly, Dignity has been a relatively sound defensive play in recent years and has been able to increase its earnings at a double-digit rate in each of the last five years.

But with the rest of a tough 2016 ahead, and a valuation that’s over 50% higher than that of the wider index, it is difficult to see a potential catalyst to push its shares higher. That’s especially the case since Dignity lacks income appeal, with a yield of just 0.9%.

The post Are Tesco plc, Poundland Group plc and Dignity plc set to beat the FTSE 100? appeared first on The Twelfth Magpie.

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A 0.8% increase in UK sales wasn’t enough to offset this drop. This means that Mothercare’s worldwide sales fell by 6.7% during the 11 weeks to 26 March, compared to the same period last year.

To be fair, the firm’s UK figures are slightly better than they appear. Mothercare has been closing lossmaking stores in the UK, so the rise in UK sales was achieved against a 6.4% reduction in retail space. UK like-for-like sales rose by 2.1%, while online sales rose by 5.6%.

However, international sales have been hit hard by the oil crash in the Middle East and by weaker consumer confidence in Asia, especially in China. There’s no way for us to know whether conditions will worsen or improve this year.

Mothercare expects full year results for the 2015/16 financial year to be within current forecasts. This puts the shares on a 2015/16 forecast P/E of about 16. The real question is whether expectations for next year will be downgraded when the group reports its results. I suspect they might be.

Although Mothercare is in much better shape than it was a couple of years ago, I’m not sure how much growth potential this business really has.

Is there more profit at home?

Unfortunately for shareholders in Poundland Group (LSE: PLND), their business wasn’t able to replicate Mothercare’s success with UK customers.

Poundland said today that although UK sales rose by 17.9% last year, this was due to opening new stores and the integration of the 99p Stores’ chain. UK like-for-like sales fell by 3.9% during the second half of the year, and by 4.9% during the final quarter.

This worsening trend isn’t very encouraging, in my view. Nor is Poundland’s guidance that underlying pre-tax profits are expected to be “broadly in line” with expectations. Use of the word broadly is often a code for slightly lower than expected.

Poundland still has some attractive characteristics. The group has net cash and has historically generated plenty of free cash flow. But with UK stores reporting falling sales, profit margins and cash generation could come under pressure.

Poundland shares now trade on 16 times 2016 forecast earnings. I’m not sure this is a good time to buy.

A better alternative?

One of the stars of this week has been Halfords Group (LSE: HFD). Shares in the car accessories and cycle retailer rose by 10% on Wednesday after it reported a 3.1% increase in fourth quarter sales.

Booming sales of in-car cameras, known as dash cams, helped lift motoring-related sales by 3.5% during the fourth quarter, and by 2.5% last year.

Another attraction is Halfords’ car servicing and repair offering, under the Autocentres brand. Autocentres sales rose by 4.1% last year, and tend to have higher profit margins than the retail stores.

After Wednesday’s gains, Halfords shares trade on about 13 times 2016/17 forecast earnings, with a 4% forecast yield. They aren’t the bargain they were in January, but in my view they’re still a reasonable buy.

The post Should You Sell Mothercare plc And Poundland Group PLC & Buy Halfords Group plc After Today’s News? appeared first on The Twelfth Magpie.

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Out of fashion

Fashion star Ted Baker (LSE: TED) fell out of favour with stock pickers last week, the business’s value declining 5% during Tuesday-Friday. The company’s shares are now dealing at their lowest level since March 2015, but I believe this represents a fresh buying opportunity.

Ted Baker saw revenues surge 18% in the 12 months to January 2016, a result that powered pre-tax profits 20% higher, to £58.7m. The retailer’s strategy of aggressive overseas expansion is clearly working wonders, while a strong internet presence is also driving turnover — e-commerce sales leapt 45.8% in the period.

With further store openings in the offing, the City expects Ted Baker to enjoy earnings advances of 11% and 14% in the periods to January 2017 and 2018 respectively.

Subsequent P/E multiples of 24.9 times for this year and 21.5 times for 2018 may be expensive on paper. But I expect these numbers to keep toppling as global demand for Ted Baker’s togs heads through the roof.

Taking a pounding

Budget retailer Poundland (LSE: PLND) also found itself on the ropes between last Tuesday and Friday, a 9% decline in the period marking a fresh downleg in the firm’s share price. And I believe further weakness can be expected as Poundland battles fierce competitive pressures.

The company advised in January that footfall continued to decline during October-December, prompting the business to warn that pre-tax profits will register at “the lower end of the range of market expectations” of between £39.8m and £45.8m for the current year.

Still, the City expects Poundland to bounce from a 31% earnings slide for the year to March 2016, with rises of 58% and19% chalked in for 2017 and 2018 respectively.

While these figures may create decent P/E ratings of 11.2 times and 9 times respectively. But I believe the prospect of intensifying revenues pressure may prompt severe downgrades to these figures in the near future.

Driller dives

I have long talked down the chances of BP (LSE: BP) staging a sound earnings recovery thanks to the chronic supply imbalance washing over the oil market. Shares in the business fell 3% last week as investor confidence once again came under pressure, and I believe the fossil fuel colossus has much further to fall.

The City expects BP to bounce from losses of 35.39 US cents per share in 2015 to earnings of 17 cents this year. But this still results in a vast P/E rating of 30.6 times. Sure, predicted earnings of 41.8 cents in 2017 may push the multiple to a very-reasonable 12.8 times. But I reckon these bullish estimates could prove disastrously wide of the mark as crude values look set to struggle.

The essential supply cuts needed to mitigate stagnant demand are likely to remain a pipe dream for some time longer thanks to the colossal economic and political considerations of the world’s top producers. And hopes of a long-term recovery at BP are not being done any favours by the firm’s massive budget cuts and asset sales.

The post Should You Buy Last Week’s Losers BP plc, Ted Baker plc & Poundland 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 recommended BP. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.