In fact, UK Mail recorded parcel volume growth of 8% in the quarter, while its mail business saw a rise in sales of 2% in the same period. Looking ahead, UK Mail expects to meet expectations for the current year and has maintained guidance for next year, which indicates that today’s share price gains are a relief rally.

With UK Mail forecast to grow its bottom line by 47% in the next financial year, its price to earnings growth (PEG) ratio of 0.3 indicates that further gains are on the cards. And with a yield of 6.5%, it continues to be a highly enticing income play, too.

Also soaring today is financial services company Tungsten (LSE: TUNG). Its shares are up by over 18% despite there being no significant news flow having been released by the company.

Of course, its shares have been volatile in recent weeks after it posted a disappointing set of results and also announced the planned sale of its banking division. Clearly, with losses widening in the first half of the current year and additional losses forecast for the second half of the year as well as for next year, Tungsten is experiencing a challenging period at the present time.

While this could be viewed by some investors as a good time to buy, since it is prior to a potential turnaround, there are a number of other stocks which offer good value for money and yet are highly profitable at the present time. Certainly, Tungsten will have a generous cash pile from the sale of its banking division, but until profitability is achieved or at least is on the near-term horizon, it may be prudent to watch, rather than buy, the company.

Meanwhile, KBC Advanced Technologies (LSE: KBC) has risen by more than Tungsten and UK Mail combined today, with its shares up by almost 50%. That’s because it has agreed a deal to be acquired for around £158m in cash by US software peer Aspen Technology, which works out as 185p per share or a premium of 49% to KBC’s closing price from yesterday.

The deal appears to be a good one for KBC’s investors, with it putting the oil and gas industry software provider on a price to earnings (P/E) ratio of 19.2. And with the outlook for the industry being rather uncertain, being part of a larger group could provide more stable financial prospects for the combined entity over the medium to long term.

However, with only 0.5% upside from the current share price to the offer price, buying KBC now has little potential reward.

The post Too Late To Buy UK Mail Group Plc (+10%), Tungsten Corp Plc (+18%) & KBC Advanced Technologies Plc (+48%) Today? 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.

The falls can range from anything from a 10% loss to sometimes 20%, 30% or even 40% if it’s perceived to be a bad one, or if the company shares are quite illiquid. Sometimes this can create an opportunity for the eagle-eyed investors amongst us. Whether that be in the form of picking up some shares on the cheap, or simply hoping for a dead-cat bounce, there are opportunities out there – it’s just a matter of spotting them.

So when I saw DX Group (LSE: DX), a share that I’d previously held, drop by over 75% in a day following a profit warning, closely followed by UK Mail (LSE: UKM) dropping further on a rather gloomy-sounding outlook that accompanied the interim results a few days later, I felt compelled to take a deeper look.

I didn’t see that cliff!

As you can see from the below chart, DX Group’s share price does look to have fallen off a cliff, such was the scale of the sell-off when the news was broken to the market at 10:51 on Friday 13 November.

And while there were some who may have dabbled on the day, I did wonder what the market knew that I didn’t. Since the announcement, the shares seemed to have settled around 20p-22p. This rates the shares at a rather lowly 3x forecast earnings and expected to yield over 10% – that seems very cheap, but are they cheap for a reason?

It may be that the market is less than impressed with management. You see, it was only on 21 September that the CEO’s outlook stated:

“Looking forward, our OneDX programme remains a key focus and we have a solid strategy supported by a robust balance sheet. Trading conditions continue to be tough but we are well placed to take advantage of any improvement and we have started the year in a positive manner.  The Board remains confident of our strategy to deliver long term growth.”

Less than 8 weeks later there was a profit warning, which seemed mainly due to higher-than-expected volume attrition in the highly profitable area of the secure DX Post and the slower-than-expected contract wins elsewhere. Additionally, management announced that the dividend would be reduced to 2.5p for the full year ending 2016 – less than half that paid in 2015.

Sorting out the issues?

Adding to investors’ pain five days later were interims from UK Mail. The shares had been sliding since the company warned on profits on 7 August 2015, the issues being mainly related to the transition to its fully automated hub in Coventry.

The market didn’t like management’s update, which pointed to guidance for 2016 being lowered, again due to the teething trouble at the new hub.

All in, the shares trade on a rather warm 16 times forecast earnings, though they are expected to yield over 6% — a yield not to be sniffed at.

However, I’d like to see management get a grip of the issues at the new hub and see it working seamlessly before investing here.

Market dominance?

Then last Thursday, Royal Mail (LSE: RMG) reported the half-year results. Reading through, though, there was the expected fall in letter volumes as well as increased debt as more staff left under voluntary redundancy schemes. Management, however, sounded quite chirpy. Of particular note (for me at least) was:

“Royal Mail is winning new volumes from well-known ‘bricks & mortar’ retailers and e-retailers. New contracts include John Lewis, Waterstones, House of Fraser, The Book People, The Hut Group and ASOS. This follows the development and launch of a number of initiatives to support retailers. For example, in the fast growing clothing and footwear sector, our online returns portal gives e-retailers full visibility of returned items. The new portal is important in the world of e-retail, where returns growth is outpacing the rest of the market. We have extended our strategic partnership with Alibaba, linking Chinese exporters with UK online shoppers, and allowing them to supply goods for UK delivery much more quickly.”

I think that announcements like this have, in part, given rise to the recent 10%+ rise in the price of the shares. For me, the company needed to be rightsized in order to compete properly in an ever-changing, ultra-competitive market – I think this is happening, albeit slowly.

However, as can be seen by the contract wins, here we have a company with the infrastructure to deliver nationwide whilst still being able to compete on price. In time, if not already, I can see it giving its smaller peers a run for their money.

And for those patient investors amongst you, it pays a near 5% yield while you wait!

The post Are Falls In DX (Group) plc (-75%) & UK Mail Group plc (-18%) Overdone? Or Is Royal Mail plc Showing Its Dominance? appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
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Dave Sullivan 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.

Vedanta Resources

Shares in Vedanta Resources (LSE: VED) have fallen by 50% over the last 12 months. Like its larger peers, the big Indian miner is feeling the effects of low commodity prices and is expected to report a small loss this year. The interim dividend was cancelled and the final payout placed under review.

However, the forecast loss of $236m is pretty small when compared to expected revenue of $11.8bn.

In my view, the real story is about Vedanta’s high debt levels and its strong free cash flow. During the first half of this year, the group generated free cash flow of $1.3bn. Much of this was used to reduce Vedanta’s net debt by $0.9bn to $7.5bn.

Vedanta’s market cap is now only 1.3 times its free cash flow from the last twelve months. That’s extremely cheap. What’s less clear is whether the firm will be able to continue to generate cash and reduce its debt levels.

If it can, then Vedanta could prove to be a very profitable long-term buy, in my view.

UK Mail Group

Market wisdom says that profit warnings come in threes. UK Mail Group (LSE: UKM) delivered its second profit warning this year today, alongside a dismal set of interim results.

Pre-tax profit before exceptional costs was 56% lower than for the same period last year. The interim dividend has been cut by 25% to 5.5p. If the final dividend is also cut by the same amount, then the total dividend for this year will be 16.4p, giving a prospective yield of 5.0%.

However, I wouldn’t be too sure of this. The firm’s message today was that problems with its new automated hub are taking much longer than expected to sort out. Next year’s profits are now likely to be lower than previously expected. I suspect the ongoing problems could limit the firm’s performance and its ability to accept extra parcel volumes over the key Christmas period.

On this basis the 10%+ fall in the share price so far today looks justified. My calculations suggest that even after today’s falls, the shares are probably trading on around 15 times next year’s earnings. I think it’s too early to buy.

Monitise

Former market darling Monitise (LSE: MONI) has now fallen by 89% in 2015. The company now belongs to a small group of stocks which trade below their net cash value.

Does this mean — finally — that Monitise is a buy?

There are some encouraging signs. Broker forecasts for the current year suggest that the firm will report a loss of £14.3m this year. That’s a big improvement on three months ago, when a loss of £29.7m was expected.

However, it might be wise to be cautious. Monitise has repeatedly disappointed the market and failed to breakeven. The firm’s £78m net cash balance will continue to fall and the loss of experienced chief executive Elizabeth Buse is a big disappointment.

Monitise obviously offers a service that people will pay to use. But is it the right product at the right time? I’m not sure. In my view, the chances of this stock being a profitable investment are very uncertain.

The post Are Vedanta Resources plc, UK Mail Group PLC & Monitise Plc A Steal At Today’s Prices? appeared first on The Twelfth Magpie.

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• 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?

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

ARM Holdings

Concerns over market saturation in the tablet computer and smartphone segments were given further fuel following Taiwanese manufacturer HTC’s latest financials released overnight. The phonebuilder announced a net loss of $138m during July-September, swinging from a profit of $19.7m a year earlier as sales fell off a cliff — total revenues slumped to $658m from $1.29bn previously, a situation not helped by intensifying competition.

Shares in microchip creator ARM Holdings (LSE: ARM) have shed 1.6% in Tuesday business following the news, but I believe investors shouldn’t lose their nerve. The Cambridge firm is a critical supplier to Apple, a company that continues to enjoy electric sales growth the world over, while ARM Holdings is also a major player with China’s emerging tech giants. I therefore expect chip sales at the business to continue rising, helped by diversification into other hot tech areas.

easyJet

Budget flyer easyJet (LSE: EZJ) also dipped during Tuesday’s session, albeit by a far-more-modest 0.3%. This is despite the company advising that it carried 6.61 million passengers during September, up 7.6% on an annual basis. Traveller traffic continues to pick up the pace at the Luton business — on a 12-month rolling basis, passenger numbers rose ‘just’ 6% to the close of last month.

The airline continues to expand the number of bases and routes it operates, and in September announced plans to increase the number of flights it operates between the Scottish Highlands and its London hubs between next March and June. And helped by improving economic conditions across the continent, I expect seat demand at easyJet to keep ascending in the coming years.

UK Mail Group

Parcels play UK Mail (LSE: UKM) cheered the market with its latest financial update, and the business was recently 7.8% higher from Monday’s close. The firm has seen its share price tank by more than a quarter since the start of August, prompted by a profit warning after the move to its new Coventry hub “caused a greater level of customer churn and loss of volume than anticipated.”

So today’s announcement that trading during April-September “is in line with our revised expectations” has boosted investor faith in UK Mail’s decision to relocate its facilities. On top of this, the courier announced that average daily parcel volumes had risen 8% in the period from a year earlier, thanks in no small part to the growth of e-commerce. And I believe traffic should continue rising at UK Mail as internet shopping activity ticks steadily higher.

Acacia Mining

Resources play Acacia Mining (LSE: ACA) has suffered a calamitous fall in Tuesday business and was last dealing 13.6% lower from the prior close. The gold producer announced that output of 164,000 ounces during July-September fell short of expectations, forcing the business to downscale its full-year estimates to 718,851 ounces, matching 2014’s production.

Acacia Mining had previously expected to produce between 750,000 and 800,000 ounces in the current period, and the poor result caused net cash to decline by $45m to just $100m as of the close of September. The company has responded by vowing to slash costs still further, but should fresh production problems occur — or gold prices shuttle lower again — I believe Acacia Mining could find itself in a very sticky place.

The post Should You Buy ARM Holdings plc, easyJet plc, UK Mail Group PLC And Acacia Mining PLC Following Tuesday’s News? 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 ARM Holdings and owns shares in Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Housebuilder Bellway (LSE: BWY) avoided the same fate, but a lack of reaction suggested that investors were not exactly wowed by the firm’s year-end update.

William Hill

This morning’s interim results sent William Hill shares down by 6%, after the high-street bookie reported flat revenues and a 12% fall in operating profit.

Reported earnings per share fell by 30% to 7.9p for the half year. Despite this, shareholders are to be rewarded with a 3% rise in the interim dividend, to 4.1p.

One of the main reasons for the fall in profits was an additional £44m of tax costs resulting from the introduction of the Point of Consumption Tax (POCT) and the increase to Machine Games Duty (MGD).

These costs contributed to a sharp decline in the firm’s operating margin, which fell from 3.1% last year to 2.1% during the first half of the current year.

William Hill’s falling profit margins and flat sales suggest to me that the stock is already fully valued. Trading on a 2015 forecast P/E of 16 and with a prospective yield of 3%, I think there are better buys elsewhere.

UK Mail

Shares in parcel and post operator UK Mail are down by 7.5% as I write, following a dramatic profit warning.

I’ve always thought that this was a well-run firm, but the firm’s move to a new, fully-automated hub facility near Coventry appears to have gone wrong. A larger-than-expected number of the parcels handled by UK Mail are not compatible with its new automated sorting equipment.

The firm is facing a big increase in operational costs, due to having to manually sort parcels. UK Mail must also fix its new facility to solve this problem. As a result, full-year pre-tax profits are expected to fall to £10-12m, down from £21m last year.

UK Mail also says that the financial effects of these problems could continue into the first half of the next financial year.

I like this stock, but I suspect a further profit warning could follow this one. I’d wait to see if the shares get cheaper before buying.

Bellway

The housing market is booming and interest rates are at record lows. Given this backdrop, it would be a surprise if housebuilders were not reporting record profits.

Happily for Bellway, it is. In the firm’s year-end trading update today, it announced a 13% increase in completions, a 5% increase in average selling price and a 3% increase in operating margin, which is expected to rise to 20%.

However, shareholders might want to ask if Bellway is getting too comfortable with such easy market conditions. The firm increased its spending on new land by 35% last year, to £620m. This had the effect of pushing the firm from a net cash position back into net debt.

In my view this isn’t very prudent. At the top of a housing bull market, I’d expect to see housebuilders running with surplus cash, not relying on debt.

Bellway’s prospective yield of 3.2% is lower than most of its peers and today’s update has left the shares flat. I believe there are better buys elsewhere in the housing sector.

The post Are William Hill plc, UK Mail Group PLC & Bellway plc Buys After Today’s Updates? appeared first on The Twelfth Magpie.

More reading

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• 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?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Roland Head 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.

UK Mail Group

Delivery specialist UK Mail (LSE: UKM) has lit up the FTSE in Tuesday business and was up as much as 5.3% earlier in the day. Indeed, the company has enjoyed a sterling run during the past week, after last week’s trading update showed UK Mail once again juggle record parcel volumes during the Christmas period.

The business is investing heavily in order to profit from ever-increasingly parcels traffic, underpinned by galloping e-commerce activity, and is on course to open its brand-new, state-of-the-art automated hub in May. And the timing could not come at a better time as it aims to attract customers from the now-defunct City Link.

City analysts expect UK Mail to record a meagre 1% earnings slip in the year concluding March 2015. But the courier’s bottom line is expected to snap higher from next year onwards, with advances to the tune of 8% and 9% chalked in for fiscal 2016 and 2017 respectively.

Such projections leave the company dealing on P/E multiples of 14.7 times and 13.7 times for these years, falling inside the benchmark of 15 times that marks attractive value for money. And income chasers will be encouraged by the firm’s progressive dividend policy, which throws up delicious yields of 4.5% for 2016 and 4.7% for 2017.

Vedanta Resources

Like UK Mail, natural resources giant Vedanta Resources (LSE: VED) has enjoyed a stellar performance in Tuesday business and is up 8.4% as I write, leading the FTSE higher. However, I believe that this bubbly rise is nothing more than a deadcat bounce, and expect prices to train lower again on the back of declining commodity prices — Vedanta’s share price has shed around 50%% over the past three months alone.

Despite fears of worsening oversupply in key markets, the fossil fuel and metals giant remains committed to ramping up output and plans to prioritise investment in its zinc and oil and gas divisions. On top of this Vedanta is also looking to boost capacity across its aluminium assets and is looking to get production from its iron ore and copper projects flowing higher again.

This strategy mirrors actions by the world’s other major mining and oil plays, and hardly does the chronic oversupply problem besetting natural resources markets any favours. The business is expected to record a 5% earnings decline in the year concluding March 2015, but improvements to the tune of 69% and 82% are anticipated for 2016 and 2017 correspondingly.

Still, I reckon that these forecasts are fanciful at best given the precarious state of the global economy, and that P/E multiples of 9.6 times and 7.4 times for these years are a fair reflection of the huge risks facing Vedanta rather than representing good value for money.

Enquest

And, like Vedanta, I believe that Enquest (LSE: ENQ) is also a precarious proposition for those seeking dependable earnings growth. This view is shared by patchy investor sentiment in Tuesday trading, with the company trading down around 1.7% at the time of writing.

The oil explorer continues to mirror movements in the oil price, with Brent sliding again to around $48.60 per barrel recently. Enquest is anticipated to get production at its Amla/Galia asset on stream next year, but should the commodity price continue to lag — exacerbated by persistent cost pressures — then the business may be forced to re-evaluate the economics of the project.

News today that natural resources glutton China saw growth slow to 7.4% in 2014 — the lowest rate of growth for almost a quarter of a century — did nothing to assuage these concerns. The company is expected to see earnings dip 60% in 2015, although a 179% upswing is anticipated for 2016 as group production spews forth.

These figures push the P/E multiple from 131.1 times for this year to 5.6 times for 2016. Investing in oil has always been a high-risk, high-reward game, but I believe the colossal structural problems facing the market should make investors think twice about buying the likes of Enquest.

The post Why I Would Buy UK Mail Group PLC But Sell Vedanta Resources plc And Enquest Plc appeared first on The Twelfth Magpie.

More reading

• 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?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

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.