However, a low-key profile can be a good thing when it comes to investing. Such a company may have a bright future that isn’t yet widely recognised by the market. I believe Vivo Energy and UDG Healthcare are two such companies. They’re thriving, profitable businesses, and have long-term ‘structural’ growth drivers that could potentially make today’s investors seriously rich.

Rising prosperity in Africa

Vivo is a pan-African retailer and marketer of Shell and Engen-branded fuels and lubricants. It has a network of over 2,100 service stations in 23 countries, which also provide customers with non-fuel services including shops, card services and takeaway and casual dining restaurants in partnership with major brands such as KFC and Burger King. Its commercial arm serves customers across a wide range of industries.

Vivo looks to me like a very good play on the long-term story of rising prosperity in Africa. Today, in a trading update ahead of its AGM, it reported “a positive start to 2019 with performance in line with expectations.”

City analysts expect the company to post earnings per share (EPS) of $0.133 (10.15p at current exchange rates) this year, rising 13.5% to $0.151 (11.5p) next year. At a share price of 125p (a little down on the day), we’re looking at an undemanding current-year price-to-earnings (P/E) ratio of 12.3, falling to 10.9 on the 2020 forecast. Dividend forecasts of $0.04 (3.05p), followed by $0.044 (3.36p), give handy yields of 2.4% and 2.7%.

The company floated at 165p a share just about a year ago. Its balance sheet looks decent, with modest debt. And given the near-term and long-term growth prospects, the shares look very buyable to me at their current level.

Health spending and outsourcing trends

The structural growth drivers I see over at UDG Healthcare are rising health spending in a world where people are living longer, and a trend in the industry to outsource the kinds of services UDG offers.

It enables and supports large pharmaceutical to small biotech companies to bring their products to market, ensuring patients can access these drugs and providing support to educate healthcare professionals and patients on the products. In short, it does a whole load of stuff that allows its clients (currently over 300, including the top 30 pharma companies) to concentrate on their core business. It has operations in 26 countries and delivers services in over 50.

I’m expecting 5% EPS growth this year to $0.486 (37.1p at current exchange rates), with growth accelerating to 10% next year and EPS rising to $0.534 (40.8p). At a share price of 678p, we have a P/E of 18.3, falling to 16.6. Dividend forecasts of $0.18 (13.7p), followed by $0.20 (15.3p), give yields of 2% and 2.3%.

While UDG’s P/Es are somewhat higher than Vivo’s and yields are somewhat lower, the healthcare stock also looks very buyable to me at its current valuation. In a defensive industry with good growth prospects, and the company having delivered dividend increases over three decades, the premium is well worth paying, in my book.

The post 2 FTSE 250 stocks I think could make you seriously rich appeared first on The Twelfth Magpie.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended UDG Healthcare and WH Smith. 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.

Having declined by such a large amount, the Premier Oil share price now seems to offer a low valuation. Could it be worth buying? Or, does another potential turnaround stock, which released an update on Tuesday, offer stronger investment prospects?

Growth potential

The company in question is international healthcare services provider UDG Healthcare (LSE: UDG). It released full-year results, with revenue rising by 5% on a constant currency basis to $1,315.2m. Profit, before tax, gained 15% to $138.8m on an adjusted basis, while adjusted earnings per share increased by 22%.

The company’s two global platforms, Ashfield and Sharp, continued to drive earnings as the business sought to strengthen its market position. Ashfield’s additions of Create NYC and SmartAnalyst could help to broaden its capabilities, while the improving performance of Sharp US in the second half of the year may lead to stronger performance in the new financial year.

With UDG Healthcare forecast to post earnings growth of 9% in the current year, its strategy of delivering organic growth, plus further acquisitions, seems to be working well. Following a share price fall of 33% in the last year, the stock’s price-to-earnings (P/E) ratio of 15.5 seems to offer investment potential for the long term.

Uncertain outlook

As mentioned, further falls in the oil price may be ahead. Investor sentiment has changed rapidly after a period of strong growth. Although a level of $60 per barrel is not especially low, there had been hopes for oil to reach $100 over the medium term among some investors. With supply disruption expected due to sanctions from Iran, and geopolitical risks elsewhere, investors seemed to have priced in continued growth across the oil and gas sector.

Therefore, with investors now apparently unsure about the prospects for the industry, Premier Oil could offer a favourable risk/reward ratio. Certainly, it could post further share price falls in the near term, but its operational performance seems to be sound. It’s in the process of ramping-up production, while maintaining a disciplined approach to costs. This could allow it to reduce debt and may lead to a stronger business over the coming years.

As such, with the stock having a forward P/E ratio of around 5, it could offer a wide margin of safety. For investors who are less risk-averse, and are focused on the long term, it may provide turnaround potential over an extended time period, in my opinion.

The post Is the Premier Oil share price a bargain, or should I buy this FTSE 250 turnaround share? 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 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.

The FTSE 250 business provides a range of outsourced services to pharmaceutical and healthcare providers in more than 50 countries, and moves to broaden its operations through recent M&A action have given its profits outlook a significant boost.

City analysts are expecting earnings to leap 21% in the year to September, and by a further 11% next year. It is not hard to see why the number crunchers are so giddy in their assessments either, certainly if latest trading numbers are anything to go by.

Investing for future growth

UDG has spent a fortune on acquisition activity in recent times, the company having sealed six transactions at a total cost of $270m during the last fiscal year alone. Five of these were swallowed up by its core Ashfield arm, and they enhance the division’s ability to offer services that span all stages of the product lifecycle.

And a robust balance sheet — it has net debt of just $53.3m on the books — means that additional earnings-boosting buys are likely just around the corner.

The Dublin business is also forking out huge sums on organic investment. At Ashfield it relocated its commercial and clinical operations to a brand new base in the US to allow it to continue expanding in this mega growth market, while it also opened new offices in Japan and Ireland. Meanwhile, its Sharp unit has invested in new facilities in the US and in South Wales to enhance its packaging and distribution capabilities.

Nowadays UDG is a major partner with the world’s biggest drugs developers, and  its earnings-driving Ashfield unit took part in eight of the top 10 product launches in the US last year. With a steady stream of new treatments from all over the pharma sector hitting the market, I am convinced the services specialist should continue to deliver robust sales growth.

As a consequence, I believe UDG is worthy of its lofty valuation, a forward P/E rating of 28.9 times.

Flying high

Senior (LSE: SNR) is another FTSE 250 firm I am backing to record strong profits expansion now and in the future.

Indeed, its latest trading statement this week assured me of its strong outlook — it advised that “order books across most of our businesses remain strong and we expect to see improved performance in both divisions,” namely its Aerospace and Flexonics arms.

More specifically, I am particularly excited by the outlook for the firm’s flying division as new programmes ramp up across the industry. Senior noted that production volumes for newer programmes on large commercial aircraft from both Boeing and Airbus have boosted business more recently.

City analysts are expecting Senior to deliver earnings growth of 8% and 17% in 2018 and 2019 respectively. And the prospect of excellent profits rises thereafter suggests to me that a forward P/E ratio of 19 times is worth swallowing to grab a slice of the action.

The post 2 FTSE 250 stocks I’d buy and hold for the next 20 years appeared first on The Twelfth Magpie.

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Royston Wild 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.

This time around I am discussing another couple of medicine marvels outside Britain’s elite index that could make you a fortune. Step forward ImmuPharma (LSE: IMM) and UDG Healthcare (LSE: UDG).

Bolt-on beauty

UDG — which provides clinical, commercial, communications and packaging services to the healthcare sector — pricked the ears of growth hunters earlier this week after it announced that earnings per share are likely to grow between 18% and 21% in the current fiscal year.

Acquisition activity has proved a significant sales mover in recent times, building the company’s service capabilities and expanding its scope from just a UK-centred business into a truly global giant. And as a result UDG said that operating profits at its core Ashfield division were “significantly ahead” year-on-year during the first fiscal quarter ending December 2017.

UDG’s promising profits outlook is roughly in line with broker estimates that are suggesting a 23% earnings improvement in the 12 months to September 2018. And this monster rise is not expected to be a flash in the pain either, as in fiscal 2019 the bottom line is expected to swell by an additional 11%.

The FTSE 250 firm may be a expensive pick on paper, rocking up on a forward P/E ratio of 25.4 times. However, in my opinion this heady rating is a fair reflection of UDG’s blockbuster profits outlook.

Indeed, UDG affirmed last week that it “remains active from a corporate development perspective,” with its “strong balance sheet [leaving] it well placed to execute further strategic acquisition opportunities as they arise,” suggesting that further bolt-on buys are just around the corner. UDG’s rising global and strategic footprint leaves it well placed to benefit from growing demand for healthcare products in the years to come.

Promising pipeline

ImmuPharma’s road to earnings growth is expected to keep making sterling progress too, although the company is expected to remain mired in the red for a little while longer. Losses of 4.54p per share in 2016 are expected to have narrowed to 3.5p last year, and to improve still further to 2p in the present period.

The AIM-quoted business is finally expected to burst into the black in 2019, when analysts say earnings of 3.4p per share will be generated.

ImmuPharma’s share price has detonated since the start of September thanks to a flurry of good news surrounding its Lupuzor lupus treatment, the stock striking record peaks around 190p per share at the turn of the year. Market demand has cooled since then but, with Phase III testing of the flagship drug now complete and results due in the current quarter, glass-half-full investors may see this as a fresh opportunity to get in before the herd.

Of course drugs development is a highly risky venture and success at the lab bench is never guaranteed. However, testing of ImmuPharma’s potential blockbuster product has so far been encouraging and, with the firm having successfully raised £10m this month through a share placing, the business has extra financial firepower to bolster its position in medical areas outside lupus as well.

The post 2 more pharma stocks that could make you a fortune appeared first on The Twelfth Magpie.

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Royston Wild 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.

But with no signs of spending slowing down in the US, UK or anywhere else, investors looking to benefit from this trend will find plenty of potential opportunities. One that I’ve got my eye on is UDG Healthcare (LSE: UDG), which is a provider of non-core services such as commercial marketing, packaging and communications for global drug makers.

UDG has benefited from these customers moving to outsource these essential but non-core services as a means of improving margins under relentless shareholder pressure. This trend, together with a slew of acquisitions that have turned it into a global leader in its markets, has sent the group’s share price up 25% over the past year alone.

Judging by the company’s Q1 trading update released this morning, investors have been right to be bullish as management is guiding for a whopping 18%-21% uplift in earnings per share for the full year to October. The group’s commercialisation division, Ashfield, is the main driver of growth and management said its operating profits were significantly ahead of the prior year’s due to acquisitions and organic growth as drug makers continue to bring huge volumes of new treatments to market.

While there were short-term issues with the packaging division, management expects these to reverse in H2 which, alongside falling US tax rates and growth in other divisions, should still leave investors very happy for the full year. With industry tailwinds at its back, a healthy balance sheet providing ammunition for further acquisitions, and massive growth opportunities, I think UDG Healthcare is still attractively valued even at 25 times forward earnings.

Underpinning critical research the world over  

Another healthcare stock on my radar is research tool provider Abcam (LSE: ABC). It provides academic pharma and biotech laboratories with research-grade antibodies that they need to conduct experiments.

This proposition has proven very attractive to scientists in recent years and as a result, Abcam has been growing very rapidly. In H1 alone revenue was 10% ahead of the year prior as each of its product categories grew sales faster than overall market growth.

Future growth opportunities also exist in broadening the group’s geographic reach, particularly in the massive Chinese market. Last year China accounted for only 13% of group revenue, but the country is becoming increasingly important with sales in the region up 24% year-on-year in H1.

There’s also the possibility of organic growth continuing to be buttressed by selective acquisitions that are well within the group’s capabilities. At year-end it had a pile of cash totalling £84.8m. And closing cash balances were well ahead of the year prior due to the highly profitable nature of the company’s business, with EBITDA margins of 32.5% recorded last year.

Abcam’s shares aren’t cheap at 39 times forward earnings, but with significant cash generation, impressive margins and continued double-digit sales growth, I think the business is still one I’d love to own for the long term.

The post 2 top healthcare stocks I’d buy right now appeared first on The Twelfth Magpie.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon and Berkshire Hathaway (B shares). 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’s reversal means that UDG has seen its market value shrink by 15% since it set record tops of 958p per share just three weeks ago. However, I reckon this is a great opportunity for savvy long-term investors to pile in.

Indeed, market makers should have been punching the air following today’s impressive release. The FTSE 250 business announced that revenues galloped 13% higher — or 17% higher at constant exchange rates — to $1.22bn in the 12 months to September 2017.

As a consequence, it saw pre-tax profits leap 17% year-on-year to $92.8m, and the company is confident that its transformation programme should continue to deliver meaty returns (it spent $270m on six acquisitions in the last fiscal year alone).

Chief executive Brendan McAtamney commented: “All of our divisions delivered good underlying profit growth, supplemented by the benefit of acquisitions… these acquisitions enhance and broaden the range of capabilities we offer our healthcare clients.”

And he added: “We are well positioned to continue to deliver organic growth and our strong balance sheet will enable us to execute further strategic acquisition opportunities as they arise.”

In good health

City forecasters are certainly predicting exciting things over at UDG, the share expected to keep growing earnings at a double-digit rate in the near term at least. A 16% earnings improvement is predicted for the year to September 2018 alone.

And this projection makes the share a pretty-tasty value pick. Sure, a forward P/E ratio of 25.1 times may not be much to shout about. But a corresponding PEG readout of 1.6 suggests the firm is actually pretty reasonably priced relative to its growth trajectory.

Meanwhile, the bright profits picture provides plenty for dividend investors to get excited about as well.

Last year the Dublin firm hiked the shareholder payout 7% year-on-year to 13.3 US cents per share, and City analysts are expecting this to swell to 15.2 cents in the current period. This projection yields a handy little 1.4% yield.

Investors should expect the healthcare giant to make good on this estimate too, what with dividend coverage ringing in at 2.9 times, comfortably above the widely-considered security benchmark of 2 times.

Intercontinental champ

SThree (LSE: STHR) is another share expected to deliver exceptional earnings and dividend growth as business takes off across the globe.

There is no hiding the troubles the company is enduring at home as the economy cools, weakness which saw aggregated gross profits in the UK and Ireland dive 10% during July-September. But strong conditions elsewhere are helping profits to continue to grow. Indeed, a 20% rise in US profits, and a 6% rise in its core market of Europe, helped group gross profits rise 5% in the quarter.

Reflecting this exceptional progress, not to mention its impressive cash flows, City analysts are expecting profits at SThree to increase 13% and 11% in 2017 and 2018 respectively, and current predictions make the business excellent value for money.

It rocks up on a forward P/E ratio of 14.5 times as well as a corresponding PEG reading of 1.1.

And to keep income chasers happy, forecasted dividends of 14p per share this year and next throw out a monster yield of 4%.

All things considered, I reckon SThree is a terrific share to snap up today.

The post 2 hot stocks offering value, growth and income appeared first on The Twelfth Magpie.

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• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Royston Wild 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.

Rapid expansion

The Lancashire-based retailer and distributor of branded sportswear and fashionwear, today reported another record result for the half year. Pre-tax profits soared by a further 33% to £102.7m, compared to the £77.4m posted for the first six months of 2016/17. Total group revenue came in at £1.4bn, a 41% improvement on the £971m achieved a year earlier. The news sent the shares soaring 9% higher by late afternoon.

The FTSE 250 group now boasts more than 1,200 stores worldwide and still continues to expand rapidly. During the 26-week period to July there was a net increase of 40 JD stores, of which 12 were in the UK and Ireland, with a further 23 in mainland Europe. A similar number of net new stores is expected across mainland Europe in the second half. Further afield, the group opened its first stores in Australia and added two more in Malaysia.

Bucking the trend

The business’s robust performance of late seems to be bucking the trend among high street retailers, and I have no reason to believe this won’t continue. So far in the second half, trading has continued at similar levels to the first six months, and the group now expects year-end sales figures to be towards the upper end of market expectations, currently in the range £268m-£290m.

I see the recent share price slump as an opportunity to buy at a very opportune moment, with the shares now trading at a very reasonable 15 times earnings, falling to 14 times next year.

Partner of choice

Another London-listed mid-cap firm that I believe has excellent growth potential is UDG Healthcare (LSE: UDG). Over the years, the Dublin-based healthcare services provider has grown to become a leading partner of choice for the global healthcare industry, delivering commercial, clinical, communications, and packaging services wordwide.

The group continues to expand its footprint having committed no less than $200m since the start of the financial year to the acquisitions of STEM, Sellxpert, Vynamic, Cambridge BioMarketing and a US packaging facility. A strong balance sheet should leave it well positioned to continue with this acquisition strategy and deliver further growth.

UDG’s shares have performed well since I last recommended them(also in March), gaining around 20%. But even at a lofty 31 times earnings I believe they still represent good value given the prospects for further long-term growth.

The post 2 FTSE 250 growth shares that could make you rich appeared first on The Twelfth Magpie.

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Bilaal Mohamed 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.

Investing in the pharmaceutical industry can be a bit of a hit or miss exercise for retailer investors. While companies in the sector can enjoy sky-high margins and years of protected revenue thanks to patents, their share prices can also fluctuate wildly based on poor clinical trial results or a rival gazumping them with a new competitor drug.

That’s why I’ve got my eye on £2bn market cap UDG Healthcare (LSE: UDG), a provider of marketing, sales and packaging services for pharmaceutical firms. The company is exposed to the upside of rising global use of pharmaceutical products, as well as the trend among pharma firms to outsource non-core operations such as training local sales teams or educating healthcare professionals on how best to use their drugs.

This is where UDG shines and as it proves its worth with existing clients and expands the array of services it offers and moves into new countries, it’s bringing in ever larger partners. This is paying off with sales for the half year to March rising 15% year-on-year (y/y) in constant currency terms to $578.9m, and pre-tax profits leaping a full 29% during the period to $52.9m.

This impressive performance has continued into Q3 with good trading and new acquisitions leading management to raise its earnings per share guidance to between 17% to 19% ahead of last year’s 31.8 US cents. The bad news is that taking the midpoint of this estimate would give UDG a valuation of around 28.9 times full year earnings.

While I see plenty of reasons to believe UDG will continue to grow organically and through acquisitions, improve its margins and maintain a healthy balance sheet, this valuation is simply too stretched compared to historic averages to make me comfortable. However, I will be keeping a close eye on the company and wait patiently for a more reasonable valuation before considering beginning a position.

Electric growth potential 

Another mid-cap for which I’m awaiting a share price dip is the aptly named electronics components distributor Electrocomponents (LSE: ECM). The company serves as a middle-man between manufacturers and end users in industries ranging from utilities, to miners, electronics and manufacturers of all stripes.

The company’s growth is down to plain old macroeconomic growth across the globe as well as increasing consolidation in the sector that favours large players such as itself. Last year underlying sales grew 4.8% y/y and 17.1% in reported currency terms to £1,511m, while operating margins rose 240 basis points to 8.8% and boosted operating profit to £133m.

In the quarter to June, this growth has picked up as each of its three main trading regions, North America, Europe and Asia, grew revenue by at least 10% y/y. The combination of continued economic growth in each of these regions, small bolt-on acquisitions and increased investment in sales staff training bodes well for this growth continuing for some time to come.

Furthermore, with a highly cash generative business that produced free cash flow of £117m last year and net debt less than one times EBITDA, there’s plenty of potential for both future acquisitions and increased shareholder returns. I like Electrocomponents a lot, but its valuation of 25 times forward earnings is just a bit too expensive for my taste.

The post Two high-growth mid-cap stocks to add to your watch list appeared first on The Twelfth Magpie.

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Ian Pierce 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.

Currency headwinds

Last month the group issued its full year results for 2016 and, truth be told, I found them a little disappointing. Group revenues came in at $4,669m, an increase of just 1% on a reported basis and 2% on an underlying basis. This was largely due to foreign currency and disposal-related headwinds. However, there were encouraging performances in areas such as Sports Medicine and Knee Implants, where its products maintained strong momentum.

Market conditions in China and the Gulf States were particularly challenging during the first six months of the year, but China did return to growth, as did Emerging Markets as a whole during the second half of the year. Management have acknowledged the rather subdued performance, but are confident of a stronger performance this year, anticipating underlying revenue growth of between 3%-4% for 2017.

Ageing populations

My view on Smith & Nephew hasn’t changed. Ageing populations in developed markets and improving incomes in emerging markets should contribute to continued volume growth in all of the company’s businesses. Furthermore, healthcare systems and hospital infrastructure in the developing world is improving at the considerable pace, which should help the group’s sales over the longer term.

Personally I view Smith & Nephew as a fairly defensive business, with plenty of opportunity for further growth both in developed nations and emerging markets, albeit at a slow but steady pace. The shares trade on a P/E rating of 18.1 falling to 16.5 by next year, which isn’t too demanding for a high quality blue-chip like Smith & Nephew.

Good start to the year

Meanwhile, another healthcare firm whose shares have been performing well recently is UDG Healthcare (LSE: UDG). The Dublin-based group has made a good start to fiscal 2017 with operating profits for the first quarter well ahead of last year, driven by continued growth and the impact of acquisitions.

In its first quarter update the group said that its Ashfield business, which commercialises services for the pharmaceutical and healthcare industry, traded well ahead of the same period last year. Growth was supplemented by acquisitions, such as STEM Marketing which it acquired in October. In its Sharp packaging services business operating profits were moderately ahead of last year, with the Aquilant sales & marketing business remaining in line with the same quarter last year.

Strong growth is set to continue with consensus forecasts predicting a double digit rise in earnings in each of the next two next two years, but still leaving the shares on a premium P/E rating of 23 for FY 2018. I see UDG as a riskier play than Smith & Nephew, but one that could reap higher rewards if the strong growth continues.

The post Retire early with these 2 healthcare stocks appeared first on The Twelfth Magpie.

More reading

• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Bilaal Mohamed 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.

Serco

Shares in support services company Serco (LSE: SRP) have risen by 15% today after it recorded better than expected performance in the first half. Its operating profit increased from £37m in H1 2015 to £65m in the same period of 2016 as factors such as the favourable resolution of commercial issues and certain contracts running longer than expected had a positive impact on its performance.

Although many of these factors aren’t expected to recur, Serco continues to make good progress with its turnaround strategy. It has removed £550m from its operating costs and has invested heavily in its infrastructure, processes and purchasing systems. Together, they’re having a significant impact on its financial performance and Serco has today upgraded its full-year guidance, which is a key reason for its share price gain.

However, Serco is still expected to report a fall in its bottom line of 45% this year, followed by a further decline of 22% next year. With its shares trading on a forward price-to-earnings (P/E) ratio of 57, it seems to be overvalued and worth avoiding at the present time.

London Stock Exchange Group

London Stock Exchange Group (LSE: LSE) also reported today, recording growth across all of its core business areas in the first half. It delivered particularly impressive growth in its information services segment, which contributed to a 9% rise in sales and an increase in adjusted operating profit of 9%.

Encouragingly, LSE’s operating expenses remained well controlled at a time when the company is investing in growth opportunities. Furthermore, its balance sheet remains strong and it has been able to reduce leverage to 1.3 times net debt-to-EBITDA (earnings before interest, tax, depreciation and amortisation).

Looking ahead, LSE’s merger with Deutsche Börse is set to go ahead as planned. With LSE forecast to record a rise in its earnings of 14% in each of the next two years, its outlook remains positive. And with its shares trading on a price-to-earnings growth (PEG) ratio of 1.4, it offers good value for money.

UDG Healthcare

Meanwhile, UDG Healthcare (LSE: UDG) also released an update today. Its third quarter saw sales and profits rise versus the same period of the previous year, with UDG reiterating its full year guidance of a 6% to 8% rise in diluted earnings per share (EPS) on a constant currency basis.

On the topic of currency, UDG has decided to change its reporting currency from euros to US dollars. This is because of the changing geographic profile of the business, with the vast majority of its profits now being generated in dollars. Furthermore, UDG’s US-based businesses are demonstrating the greatest growth opportunities and future corporate development activity is likely to be US-focused. As such, reporting in dollars seems to make sense.

With UDG trading on a P/E ratio of 25.2, its shares appear to be rather overvalued. Although it’s set to increase its earnings by 10% next year, it’s still difficult to justify purchase at its current price level.

The post Do today’s updates make these 3 stocks ‘must-haves’ for your portfolio? appeared first on The Twelfth Magpie.

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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.