The website tells us that Spectris aspires to be a leader in niche markets with high barriers to entry. I like the language. It reminds me of Warren Buffet’s approach to investing in quality companies and some of the things he looks for. The firm reckons it aims to maintain its edge in the market with customer focus, continuous improvements and “strong” intellectual property.

Scores well on quality indicators

I think the financial indicators relating to business quality back up the company’s claims. The return-on-capital figure runs close to 23% and the operating margin at about 22%. Meanwhile, there’s a long record of robust and generally rising cash inflow, which provides heavyweight support for profits and for that all-important dividend. The dividend has increased by some 55% over six years, which is a decent amount of progress and one of the key attractions of the share, in my view.

I find today’s full-year report encouraging. On an adjusted basis, sales increased 5% compared to 2017 and earnings per share lifted 7%. The directors described the performance as “slightly ahead of expectations,” and they signalled their confidence in the outlook by pushing up the total dividend for the year by 8%. However, chief executive Andrew Heath did sound a note of caution in the report, saying that sales growth is likely to moderate in 2019 because of a more cautious macroeconomic outlook.

But the company will not be coasting along because it plans to squeeze more profit from the enterprise by focusing on productivity and operational efficiency. Heath expects to see a £15m-£20m benefit from the “profit improvement programme” during 2019 and, to put that in perspective, the pre-tax profit reported today is just above £241m.

Change at the top and a strategic review

Heath is new to the business, having only put his feet under his desk in the autumn, and I see that as a positive. A new broom often sweeps clean, and new leadership can usher in renewed vigour and determination at the top in any company. Indeed, a recent strategic review has identified that the firm could benefit from becoming a “more focused and simplified business.” 

I think simplification in business operations is almost always a good thing. The review has also focused in on what parts of the enterprise are scalable –which is another word I like to hear. The idea is to pin down areas of the business “with strong capabilities and the greatest performance potential,” which can expand into high-growth markets.

The good news is that three of the company’s businesses have been identified as fitting the bill in Malvern Panalytical, HBK, and Omega, which together account for more than 60% of sales and adjusted operating profit already.

When you buy the shares of any company your investing outcome depends on the forward prospects of the enterprise. On that score, I think Spectris looks well placed and is building up a lot of potential. I’d be more than happy to make a long-term investment to see what happens next.

The post I’d buy and hold this quality FTSE 250 dividend growth stock forever appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Spectris. 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.

Today I’m going to explain why I continue to hold easyJet shares in my own portfolio. But first I want to look at the latest numbers from another stock I own myself, FTSE 250 instrumentation and control manufacturer Spectris (LSE: SXS).

Next six months are vital

Its selling point is that the equipment it makes is designed to help make its customers operations more efficient and productive. The group’s performance during the first half of the year seems to have been reasonably good. Sales rose by 3% to £728m, while operating profit climbed 6% to £70.5m.

Three out of the group’s four divisions reported sales growth during the half year, with sales up by 5% in North America, and by 6% in Europe and Asia.

However, this positive performance wasn’t enough to distract investors from the cautious outlook statement in today’s results. Although profit guidance for the full year is unchanged, chief executive John O’Higgins does expect to see sales growth “ease a little in the second half” when compared to last year’s strong performance.

Should I be worried?

Spectris earnings are always heavily weighted to the second half of the financial year. Last year, for example, H2 earnings were more than double the H1 figure. On this basis, 2018 forecasts for earnings of 158p per share seem reasonable, based on the group’s half-year adjusted earnings of 46.1p per share.

However, the combination of Mr O’Higgins planning to leave the business and the cautious tone of today’s announcement makes me slightly hesitant about the future. With the shares trading on 15.4 times forecast earnings and offering a forward yield of 2.5%, I’d rate this stock as a hold at current levels.

Flying higher

It would be easy to say that easyJet has reached maturity and cannot grow much bigger. But the facts suggest otherwise. The airline has been picking up demand left behind by the failure of smaller airlines such as Monarch. Total revenue climbed 14% to £1.6bn during the third quarter, as passenger numbers rose by 9.3% to 24.4m.

During the same period, the airline’s capacity rose by 8.9% to 26.2m seats. As passenger numbers grew faster than capacity, we can see that easyJet’s load factor — the percentage of seats sold — rose again, to 93.4%.

A high load factor helps to improve profit margins. But to maximise the profitability of each passenger, easyJet is also focusing on increasing non-fare revenue. This so-called ancillary revenue rose by 11.5% per seat during the third quarter, as more passengers chose optional extras such as reserved seats and upgraded baggage allowances.

I’m still a buyer

My analysis of easyJet’s latest accounts suggests that its debt and leasing obligations are lower than some rivals, relative to its profits. This low gearing should provide useful downside protection if the market does slow.

In the meantime, I believe the shares offer one of the most attractive dividend growth opportunities in the FTSE 100. Despite forecast earnings and dividend growth of more than 30% this year, the stock trades on a forecast P/E of 14 and offers a prospective yield of 3.5%. I rate the shares as a buy.

The post Is the easyJet share price the best buy in the FTSE 100? appeared first on The Twelfth Magpie.

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Roland Head owns shares of easyJet and Spectris. 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.

But the Hertfordshire-based group’s turnaround status means that it’s still in the process of rebuilding its dividend payout, after profits crashed in 2015. By accepting a lower yield today, we may be able to lock-in higher yields in the future.

In contrast, the second stock I’m covering today is very much in growth mode. Results out today show a 14% increase in earnings per share last year. However, shares in this successful group don’t come cheap. Is it worth paying a premium for this quality business?

1-0 to Tesco

Tesco’s recent deal to acquire wholesaler Booker Group means that the supermarket will expand its grip on the fast-growing convenience store market. It will also become one of the UK’s largest food suppliers to the restaurant trade, opening up a new route to growth.

Booker chief Charles Wilson will take control of Tesco’s UK business when the deal completes. He’s widely expected to succeed turnaround boss ‘Drastic’ Dave Lewis at some point in the future.

If this view is correct, I believe it will be good news. Mr Wilson is widely credited with rescuing Booker when it was close to failure. He went on to turn it into a stellar growth story whose shares have risen tenfold over the last 10 years.

The Booker sale is expected to leave Mr Wilson with a £240m shareholding in Tesco. This would align his interests with those of shareholders in a way that few other FTSE 100 executives can manage.

A strong outlook

Tesco’s earnings per share are expected to rise by 28% during the 2018/19 financial year, which starts on 1 March. The shares trade on a forecast P/E of 15 and offer a prospective dividend yield of 2.4% for this period.

I expect profit margins to rise for a little longer yet, lifting earnings faster than sales. In my view, now could be a good time to add Tesco stock to a long-term income growth portfolio.

Precision engineering

Shares of FTSE 250 engineering group Spectris (LSE: SXS) rose by more than 3% this morning, after the firm issued a better-than-expected set of 2017 results.

Group sales rose by 13% to £1,525.6m, while adjusted earnings climbed 14% to 145.1p per share, beating consensus forecasts of 132.3p per share.

The dividend rose by 9% to 56.5p per share, coming in ahead of an expected figure of 54.6p.

Why I’d buy

This company’s instrumentation and control products are used in industries as diverse as gold mining, automotive engineering and food production. These products are sold through a range of specialist brands and are often unrelated, but their underlying purpose is always to improve customers’ productivity.

In today’s increasingly automated industrial world, my guess is that demand for Spectris’s products is likely to continue growing. The company itself should also be able to continue expanding through small, specialist acquisitions.

Broker forecasts put the stock on a forecast P/E of 18 for 2018, with a prospective yield of 2.2%. Spectris could be more vulnerable in a recession than Tesco, but my hunch is that this quality business will continue to thrive over the long term.

The post One stunning dividend-growth stock I’d buy alongside Tesco plc appeared first on The Twelfth Magpie.

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Roland Head 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.

Spectris is a highly specialised business, suppling productivity-enhancing instruments and controls and providing systems to industries such as healthcare, automotive, the oil industry and utility industry. These products and services are used in critical processes that require a high level of experience as well as a high level of trust between customer and supplier. 

As long as Spectris does not begin to cut corners, or misuse the trust of key clients, it should be able to maintain its reputation in the business – great news for long term investors. 

Steady earnings growth 

Over the past 10 years, as Spectris has grown, the value of the company’s shares has risen by 10.6% per annum, excluding dividends. Including dividends, returns are closer to 13% per annum. While there are small caps out there that may provide a better performance, Spectris is much more of a safe bet. 

A return of 13% per annum is not to be sniffed at, especially when the average market return over the past 15 years is around 7-8%. 

To help drive earnings growth, today the company announced the acquisition of US firm Omnicon Group Inc for $29m. This business provides a range of services to help its customers analyse and improve product reliability and safety in the aerospace and defence industries. According to management, the acquisition “represents a further step in our strategy to provide solutions using a combination of software and services to enhance productivity and create greater value for our customers.“

The combination of the group’s organic growth, coupled with bolt-on acquisitions, has lead City analysts to predict that the company will earn 134p per share this year, up from just 9p last year. 

Further earnings growth of 12% is projected for the following year. Based on 2018 earnings estimates, the company is trading at a forward P/E of 16.7. Based on the specialised nature of its business, as well as past performance, I believe that this multiple undervalues the stock. 

Market-beating outperformance 

Halma (LSE: HLMA) is another highly specialised company that looks to be a great buy-and-forget investment. 

Halma manufactures a range of products that protect and improve the quality of life for people. These include construction and medical safety products and devices. Environment monitoring and protection is also a growing part of the business. 

Through both organic growth and bolt-on acquisitions, shares in Halma have returned 180% over the past five years, excluding dividends. Including dividends, the company has produced a total annual return in the region of 24%, eclipsing the broader market. 

Unfortunately, these returns haven’t gone unnoticed. Investors have rushed to get in on the firm’s growth story and now the shares trade at a dear 27 times forward earnings. Still, I believe that this valuation is appropriate considering the specialised nature of the company’s business. City analysts are predicting steady earnings per share growth of 7% per annum for the next few years. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Halma. 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.

Though statutory 2016 results looked bad, the year was impacted by one-offs including a £115m impairment relating to Omega Engineering and ESG Solutions. That alone reduced the firm’s EPS figure by a massive 96.8p to just 8.6p — but adjusted EPS came in at 127.5p, for a rise of 12%.

It looks like 2017 should be something of a transformational year for the company’s fortunes, with EPS expected to gain 7% this year followed by a further 12% next — perhaps not the kind of massive rises that would have growth investors salivating, but a welcome reversal of the recent trend.

Tempting outlook

May’s trading update boasted a 22% rise in sales for the period. And while like-for-like sales declined by 1% in the troublesome North American market, we saw an 11% rise in the Asia Pacific region and 4% in Europe. But the comment that I really liked was: “The group continues to be highly cash generative and maintains a strong financial position.”

Overall, what I’m seeing here is a company that’s been through a bit of a down cycle, but which is enjoying an improving outlook while still in rude health. Net debt of £150.9m at the end of 2016 was only around 70% of EBITDA, which seems fine for a firm at a relative low point in its earnings, and strong cash flow should boost that position in the medium term.

The dividend is modest at around 2%, but it’s well covered and has kept on growing significantly ahead of inflation, with rises of better than 5% forecast for this year and next.

Doing something right

Online travel agent On The Beach (LSE: OTB) is an intriguing prospect. Floated in September 2015, the shares were doing well until they were hammered by the UK’s vote to leave the EU in June last year, an event that is increasingly threatening an economic slowdown and a serious tightening of our discretionary spending belts. 

But since a post-referendum low, we’ve seen the share price climb by 128% to today’s 403p, more than double the IPO price. On The Beach appears to be doing something right.

Part of that something is clear from interim results released in early May, which showed a 28% growth in adjusted pre-tax profit, with adjusted earnings per share up 27%. Net debt was reduced to an impressive £2.3m from £6.6m a year previously — and that was after the £12m acquisition of Sunshine.co.uk.

Disrupting the market

How does it do it? The company focuses on one specific market, and speaks of its “journey to disrupt the online retail of beach holidays with its scalable, flexible, innovative technology“. The firm’s business model is also, apparently, asset-light and cash-generative, two things I generally like to see in any company.

I confess I’m not too keen on the company’s moniker, even if it is a good fit for its target market, because I see generic-sounding names as providing a barrier to building a strong brand image. I’m also a little concerned about a possible lack of barriers to entry, and I wonder how easy it would be for others to follow the same strategy (especially an asset-light one).

But I do like what I’ve seen of On The Beach’s operations so far.

The post 2 transformational growth stocks that could help you retire early 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. 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.

Many of these companies’ profits were hit hard by the downturn in the oil and gas market in 2015. When the market started to recover last year, their share prices headed north with impressive speed.

The question today is whether these stocks are still worth buying — or whether the good news is already in the price.

A very precise choice

Shares of instrumentation group Spectris (LSE: SXS) are worth 70% more than they were 12 months ago. And they rose by 3% on Tuesday morning after the group said that sales rose by 13% to £1,345.8m in 2016, beating market forecasts. Adjusted earnings of 127.5p per share were also ahead of forecasts, which suggested a figure of 119.7p.

These impressive headline figures masked a £115.3m writedown in the value of the firm’s Omega Engineering and ESG Solutions businesses, which traded poorly during the period. Although this was a non-cash writedown, it’s significant because it implies lower earnings expectations for the future.

On a more positive note, Spectris acquired Millbrook, the UK’s main testing facility for car manufacturers, last year. This complements some of the group’s existing business and contributed to last year’s sales growth.

Is Spectris a buy?

Spectris achieved an adjusted operating margin of 14.9% last year. This is in line with previous years and suggests the group’s business has retained its profitable edge.

Net debt is low and last year’s 52p dividend was covered three times by free cash flow. Spectris appears to be an attractive business, but the shares now trade on a P/E of 20 with a yield of just 2.1%. Any disappointment could cause the shares to slide. I’d hold, but might be tempted to wait for a better buying opportunity.

Should you bet on oil?

Spectris makes some of its profit from the energy sector. But for pump manufacturer Weir Group (LSE: WEIR), the oil and gas market is far more important. Weir shares fell by about 55% in 2015.

The shares are now worth 135% more than they were a year ago, but only 6% more than two years ago. This pricing implies that Weir is ready to pick up where it left off before the oil market downturn. Is this realistic?

There are certainly signs that the US fracking industry, a key market for Weir, is ramping up activity to profit from higher oil prices. But the number of new wells being drilled is much lower than it was before the market crashed.

Weir’s valuation is also demanding. The stock now trades on a 2016 forecast P/E of 32, and a 2017 forecast P/E of 24. The dividend yield has fallen to 2.2%.

Weir’s profits are expected to reach about 60% of their 2013 peak in 2017. In my view, there probably is a little more to come.

With results due on 22 February, existing shareholders should probably hold. But for new buyers, I’d argue that the risks outweigh the likely reward. There’s better value elsewhere, in my opinion.

The post Are these high-flying FTSE 250 engineers worth buying? appeared first on The Twelfth Magpie.

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

Spectris’s sales growth was fuelled mostly by the effect of acquisitions and foreign exchange translation. For example, acquisitions contributed 4%, while weaker sterling added another 18% to the company’s reported top line growth figure. As such, Spectris’s like-for-like (LFL) sales declined by 4% versus the same period of last year.

While disappointing, this is in line with expectations. Spectris faces challenging trading conditions, which have deteriorated during the recent period. North America, in particular, has been a region where Spectris’s performance continues to be impacted by weak industrial demand. Similar problems were encountered in Europe, where, despite some improvement in recent months, Spectris continues to record low levels of growth.

Strong progress

However, Spectris’s performance in Asia Pacific and the Rest of the World was much better. In those regions it recorded a rise in LFL sales, while making strong progress with its cost savings programme. Spectris expects to deliver £10m in cost savings for the full year through its new strategy, ‘Project Uplift’. In addition, Spectris has the financial strength to undertake further acquisitions following its purchase of Millbrook Group for £122m. Its integration is progressing well and similar deals could help to offset the difficult trading conditions being experienced in Europe and North America.

While Spectris currently yields only 2.5%, its dividend growth potential is significant. Dividends are covered 2.3 times by profit, which shows that shareholder payouts could be raised at a faster pace than earnings growth and yet remain highly affordable. Furthermore, Spectris is forecast to increase its bottom line by 26% in the current year and by a further 10% next year. And with the potential for upgrades to those forecasts thanks to weaker sterling, Spectris’s dividend growth potential could exceed current expectations.

Growth potential

Of course, income investors may prefer to buy a higher yielding stock right now, given the prospect for higher inflation in 2017. One appealing stock in this regard is BAE (LSE: BA). The defence company yields 3.6% from a dividend which is covered 1.85 times by profit. BAE has bottom line growth potential as a result of the scope for US and global defence spending to rise under a Trump administration. Although Trump’s policies are yet to be confirmed, he has indicated in recent months that the US will raise defence spending and expects NATO allies to do the same.

As such, BAE’s dividend growth prospects are bright. When combined with its relatively high yield, this makes it a sound income choice. While Spectris’s income appeal may be less obvious at the present time, its dividend growth prospects mean that it is set to become a popular income stock.

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Peter Stephens owns shares of BAE Systems. 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 control

Shares in instruments and controls specialist Spectris (LSE: SXS) took off during the course of last week, gaining 19% between last Monday and Friday. Investor appetite was helped following Spectris’s latest financials on Tuesday, which showed that sales had edged 1% higher in 2015 to £1.2bn.

This was a solid performance given the challenging state of the firm’s end markets, and revenues are anticipated to pick up, with the company planning further product launches and acquisitions. Indeed, Spectris bought out Switzerland’s CAS Clean Air Service just today.

With heavy restructuring also ticking along nicely, the City expects the London firm to bounce from recent earnings losses and punch a 23% earnings jump in 2016. This leaves Spectris dealing on an attractive P/E rating of just 14.8 times, while a sub-1 PEG rating, at 0.7, underlines the firm’s decent value relative to its growth prospects.

On top of this, a predicted 52.5p per share dividend — yielding a handy 3% — sweetens the investment case.

Software strider

Software provider Fidessa (LSE: FDSA) also enjoyed a massive share price ascent during the course of last week, the stock adding 29% between Monday and Friday.

Like Spectris, Fidessa benefitted from strong full-year numbers, the company advising last Monday that revenues leapt 7% in 2015 to £295.5m despite volatile trading conditions. And encouragingly the firm advised that its end markets “continue to improve with increasing opportunity for new services.”

The number crunchers do not believe that Fidessa will enjoy explosive bottom-line growth in the near-term, however, and a predicted 2% advance leaves the business dealing on an elevated P/E rating of 23.9 times. But a predicted dividend of 86.8p per share, yielding a huge 4.4%, helps to offset the high multiple.

A power pick

While it is true that resurgent risk appetite has propelled stock markets higher over the past week, there is no doubt that plenty of ‘mud’ — from fears over extreme Chinese cooling to the outcome of June’s ‘Brexit’ vote — remains in the system that could drive share prices through the floor again.

As a consequence, demand for quality defensive companies remains very much alive, a factor that helped to drive National Grid (LSE: NG) 3% higher between last Monday and Friday. And I expect the electricity network operator to keep chugging higher as the fruits of its vast investment programme in the UK and US drive earnings in the near-term and beyond.

The City expects National Grid to enjoy a 4% earnings bounce in the year to March 2016 alone, resulting in a very-decent P/E rating of 14.9 times. And when you also factor in a projected dividend of 43.7p per share — yielding a mammoth 4.8% — I believe there is plenty of room for the power play’s shares to positively re-rate.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Fidessa. 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 results themselves were broadly as expected. Underlying operating profit was down 55% to $2.2bn. Adjusted earnings per share of $0.64 were marginally ahead of forecasts for $0.63 per share, and net debt was almost unchanged at $12.9bn.

Anglo’s dividend will be suspended until the firm’s debt levels have come down. The firm then plans to move to a payout ratio dividend policy. This means that Anglo will pay out a fixed proportion of profits each year, rather than trying to continually increase the dividend regardless of profits.

Big changes ahead

Anglo’s ambitious restructuring plan did contain a few surprises. The group has increased its target for asset disposals from $4bn to between $5bn and $6bn. After agreeing $2bn of asset sales in 2015, Anglo is targeting asset sales of $3bn to $4bn in 2016.

The group also expects to increase operating profit by $1.9bn in 2016, through further cost-cutting and efficiency gains.

Anglo believes that this combination of measures will enable it to generate free cash flow and reduce net debt to around $10bn in 2016.

Is Anglo a buy?

Anglo hopes to reduce its portfolio from 55 assets to just 16. The group’s aim is to focus on a core of high quality assets in diamonds, platinum and copper, all of which would be profitable even at current commodity prices.

The plan seems logical, but the difficult part will be executing it. Today’s share price volatility suggests to me that heavyweight investors have mixed views on whether Anglo’s asset disposal targets are realistic.

I intend to continue holding, but I’m painfully aware that if Anglo fails to raise the cash it needs from disposals, the group may be forced to ask shareholders for fresh cash.

Better off at Spectris?

Another company that issued results today was FTSE 250 engineering firm Spectris (LSE: SXS), which makes measuring and control instruments.

Shares in Spectris rose by 6% following today’s results, which showed that the group’s adjusted operating profit fell by 9% to £181m, while adjusted earnings per share fell by 8% to 114p. The full-year dividend was increased by 6% to 49.5p.

The results were in line with expectations and suggest to me that the firm’s restructuring and recent acquisitions are working well. The firm’s 12% operating margin seems to indicate that Spectris products enjoy a reasonable competitive advantage.

The balance sheet is also strong. Net debt of £98.6m is less than last year’s net profit of £113.8m. I find that comparing debt levels to profits gives a useful indicator of how indebted a firm really is. In this case, it’s clear that Spectris’s debt levels are low and aren’t a concern.

Indeed, I’m tempted to rate Spectris as a medium-term buy. Although the shares’ forecast P/E of 14 isn’t obviously cheap, Spectris has a strong balance sheet and a 3.5% forecast dividend yield that’s backed by free cash flow.

Buying quality firms like Spectris at a fair price usually results in reasonable returns.

The post Do Today’s Results Make Anglo American plc & Spectris plc A Buy? appeared first on The Twelfth Magpie.

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Roland Head owns shares of Anglo American. 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.

Of course, the company’s shares have not fallen without good reason, with a profit warning following the commencement of the current CEO’s appointment in July 2015. This was the company’s fifth profit warning in just 18 months and, realistically, there could be more to come as Rolls-Royce’s markets continue to be highly challenging.

Evidence of these difficulties can be seen in the forecasts for the next two years, with Rolls-Royce due to post a decline in earnings of 18% this year, followed by a further fall in net profit of 34% in 2016. This means that the company is trading on a forward price to earnings (P/E) ratio of 15.6 which, given its difficult outlook, does not appear to offer a particularly wide margin of safety. As a result, further share price falls could be on the cards.

Despite this, Rolls-Royce remains a top quality business and, with the company’s CEO having an excellent track record at FTSE 100 peer ARM Holdings, there is scope for a successful turnaround in the coming years. Investors, though, may be prudent to wait for a lower share price before buying.

Meanwhile, measuring instrument and controls specialist Spectris (LSE: SXS) released a rather disappointing update today, with the company experiencing challenging trading conditions. As a result, it now expects full year adjusted operating profit to be at the lower end of market expectations. And, with the market having already priced in a 4% fall in its bottom line, its shares could come under a degree of pressure in the short run.

However, Spectris appears to have a sound strategy to overcome its external problems, with its restructuring programme and operational initiatives having the potential to improve its financial performance. This, alongside further investment in core research and development programmes could allow it to return to positive profit growth, although with its shares trading on a P/E ratio of 14.2, it may be wise to await a larger margin of safety before buying a slice of the business for the long term.

Also enduring a difficult period, but on a much larger scale, is Glencore (LSE: GLEN). Its shares have collapsed in the last year and are down by 70% during the period. A key reason for this is, of course, a significantly weaker commodities market and this looks set to continue over the short to medium term. As such, further pain could lie ahead for the company’s investors.

Additionally, there have been concerns regarding Glencore’s financial strength and in its capacity to survive further challenges within its operating environment. Although the company recently conducted a placing in order to pay down debt, investor sentiment does not appear to have improved significantly. As such, further share price falls could be on the near-term horizon but, for long term, less risk averse investors, a price to book value (P/B) ratio of 0.4 may indicate that now is the time to buy.

The post Will Glencore PLC, Rolls-Royce Holding PLC & Spectris plc Beat The Market? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.