The mid-cap index has delivered a number of big winners for investors in recent years. Today I’m looking at two FTSE 250 stocks which I believe could beat the market over the next few years.

Growing order book

Ultra Electronics Holdings (LSE: ULE) specialises in electronic systems, primarily for the defence and aerospace markets. Much of its business comes from the US, where defence spending is said to be increasing. The group is also involved in providing security and cyber solutions for government customers, another rapidly growing market.

Figures published by the company today show that its order book has increased by 19% to £969.2m over the last 12 months. That’s a strong performance, in my view.

Stumbling block

The group’s first-half performance was solid if not spectacular. Exchange rates caused reported sales to fall by 4.2% to £350.5m. But excluding this, revenue rose by 1.3%.

The story of the company’s profits was a bit more complex. Underlying pre-tax profit fell by 16% to £43.6m. About 5% of this was due to exchange rates, but most of the remainder seems to have been caused by £6.1m of cost overruns. This problem was flagged up last year and is affecting a handful of contracts in the group’s Herley business, which makes ruggedized electronics for aviation use.

A turnaround buy?

The group generated an operating margin of 13.7% during the first half. Excluding the Herley problems, this figure would have been 15.4%.

Both of these are attractive figures, but I’m concerned that the company doesn’t seem to know when these profit-sapping cost overruns will come to an end.

Another potential concern is that the group is currently under investigation by the Serious Fraud Office, for suspected corruption in Algeria.

These risks shouldn’t be ignored, but earnings are expected to rise by 12% next year. Trading on 15 times earnings with a 3% yield, I suspect Ultra Electronics could be a decent turnaround buy.

This rival is growing fast

Turnaround situations always carry a certain risk. What if the problems aren’t fixed and get worse?

One company that’s already delivering powerful growth is engineering group Senior (LSE: SNR), which makes products for aerospace, defence and land transport customers. During the first half of this year, Senior’s pre-tax profit rose by 31% to £31.4m. The group’s earnings were 25% higher, at 5.9p, supporting a 7% increase in the interim dividend.

The company said that trading was “slightly ahead of expectations” but said full-year expectations were unchanged. However, like Ultra Electronics, Senior is benefiting from a growing order book.

The firm’s book-to-bill ratio was 1.2 during the half year. This means that new orders booked during the period were worth 20% more than existing orders completed during the half year. Profit margins are also expected to improve this year.

Reading the company’s commentary, I think there’s a good chance that full-year figures could be slightly better than expected. Although the shares aren’t cheap, on a 2018 forecast P/E of 19, earnings are expected to rise by 17% next year and the shares offer a well-supported dividend yield of 2.4%.

I think Senior could be worth a closer look at this level, given the group’s strong momentum.

The post Have £2,000 to invest? These FTSE 250 dividend growth stocks could help you retire early 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.

The deal is off

Ultra Electronics has been working with Sparton in a joint venture supplying the US Navy with sonobuoys (an expendable sonar system). When Sparton put itself up for sale during 2016 the takeover deal was put on the table. Yet after the unfavourable outcome of an antitrust review by the US Department of Justice (DOJ) the two firms mutually terminated the merger process.

Executive chairman Douglas Caster said he is “disappointed,” but the “ERAPSCO joint venture” will continue between Ultra and Sparton, and he expects Ultra to continue supplying the US Navy “for years to come.”  The DOJ plans to open an antitrust investigation into the ERAPSCO joint venture, but Ultra anticipates “working closely with the US Navy during a transition to independently developing, producing and selling sonobuoys.”

Things are working out differently than anticipated, which means that a net £134m raised in a July 2017 placing to fund the acquisition needs to be returned to shareholders via a share buy-back programme. The directors said this is possible because the company remains “highly cash generative with good balance sheet strength.”

That’s even though today’s figures showed that revenue declined 1.3% compared to 2016 and underlying earnings per share slipped by 13.3%. Douglas Caster said the firm “experienced delays to a number of programmes and contracts relatively late in the year.”

A strong order book

Despite difficult trading, net debt fell by 71% to £75m and order intake was almost 16% higher. The order book stood at a healthy-looking £914m at the beginning of 2018. The directors expect modest financial progress during 2018 and underpinned their optimism by pushing up the total dividend by 3.8%. At today’s 1,330p share price, the forward dividend yield for 2019 stands close to an attractive 4%.

Despite short-term challenges, the directors think the defence market cycle looks set for an upturn, so I think Ultra Electronics is worth your research time right now along with Rolls-Royce Holding (LSE: RR), which also has significant exposure to the defence market.

In January, Rolls-Royce announced plans to simplify its business by carrying out an evaluation of strategic options for its Commercial Marine operation and by reducing its five operating businesses down to three core units based around Civil Aerospace, Defence and Power Systems. Such a move suggests the firm will bear down on costs and improve efficiency, which should help directors squeeze more profits from operations. If that happens at a time when the defence market is growing, we could see the stock making progress from here.

Rolls-Royce endured several years of earnings decline recently, but City analysts following the firm expect earnings to grow around 39% during 2019, which could signal the beginning of an enduring revival in fortunes. At today’s share price around 811p, the forward dividend yield runs close to 1.9%.

The post Why I’d pair this dividend champion with Rolls-Royce Holding plc appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Ultra Electronics. 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.

UK defence stocks are down across the board today. Ultra Electronics Holdings (LSE: ULE) shares have plummeted around 20%, and other defence specialists such as Babcock International and BAE Systems are also down, falling 4.3% and 2.3% respectively. So why the share price weakness?

Profit warning

The falls across the sector this morning are primarily the result of a profit warning from Ultra Electronics.

The £1.2bn market cap company, which develops technologies for the defence, aerospace, security, cyber and energy markets, said in a trading statement that although the majority of the group’s markets had been “satisfactory,” the UK has been “difficult.” Indeed, funding pressure on the Ministry of Defence has forced it to pause, cancel or delay numerous programmes, and a number of UK orders that Ultra budgeted for 2017 have been affected.

The group now expects revenue for the full year to be around £770m vs City analysts’ forecasts of £810m. The company also stated: “the Board would currently be minded to recommend a final dividend of 35p per share.”

Furthermore, it announced that Chief Executive Rakesh Sharma will step down with immediate effect. Chairman Douglas Caster, who was Chief Executive of the company from 2005 to 2010, will assume the role of Executive Chairman until a successor is appointed.

On the positive side, the company noted that it has made “good progress” in order intakes during the period, reflecting “an improving position” in the US, the group’s largest market. The order book for delivery in 2018 at constant currencies was over 20% higher than last year, positioning the group well for entering 2018.

An overreaction?

While we can take some positives from the group’s order book, today’s trading statement is clearly not great. The UK Ministry of Defence is a key customer for Ultra, making up around 7% of revenues last year. Investors are in an extremely unforgiving mood at present, and profit warnings are generally being punished quite harshly.

Having said that, I’m wondering if the 20% share price fall is an overreaction. The group generates over 50% of its revenues from the US, including 18% from the US Department of Defence. With the US Senate recently passing a huge $700bn spending bill, that should have positive implications for Ultra Electronics.

Of course, after today’s profit warning it’s harder to accurately value the company. The group advised that underlying operating profit for the full year is expected to be approximately £120m, but gave no indication of its expected earnings per share figure. Analysts had forecast 130.7p per share, however, this figure is likely to be revised downwards now.

On the plus side, a 35p final dividend would be an increase of 4.2% on last year’s payout. A dividend increase is a positive signal from management, although there’s no guarantee the company will pay out that figure. A 35p final dividend would take the full-year payout to 49.6p, a yield of around 4% at the current share price of 1,240p. It’s worth noting that Ultra Electronics has an excellent dividend growth history, having never cut its dividend.

With that in mind, Ultra Electronics is a stock I’ll be watching quite closely going forward. I’m bullish on defence as a long-term investment theme, and the share price fall may have created a long-term opportunity. Having said that, I’m aware that profit warnings often come in threes.

The post Why Ultra Electronics Holdings plc has fallen 20% today appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in BAE Systems. The Motley Fool UK has recommended Ultra Electronics. 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.

Paysafe Group (LSE: PAYS), which assists businesses and consumers connect and transact seamlessly through its payment processing capabilities, recording a combined transactional volume of $48bn in 2016, is one such company that has recently received a recent takeover offer.

Shares in Paysafe surged in late July, as it received a conditional, all-cash takeover offer from private equity groups Blackstone and CVC Capital Partners at 590p per share. And on Friday, the board “unanimously” recommended the bid by the private equity consortium, stating that an agreement had been reached on the terms of the offer. The deal values Paysafe at £2.9bn, representing a near 60% increase on the company’s market capitalisation at the beginning of 2017.

Looking at the half-yearly report released this morning, it’s not hard to see why the private equity groups wanted to get their hands on it. Revenue for the half-year increased 11% to $538.7m and adjusted EBITDA rose 17% to $169.2m. Meanwhile, adjusted fully diluted earnings per share surged an impressive 25% to 25 cents.

However, in my opinion, it is a shame that Paysafe will be taken private. Fast-growing technology companies can generate amazing long-term returns for shareholders, but with the firm being taken private, it means one less opportunity in the sector for private investors to profit from.

Is this stock a takeover candidate?

Another area that could potentially see consolidation is the defence sector, and one stock that has been touted as a potential takeover target in the past is Ultra Electronics Holdings (LSE: ULE).

The £1.6bn market cap company develops technologies for the defence, aerospace, security, cyber, transport and energy markets, generating around 85% of its revenues from defence and security. With US President Trump planning to spend significantly on defence this year, Ultra Electronics looks well-placed to capitalise.

The company released a fairly lacklustre set of half-year results yesterday that saw revenue down 0.1% to £366.4m and underlying earnings per share up just 0.3% to 58.3p. However, it did say that 2017 will be more heavily weighted to the second half than normal.

The share price has pulled back as a result, and has now declined almost 10% since the beginning of the month. At the current price of 1,953p, the stock now trades on a forward-looking P/E ratio of 14.3, which looks reasonable value for a niche player that is forecast to generate a 5% rise in revenue this year. A forecast dividend yield of 2.5%, covered 2.7 times, also looks attractive.

Given that global political tension is unlikely to dissipate any time soon, in my view the defence sector could offer some attractive returns in coming years, and Ultra Electronics looks to offer potential from both a capital growth and dividend investing perspective.

The post Paysafe plc just accepted a takeover offer. Is this stock next? appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Ultra Electronics. 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.

Weighted to the second half

To put the results in context, chief executive Rakesh Sharma cautions that he expects 2017 to be “more heavily weighted to the second half than normal”, so I reckon we should look past this morning’s lacklustre figures where revenue and underlying earnings came in flat compared to six months ago. The directors showed their confidence in the outlook by raising the interim dividend by 2.8%.

The firm applies electronic and software technologies to create solutions and products in the defence, aerospace, security, cyber, transport and energy markets – a business that is sensitive to national defence budgets. Mr Sharma tells us that the US federal budget was not approved until May and that delay, together with the UK General Election, caused the progress of some contract awards to slip. On a brighter note, strong order intake in the final part of the period continues.

Improving order book and acquisitions

The firm’s order book increased 2.8% to around £808m compared to a year ago and also showed improvement from the £799m figure at the end of 2016, momentum that the top executive expects to continue throughout 2017. Meanwhile, the organic growth is backed up by the directors’ hunt for compelling acquisition opportunities, of which last month’s announcement of a conditional merger agreement to acquire New York Stock Exchange-listed Sparton Corporation is a recent outcome.

Prior to this acquisition, Ultra Electronics had been working in a long-standing joint venture with Sparton developing, manufacturing and supporting all US sonobuoys supplied to the US Department of Defense. The company reckons the acquisition of Sparton should enhance Ultra’s continuing relationship with the government body and increase exposure to the growing sonobuoy segment, which should lead to attractive financial returns.

But Ultra is not afraid to get rid of businesses too, and cites the disposal a business in August 2016 as causing a 2.7% decline in revenue for the most recent period. On top of that, organic revenue dropped 6.7% due to contract-award delays, but exchange rate movements more than offset these declines, boosting the overall result on revenue by 9.3% to deliver the flat figures reported today.

Steady growth

Such nipping and tucking with regard to acquisitions and divestments, and a solid-looking organic business, means City analysts following the firm expect earnings to lift 2% this year and by 6% during 2018. Today’s 1,991p share price puts the company on a forward price-to-earnings ratio just below 14 for 2018 and the forward dividend yield runs at almost 2.7%. This is not a bargain valuation but the sector seems steady and Ultra has a good record as a dividend-raiser, lifting the payment by 25% over the past five years.

I like Ultra Electronics as a potential long-term, dividend-paying hold because the share price chart is historically steady without too many nausea-inducing undulations, suggesting a durable underlying business.

The post One FTSE 250 mid-cap stock I’d buy in August appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has recommended Ultra Electronics. 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.

Fast-growing

The firm describes itself as a fast-growing discount retailer, operating from over 533 high street and out-of-town stores across the UK and 73 stores under the JA Woll brand in Germany.

And fast growing it is. As recently as 2004 the B&M sign hung above the door of just 21 stores, at which point new ownership drove forward the expansion of a brand originally established as long ago as 1978 with the first store in Blackpool. Yet the company declares that it spends “next to nothing” on advertising so that it can keep prices “as low as possible” and the expansion is driven by word of mouth.

Targeting expansion at home and abroad

During 2014, B&M came to the London stock market to “support the company’s ambitious growth plans, both in the UK and continental Europe.” And in what strikes me as something of a triumph, in 2013 the firm had picked up Sir Terry Leahy to serve as chairman. As the chief executive of Tesco, Sir Terry led the supermarket giant though it most prosperous times before the firm’s fortunes turned down recently. Such an experienced pair of hands could be just what B&M needs to help drive through its expansion programme.

At today’s 299p share price, B&M trades on a forward price-to-earnings (P/E) ratio of 16 for the year to March 2019 and the forward dividend yield runs around 2.6%. I think the firm’s valuation looks reasonable given its exciting forward prospects.

Moving up

Robust single-digit percentage increases in revenue, underlying earnings per share and dividend marked the Ultra Electronic Holdings (LSE: ULE) full-year results delivered in early March. After a years-long period of sideways trading, the shares appear to be moving up to reflect the firm’s improving prospects.

Demand seems to be growing for the company’s offering, which involves applying electronic and software technologies to create solutions and products in the defence, aerospace, security, cyber, transport and energy markets.  

Defence spending on the rise

The firm is sensitive to national defence budgets, but chief executive Rakesh Sharma points to market analysis suggesting the global defence sector is returning to growth. Increasing tensions around the world and a new administration in the US appear to be driving the change and I reckon Ultra Electronics looks poised to benefit and trade well as defence spending beefs up around the world.

At today’s 2,115p share price, the company trades with a forward P/E ratio of just over 14 for 2018 and the forward dividend yield runs at 2.5 %. City analysts following the company expect earnings to lift 3% during 2017 and 7% in 2018, and to cover the dividend payment around  2.8 times. I think that valuation looks undemanding for a firm that seems to be gaining momentum ahead of a gathering tailwind.

The post 2 attractive growth and dividend stars for your ISA appeared first on The Twelfth Magpie.

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Kevin Godbold 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.

Soaring higher

Defence play Ultra Electronics (LSE: ULE) soothed investor nerves in Friday trading after announcing a solid uptick in client activity.

While trading has been in line with management expectations during the quarter, the London business advised that “order intake for quarter one has been strong.” The order book has swelled to £833.5m as of the start of April, Ultra Electronics advised, up from £753.8m at the beginning of 2016.

This is great news considering that £100m worth of orders at Ultra Electronics had slipped into this year and beyond — broker Edison notes that “the first quarter improvement would tend to suggest that at least some of these have been recovered alongside significant elements of new intake.”

Indeed, the Greenford firm has also inked lucrative contracts with the Royal Navy and fellow defence giant Raytheon during the past couple of weeks alone.

The City expects earnings at Ultra Electronics to tick 5% higher in 2016, and a further 6% rise is predicted for next year. I believe that subsequent P/E ratings of 13.7 times and 12.9 times represent a decent level to latch onto the firm as market conditions seem to be improving.

Failing to ignite

Boiler builder Flowgroup (LSE: FLOW) has not fared as well in end-of-week trading, however, the stock recently dealing 12% lower from Thursday’s close. The business announced today that revenues galloped 21% higher during 2015, to £40.4m. But this could not prevent operating losses widening to £17.1m from £10m in 2014.

Flowgroup said that the adverse result reflected “increased investment in staffing levels and infrastructure in preparation for further growth across the business.” However, the engineer was also hampered by a delayed launch for its Flow boiler following a European Court of Justice ruling on energy-saving products, a move that could see VAT on the device increased to 20% from 5% from 2017.

Flowgroup completed first commercial installations of the product in April at the 5% rate, and believes that boiler sales and installations should continue to benefit from a reduced tax rate.

But of course this is not a certainty, and Flowgroup could see uptake of its cutting-edge tech slump should VAT charges soar. Such a scenario could see losses extended beyond 2017, as City forecasts currently suggest.

Driller dips

Shares in fossil fuel play Eland Oil & Gas (LSE: ELA) have continued to trade below recent five-month peaks in Friday’s session.

The company has announced plans to raise $15m through a book-build placing to accelerate the development of its assets in Nigeria. As well as funding the re-entry, completion and production of its Gbetiokun-1 well, Eland will also use the funds to build a supplementary export route for production. The remainder will be used for working capital purposes, Eland advised.

Positive testing results at the field have helped propel Eland’s share price in recent weeks, and the business hopes to produce 7,800 barrels of oil per day when production commences. Maiden oil is pencilled in for the second half of 2016.

The City expects Eland to bounce back into the black this year, and record earnings of 13 US cents per share. This projection leaves the firm dealing on a P/E rating of 3.1 times.

For some, this ultra-low reading may make the business an irresistible value pick. But I believe the uncertainty related to oil drilling — not to mention the wider supply imbalance hanging over the oil price — still makes Eland a risk too far at the present time.

The post Should you buy Ultra Electronics Holdings plc, Flowgroup plc & Eland Oil & Gas plc today? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• 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
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

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.

AstraZeneca

Thanks to the enduring problem of patent expirations, the bottom-line at AstraZeneca (LSE: AZN) is not expected to enjoy a sudden upsurge any time soon. With blockbusting labels like Crestor and Nexium falling prey to rising competition from generic substitutes, the City expects revenues to fall again in 2015 and 2016 respectively, pushing earnings fractionally lower this year and by 4% in the following period.

On top of this, AstraZeneca is also having to splash out vast sums to resuscitate its product pipeline and offset these troubles — total R&D spend during January-June rose by almost a quarter, to $2.64bn. Still, I believe that long-term investors should be encouraged by the progress the Cambridge firm is making to deliver the next generation of sales drivers.

AstraZeneca currently has 15 new molecular entities (or NMEs) under regulatory review or at the ‘pivotal study’ stage, with several in the critical growth areas of Respiratory and Oncology. And the business expects 8-10 NMEs and product extensions to receive regulatory approval this year and next. With the pharma play also pulling up trees in emerging markets, and embarking on a huge lab-building programme across the US and Europe, I believe a P/E ratio of 15.9 times for 2015 represents a great point to get in on AstraZeneca’s excellent long-term growth prospects.

Halfords Group

Market appetite for bike and car services giant Halfords (LSE: HFD) has fallen off a cliff during the past couple of months. The business is now dealing at a 21% discount to levels seen at the start of August, a combination of heavy profit-booking after recent heady gains and a ghoulish trading statement keeping potential buyers away.

Halfords announced that underlying cycle sales slumped 11% in the eight weeks to the close of August, a result that pushed total like-for-like sales 1.3% lower. However, this revenues blip should be considered in the wider context of stunning bike sales in the past couple of years, while the retailer’s position as the premier destination for automotive parts and services was once again highlighted — underlying revenues at its Car Maintenance and Car Enhancement divisions advanced 7.3% and 4.7% respectively in the period.

The City expects Halfords to record a 1% earnings decline in the 12 months to March 2016, resulting in a very decent P/E multiple of 13.5 times. But thanks to the huge investment being made in its brands, not to mention the impact of store refurbishments and improvements to its online presence, the retailer is expected to enjoy a 7% bottom-line bump in 2017, pushing the ratio to an even-better 12.6 times.

Ultra Electronics Holdings

Like Halfords, defence play Ultra Electronics (LSE: ULE) has seen its share price erode more recently and the business has conceded 9% during the past three weeks alone. However, I believe this represents a solid entry point as improving economic conditions from key Western customers drive demand for its high-tech gear.

The Greenford firm saw revenues slide 2.7% during January-June, to £331.7m, caused predominantly by the termination of a contract to update IT systems at Oman Airport. Still, Ultra Electronics expects performance to pick up during the second half of 2015, and I believe the company’s expertise in hot growth areas like cyber security should pay off handsomely looking even further down the line.

On top of this, Ultra Electronics also has an appetite to boost growth through shrewd acquisitions — just last month the firm snapped up the electronics division of Kratos Defense & Security Solutions for $265m, giving its Communications & Security arm further fuel. Against this backcloth the number crunchers expect Ultra Electronics to bounce from a 3% earnings decline this year and record an 8% increase in 2016, figures that create handsome P/E ratios of 13.9 times and 12.7 times correspondingly.

The post Ignore Short-Term Growth Troubles And Buy AstraZeneca plc, Halfords Group plc & Ultra Electronics Holdings plc! appeared first on The Twelfth Magpie.

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

Today, half-year results are out for test & inspection service provider Intertek Group (LSE: ITRK) defence industry supplier Ultra Electronic Holdings (LSE: ULE) and financial software company Fidessa Group (LSE: FDSA).

Bouncing back

Fears about a weak oil price environment dragging on Intertek Group’s profitability seem over-blown. The shares were weak during 2014, but look perky this morning, perhaps indicating the path of least resistance may now be ‘up’.

Compared to a year ago, the firm’s fist half saw revenue rise 3.5%, adjusted cash from operations grow 14.4%, adjusted earnings per share up 6.7%, which all helped a 6.3% hike in the dividend.

Such figures don’t come from a firm on its knees. The directors reckon the global testing, inspection and certification market will continue to benefit from exciting growth prospects driven by what they describe as global trade flows, global demand for energy, expanding regulations, more complex supply chains, technological innovation and increased demand for higher quality and more sustainable products.

Those buying near the bottom of the 35% or so retreat in the share price since the heady peaks reached during 2013 look vindicated by these results. Yet it’s not too late to run your analysis on this quality business — perhaps after waiting for today’s results-induced spike to subside.

Pedestrian

It’s a different story from Ultra Electonics Holdings where most financial performance figures are a bit down. The firm’s chief executive reckons the results reflect a generally lower level of activity across most parts of the company’s government related business, with the effect increased by a pause in normal business due to the UK and US election cycles.

The firm expects better results in the second half of its trading year according to the traditional weighting of its income. However, City analysts following Ultra Electronics expect a 2% earnings contraction for 2015 overall.

Defence suppliers are often touted as ‘defensive’ investments, because of the consistent nature of cash flow. In fairness, the directors did hike the payout by 4.5% with these interims. Yet, at today’s share price of 1747p, Ultra Electronics yields just 2.8% for 2016 and the firm’s five-year share price record is pedestrian. There’s nothing here to excite me, so I’m avoiding the company’s shares.

Highly rated

With revenue rising 3% and profits falling 3%, Fidessa Group’s share price drop this morning seems like an adjustment of expectations — the shares had risen a fair bit leading up to today’s interims.

Fidessa’s strong niche serving the financial industry has seen the firm grow steadily and the share price rather more recklessly. Today’s forward price-to-earnings rating around 25 looks rich set against City analysts’ expectations of an 8% uplift in earnings during 2016. So, when investor expectations are high, any wobble on earnings growth can cause volatility in the firm’s share price, as we are seeing today.

The chief executive reckons the firm’s customer markets are starting to enter a new phase of recovery as regulatory and structural changes begin to take effect. More regulatory change results in more opportunities for Fidessa and a strengthening pipeline of business. However, he offers a warning that competition within the industry is increasing, which could lead to further closures and consolidations. There could be stronger headwinds during 2016.

The post Is It Time To Invest In Intertek Group plc, Ultra Electronics Holdings plc And Fidessa Group? appeared first on The Twelfth Magpie.

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