Should You Buy Sirius Minerals PLC, Fairfx Group PLC & Circle Oil Plc Today?

Royston Wild — Fri, 15 Apr 2016 12:10:15 +0000

Today I am running the rule over three of the Footsie’s Friday risers.

In the money

Money transfer and currency card specialist FairFX (LSE: FFX) has continued its heady ascent of recent weeks with a 3% gain in Friday trade, the business greeting the market with robust full-year numbers for 2015.

FairFX announced that revenues leapt 35.7% higher last year, to £7.4m, although heavy marketing spend drove the firm into a pre-tax loss of £3.4m. The money play added 103,338 retail customers last year, taking the total to more than half a million.

Reassuringly FairFX added that trading during the first quarter of 2016 had been in line with expectations, and I believe the firm’s huge investment in marketing and technology — not to mention strategic focus on the retail card market — should keep delivering the goods.

FairFX is not expected to flip into the black this year, however, given that its hot growth story is still in the early stages. But the money play is expected to report its first earnings of 1.1p per share in 2017, and despite a heady P/E rating of 30.1 times I reckon FairFX could prove a lucrative selection for long-term investors.

Oilie gushing higher

Oil explorer Circle Oil (LSE: COP) also enjoyed a firm bump skywards in end-of-week trade, an 18% advance putting FairFX firmly in the shade.

Investor appetite shot higher following news that Circle Oil had agreed to suspend repayments to the International Finance Corporation under its reserve based lending facility. The payment deadline has now been pushed back to May 13th.

The stunning rise of Brent crude to four-month highs above $44 per barrel has no doubt boosted investor hopes that Circle Oil may now be past the worst.

I am not so convinced, however, and believe Circle Oil could find itself on the back foot again should ‘black gold’ prices retrace and the oil play’s fragile balance sheet find itself under the microscope again.

In a hole?

Like Circle Oil, I reckon Sirius Minerals (LSE: SXX) is also at the mercy of a colossal share price correction, thanks to the hulking supply imbalances hanging over commodity markets.

The potash producer was recently dealing 2% higher from Tuesday’s close, however, Sirius Minerals settling in recent weeks following heavy stock price volatility.

Shares shot to their highest in almost a year in March following a definitive feasibility study at its North Yorkshire polyhalite project, an asset that Sirius Minerals believes will transform the business into “a world leader in the fertilizer industry.” But news that the firm will need $3.56bn to start digging brought shares back to Earth with a bang.

While Sirius Minerals throws up plenty of potential, the firm remains a high-risk stock despite the exceptional results of recent drilling work. The digger still has to raise finance for its asset in the North, while subdued potash values puts a further fly in the ointment. And of course the unpredictable nature of minerals production also makes the Sirius Minerals a gamble too far, in my opinion.

The post Should You Buy Sirius Minerals PLC, Fairfx Group PLC & Circle Oil Plc Today? 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.

Should You Pile Into Sirius Minerals PLC, Tritax Big Box REIT PLC & TLA Worldwide Plc Today?

Royston Wild — Tue, 29 Mar 2016 13:14:31 +0000

Today I am running the rule over three of the Footsie’s recent headline makers.

Box up a beauty

Real estate investment trust Tritax Big Box (LSE: BBOX) made the headlines in Tuesday business with news of another impressive acquisition.

Tritax — which buys and manages big-space locations like warehouses and distribution hubs — has snapped up Argos’s national distribution centre in Burton-upon-Trent for £74.65m, the firm announced today. This follows the £25.2m purchase of Brake Bros’ distribution site in Bristol last week.

Tritax is clearly a firm on the move — the firm recorded a total return of 19.4% in 2015. And the City expects Tritax to keep earnings growth rolling with expansion of 6% and 4% in 2016 and 2017 respectively.

Sure, these projections may create slightly-heady P/E ratings of 20.9 times and 20.1 times. But I believe dividend yields of 4.6% for 2016 and 4.7% for this year comfortably offset these figures.

Sports superstar

Shares in TLA Worldwide (LSE: TLA) have exploded in Tuesday trade, the company recently dealing 40% higher from the last session’s close.

The sports marketing agency made the headlines last week after announcing it had it had reached an agreement with Atlantic Alliance Partnership on a potential takeover by the US firm.

The deal will see the agency’s shareholders receive 10 new Atlantic Alliance Partnership shares for every 111 of TLA Worldwide’s shares. This represents an indicative offer of 65p per share for the British company, still some way above the current share price of 57p.

Of course, there is always a chance that the bottom could fall out of the deal, as is the case with any takeover attempt. But there is still plenty of room for investors to make a handsome profit should the accord come to pass.

Stuck in a hole?

Shares in Sirius Minerals (LSE: SSX) have endured a wild ride in recent weeks. The company more than doubled in value from February’s troughs to a peak of 24p per share less than a month later, although investor optimism has cooled significantly since then.

The potash play finally released the much-awaited definitive feasibility study for its North Yorkshire polyhalite project during mid-March. The release contained both good and bad news — Sirius Minerals estimates that the asset will have a net present value of $27bn when production commences.

But the cost of developing the asset shocked investors, with the digger expecting to fork out $3.56bn to get the project up and running. Sirius Minerals now plans to raise equity and take on debt to move the project along.

Considering the scale of finance the firm needs to develop the mine, as well as the potential for potash prices to keep on struggling, I believe Sirius Minerals is a risk too far at the present time.

The post Should You Pile Into Sirius Minerals PLC, Tritax Big Box REIT PLC & TLA Worldwide Plc Today? appeared first on The Twelfth Magpie.