This volatility looks set to continue in future. The company’s outlook remains highly uncertain and driven by news flow. However, irrespective of its volatile share price outlook, could it offer millionaire-maker potential?

Growth opportunity

The investment opportunity for the stock appears to be compelling. The mine it is now in the process of constructing is intended to have a 100-year life and expects to eventually produce around 20m tonnes of polyhalite per year (Mtpa). This will be made available across a wide range of markets, which means securing orders for the product is unlikely to prove challenging. That’s particularly the case since crop studies have thus far been positive and demand for fertiliser remains high across the globe.

Furthermore, the numbers appear to add up regarding future profitability. Sirius Minerals is forecasting operating costs which are among the lowest in the industry when production kicks off in 2021. It anticipates cash margins of between 70% and 85%, which should lead to a rapid pay-down of debt levels. This could leave the company with a rapidly-rising cash balance in future years that may end up with investors in the stock receiving high dividends for many years to come.

Risks

Clearly, the company offers high potential rewards. However, its risks are also high. As discussed, its share price has been highly volatile this year, and this is likely to continue as the date of first production comes closer. As a company which lacks diversification within its asset base, there is also increased risk of project delays and they could impact negatively on its performance.

However, with a net present value (NPV) of between $15bn and $28bn each end of construction, versus a market capitalisation of around $1.5bn, it appears to be extremely cheap at the present time. Therefore, with a wide margin of safety and clear growth potential, it could be a profitable, albeit volatile, performer.

High rewards

Also experiencing high volatility during the course of the last year has been online gaming company Stride Gaming (LSE: STR). It released a positive trading update on Monday which showed it has experienced strong trading in the second half of the year after an upbeat first part of the year. As a result, it is now confident of meeting the upper end of market expectations for the financial year which has just ended.

The announcement helped to push the company’s share price up by nearly 4%. However, after a turbulent year it is still down 5% during the last 12 months. Looking ahead, the company has growth potential as the online gaming industry continues to experience high growth. It trades on a price-to-earnings (P/E) ratio of just 10.2, which suggests there could be further upside potential on offer over the medium term.

The post Is Sirius Minerals plc a millionaire-maker stock? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares in Sirius Minerals. 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 the FTSE 100 trading close to its all-time high, it may seem as though share price growth is a given over the medium term. However, there are still numerous risks which could halt the FTSE 100’s recent gains and send share prices lower. For example, Brexit, the election and higher inflation may cause some difficulties for the FTSE 100. As such, buying shares which have wide margins of safety as well as impressive income prospects could be a shrewd move.

Improving financials

Reporting on Tuesday was gaming company William Hill (LSE: WMH). It announced improved performance following a difficult and highly uncertain period for the business. Its strategy appears to be working well even in a highly competitive industry, with the company reporting a rise in wagering and net revenue across all of its four divisions. Of particular note was double-digit wagering growth in Australia and the US, while its online operations saw a rise in amounts wagered of 9%.

With a dividend yield of 4.2%, William Hill continues to offer a relatively high income return. However, its dividend appeal looks set to be strengthened by a forecast rise in shareholder payouts. They are expected to increase by 5.5% next year and since they are covered around twice by profit, there is scope for further growth over the long run.

As mentioned, William Hill faces a highly competitive outlook. Sector consolidation has made rivals financially stronger, but with the company expected to record a rise in earnings of 8% in each of the next two years it seems to be a sound buy. That’s especially the case since it trades on a price-to-earnings growth (PEG) ratio of just 1.4 at the present time.

Low valuation

Also offering a potent mix of capital growth and income returns is sector peer Stride Gaming (LSE: STR). It may only yield 1.2% at the present time, but with dividends covered over eight times by profit, there is a good chance of rapid growth in shareholder payouts over the medium term. Evidence of the potential for this can be seen in the growth of dividends in the current year, with them rising by over 10%.

As well as dividend growth, Stride Gaming offers a wide margin of safety. It has a price-to-earnings (P/E) ratio of only 10.1, which suggests that it has a favourable risk/reward ratio. That’s especially the case since it is forecast to post a rise in earnings of 8% in the current year.

With the online bingo and social gaming sectors becoming increasingly popular among consumers, Stride could benefit from a tailwind over the medium term. While competition could remain high, there is scope for M&A activity and due to its low valuation, it could be a prime takeover target. As such, now could be the perfect time to buy it for the long run.

The post These bargain-basement dividend stocks could help you retire early appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Peter Stephens 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.

Shares in online gaming operator Stride Gaming (LSE: STR) have risen by over 12% today after it released an encouraging trading update. It provides details on the company’s future outlook, as well as whether it’s a better buy than sector peer William Hill (LSE: WMH).

Stride Gaming’s full year to 31 August was better than expected, with its second half being particularly strong. The company now expects its results to be ahead of market expectations. For example, net gaming revenue will be no less than £47m for the year and EBITDA (earnings before interest, tax, depreciation and amortisation) will be no lower than £12.3m for the full year, notwithstanding that the previous year contained only nine months of the Point of Consumption tax.

A key reason for the strong performance has been organic growth from Stride Gaming’s existing business. It is also focused on integrating the acquisitions of Tarco Assets, Netboost Media and 8Ball Games into the business and delivering on the anticipated synergies from the deals.

Looking ahead, Stride Gaming is forecast to increase its bottom line by 7% next year. This puts it on a price-to-earnings growth (PEG) ratio of 1.7, which indicates that it offers good value for money. And with it now being the fourth biggest online bingo operator in the UK, Stride Gaming has size and scale advantages that could positively catalyse its growth over the long term.

Value for money

However, sector peer William Hill offers better value for money. It’s forecast to increase its bottom line by 9% in the next financial year and this puts it on a PEG ratio of just 1.3. This indicates that William Hill offers more growth at a better price and its share price could outperform that of Stride Gaming.

Furthermore, William Hill is a larger operator than Stride Gaming and this provides it with advantages over its sector peer in what is becoming an increasingly competitive gaming space. In fact, sector consolidation is taking place and William Hill was itself the subject of a bid approach by Rank and 888  that ultimately didn’t work out. However, it shows that William Hill may prove attractive to other companies, which may have a positive impact on its share price.

Certainly, William Hill has endured a challenging period. It’s making major changes to its business in response to a disappointing period of results. While they will take time to have an impact on its bottom line, it seems to be moving in the right direction.

With William Hill yielding 4.1% versus 0.9% for Stride Gaming from a dividend covered 1.8 times versus 7.5 times for Stride Gaming, William Hill offers a superior income return over the medium term. As such, and while both stocks could be worth buying for the long term, William Hill is still the better buy.

The post Should you dump William Hill plc and buy this sector peer after today’s results? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Peter Stephens 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.

The deal fits in with Stride Gaming’s strategy of seeking out multiple small online gaming companies and, since it listed on the stock market in May 2015, its share price has now soared by almost 50%. And, with it continuing to diversify its brands and take advantage of appealing valuations across the sector due to increasing regulation, Stride Gaming could continue to be a strong performer over the medium term.

Also announcing an acquisition today is energy procurement business Inspired Energy (LSE: INSE). It has paid £2.75m for Blackpool-based Wholesale Energy, with the deal being made up of £1.5m in cash plus a further £0.5m in shares that will be crated by a placing that has also been announced today. And, should Wholesale Energy meet specific targets, a further £0.75m will be paid in future.

The deal has been positively received by the market, with Inspired Energy’s share price rising by 4% and, with the acquisition adding service specialism and increasing Inspired Energy’s customer base, it is likely to have a positive impact on its financial performance. In fact, Inspired Energy is forecast to increase its earnings by as much as 11% next year and, with its shares trading on a price to earnings (P/E) ratio of 12.6, it appears to offer good value for money – especially since it has a strong track record of profit growth in recent years.

Meanwhile, e-learning services provider Learning Technologies (LSE: LTG) has also announced an acquisition today, with it buying Eukleia Training for £7.5m, with £6m to be paid in cash and £1.5m in shares. As such, Learning Technologies will conduct a £7.5m placing, with the surplus capital to be used for future acquisitions.

Although shares in Learning Technologies have fallen by 3% today, the deal seems to make sense for the company. That’s because it provides Learning Technologies with additional scale and exposure to the government, risk and compliance marketplace, which is very much a growth market. And, with Learning Technologies forecast to increase its bottom line by 16% in the current year and by a further 17% next year, investor sentiment could be positively catalysed in the short to medium term.

That’s especially the case since the stock still trades on a price to earnings growth (PEG) ratio of 1.6, which indicates that there is substantial scope for capital gains in future.

The post Stride Gaming PLC, Inspired Energy PLC & Learning Technologies Group PLC Are Major Movers On Acquisition Updates appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Peter Stephens 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.