Of course, it’s not the only FTSE 350 share which may deliver impressive income investing returns. Reporting on Thursday was a FTSE 250 stock which could generate improving dividend growth over the coming years.

Improving outlook

The stock in question is international defence, security, transport and energy business Ultra Electronics (LSE: ULE). It released a pre-close trading statement which showed that its performance in the year has been in line with expectations. It has experienced strong order inflow and remains focused on execution and delivery as it continues to win new business.

It is experiencing increased working capital requirements due to a higher order book, as well as underlying revenue growth and a constrained supply chain. However, it remains well-placed to capitalise on the growing US defence budget, and this could act as a catalyst on its future financial prospects.

With Ultra Electronics due to post a rise in earnings of 16% in the next financial year, the company appears to have a bright future. It has a dividend yield of 3.9% and since shareholder payouts are due to be covered 2.4 times by profit in 2019, there appears to be significant scope for further dividend growth over the medium term.

Improving prospects

The dividend growth rate of GlaxoSmithKline may also improve in future. It has spent the last few years seeking to boost its financial strength and increase its dividend coverage ratio. As a result, dividends have only been maintained, which means that the stock now has a dividend coverage ratio of around 1.4. This suggests that they are highly sustainable at their current level.

Looking ahead, the company is set to become increasingly focused on its pharmaceutical business. It recently announced plans to sell a number of its consumer healthcare brands, while it has also agreed to purchase oncology-focused Tesaro. This could boost its long-term growth prospects and may lead to a business that is better able to direct capital towards its most profitable use.

Since GlaxoSmithKline trades on a price-to-earnings (P/E) ratio of 13.2, it seems to offer good value for money at the present time. With it having exposure to a variety of regions around the world and being a company that may offer defensive credentials, it may be able to outperform a volatile FTSE 100 over the near term. In the long run, a refreshed strategy under its current CEO could reposition the company for stronger growth, which could make it a worthwhile dividend share in my opinion.

The post Why the GSK share price is a FTSE 100 dividend growth opportunity I’d buy today appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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.

However, the FTSE 250 continues to offer a number of opportunities to generate a high income alongside strong capital growth prospects. Here are two prime examples which could be worth buying today.

Upbeat performance

Reporting on Friday was defence, security, transport and energy company Ultra Electronics (LSE: ULE). The company released a trading update which showed that conditions in its markets have remained as expected, with it anticipating modest progress in underlying revenue and operating profit for the full year. It expects a second-half weighting to its financial performance, with it investing in increased R&D and capital expenditure.

The company was able to secure a higher volume of orders in the first quarter of the year than in recent years. This resulted in a stronger order book, with it standing at £933m at the end of March versus £914m at the start of the year.

A growing order book suggests that Ultra Electronics could deliver improving financial performance. The company is expected to post a rise in its bottom line of 9% in the next financial year, which puts it on a price-to-earnings growth (PEG) ratio of just 1.4. Alongside a dividend yield of 3.6% which is covered 2.2 times by profit, this suggests that the company has high total return potential in the long run.

Recovery potential

Also offering a potent mix of capital growth and dividend potential is consumer goods company PZ Cussons (LSE: PZC). The stock has experienced a challenging period, with its performance in key markets being less impressive than had been anticipated.

However, the company now appears to be on the cusp of a successful comeback. It is expected to post a rise in its bottom line of 11% next year, followed by 10% in the following financial year. This puts it on a PEG ratio of just 1.6, which is relatively cheap for a stock that has exposure to a number of markets via a wide range of brands.

Since PZ Cussons is expected to record improved profitability, its dividend growth rate could be relatively impressive. The company is due to increase its shareholder payouts by over 6% per annum during the next two years. This means it has a forward yield of 3.8% from a dividend that is due to be covered 1.9 times by profit in the next financial year.

Certainly, a fall in profit in the current financial year could cause investor sentiment to come under a degree of pressure. But with a solid total return outlook, the stock seems to offer investment appeal.

The post 2 FTSE 250 dividend growth stocks I’d buy with £2,000 today 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 owns shares of PZ Cussons. 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.

Management reported strong order intake during the fourth quarter and said that 62% of 2018 revenue has already been secured, compared to 56% at the same point last year. The year-end order book stood at £900m, but executive chairman Douglas Caster said that the true figure could be higher, as it excluded sales from ongoing open-ended contracts in the aerospace and US defence sectors.

Mr Caster confirmed that cash generation has remained strong and reiterated the board’s plan to pay a final dividend of 35p per share for 2017.

All in all, it was a good update — but why have the shares rocketed? To understand this you need to rewind two months to November 13, when Ultra issued a profit warning. Lower UK defence spending had resulted in the MoD “pausing, cancelling or delaying numerous programmes”. The firm’s shares fell by about 20% in one day.

A brighter outlook

What’s interesting about today’s statement is that guidance for the current year is unchanged. Total revenue is expected to fall by 2% to £770m, while underlying operating profit is expected to drop 8.5% to £120m. What’s changed is the outlook, which now appears more positive.

So are the shares a buy? I’m tempted to say yes. Ultra Electronics is still trading around 15%-20% below the levels seen before November’s sell-off.  That leaves the stock on a forecast P/E of 12.5, with a prospective yield of about 3.4%.

Given the group’s strong cash generation and more stable outlook, I think this is cheap enough to provide an attractive entry point for investors, even if growth does remains slow.

Another defence opportunity

Ultra Electronics isn’t the only buying opportunity I see in the defence sector. Another stock that’s on my watch list is engineering services group Babcock International Group (LSE: BAB).

The firm’s shares have been hit by the wide-ranging sell-off seen across the outsourcing sector. Fears of UK defence spending cuts have also hit the stock. But so far Babcock appears to have avoided the kind of problems faced by outsourcing rivals. Nor has it been hit by spending cuts.

Indeed, in November’s interim results, chief executive Archie Bethel commented on “the increasing number and value of our opportunities both in the UK and internationally.”

The group’s H1 results certainly appeared positive. Underlying revenue rose by 5.9% to £2,638.9m, while underlying pre-tax profit climbed 4.9% to £239.5m. Although the order book fell from £20bn to £18.5bn, the company reported an increased bid pipeline of £12.2bn, up from £10.8bn one year earlier.

In my view, Babcock has several advantages over other outsourcing firms. I’d expect its specialist focus on skilled defence and engineering work to make it harder to replace than — for example — a security or facilities management contractor.

The group’s specialist skills also appear to allow for stronger pricing. Its 9% operating margin is significantly higher than those of peers such as G4S or Serco.

Given these strengths, I think the stock’s 2017 forecast P/E of 8.6 and expected yield of 4.1% are probably cheap enough to deserve a ‘buy’ rating.

The post 2 unloved dividend stocks you might regret not buying 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 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.

As such, stocks such as water services company Pennon (LSE: PNN) could be worth a closer look. It has a bright dividend future, but isn’t the only stock which could deliver rising shareholder payouts in the long run.

Improving outlook

Pennon continues to offer a potent outlook of defensive dividend growth. The company’s business model is highly reliable and with lower positive correlation to the wider economy than many of its index peers, it could prove popular among investors should the outlook for the UK economy deteriorate. In such a scenario, investors may seek a ‘flight to safety’ which could include defensive assets such as those in the water services sector.

However, the company is more than just a defensive share. It offers strong dividend growth potential, too. For example, shareholder payouts are expected to rise by 7.2% next year as the company’s profitability is forecast to increase at a double-digit rate. Despite this, the company’s dividends are still due to be covered 1.3 times by profit. This suggests they are highly sustainable and could continue to rise at an inflation-beating rate in the long run.

With Pennon trading on a price-to-earnings (P/E) ratio of 16.6, it appears to have value appeal. Therefore, it could deliver high total returns in the long run following its 12% share price fall in the last year.

Low valuation

Also offering high dividend growth potential is electronic and software specialist Ultra Electronics (LSE: ULE). It reported news of a contract win on Wednesday, with the company being awarded a $16.2m modification to a previously awarded cost-plus-fixed-fee contract by the US Department of the Navy.

Under the terms of the contract, Ultra Electronics will continue to work with the US Department of the Navy to design, develop, integrate and install a variety of cyber-security systems for critical infrastructure control and monitoring. The solutions provide cyber proofing of a number of industrial control systems and electronic security systems in mission critical environments.

Looking ahead, Ultra Electronics is expected to increase its dividend payments by 5% per annum over the next two years. This puts it on a forward dividend yield of 2.9%. With dividends due to be covered 2.7 times by profit next year, there appears to be significant scope for further increases in shareholder payouts. With a price-to-earnings growth (PEG) ratio of just 1.6, the stock looks set to deliver a potent mix of high capital growth and income returns in the long run.

The post Pennon Group plc isn’t the only dividend growth star that could make you rich appeared first on The Twelfth Magpie.

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Peter Stephens owns shares in Pennon. The Motley Fool UK has recommended Pennon Group and 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.

Military prowess

Investors will no doubt be looking to FTSE 100 giants such as BAE Systems or perhaps even aircraft engine-maker Rolls-Royce to get in on the action, with the hope of profiting from the somewhat unconventional new president’s lust for military prowess. But I believe there could be even better options for investors wanting to cash-in on the defence spending spree.

Ultra Electronics (LSE: ULE) specialises in applying highly-advanced electronic and software technologies to provide solutions and products to the defence & aerospace, security & cyber, transport, and energy markets. The Middlesex-based group has world-leading positions in many of its specialist capabilities and, as an independent, non-threatening partner, is able to support all of the main prime contractors in its sectors.

Mission critical

As a result of such positioning, the firm’s systems, equipment and services are often mission or safety-critical to the successful operation of the platform to which they contribute. This mission-criticality secures the company’s positions for the long term, which in turn has helped to underpin its strong financial performance over the years.

The FTSE 250-listed group has an excellent track record, achieving growth in underlying earnings in all but one of the last 15 years. With analysts forecasting continued steady growth for the foreseeable future, I see no reason why the share price shouldn’t continue on its upward curve for many years to come. The relatively modest valuation of 15.5 times earnings also means it could be a good time to buy.

Organic sales growth

Another London-listed firm that could benefit from the new US administration is GKN (LSE: GKN). The Redditch-based global engineering group serves both the aerospace and automotive markets, with the former hoping to profit from increased military spending over the coming years.

In its latest trading update, the FTSE 100 group reported good organic sales growth during the first quarter of its financial year as it continued to benefit from favourable currency translation, with the automotive market performing better than expected, and growth in aerospace being slightly slower than previously anticipated.

Attractive valuation

The group’s trading margin was ahead of last year primarily due to an increase in its Driveline division, although it and the Powder Metallurgy division are seeing an impact from higher raw material costs. Meanwhile the Aerospace division saw modest organic growth during the quarter.

GKN’s share price has performed well over the past year, gaining 27% in just 12 months, but I still see further upside over the longer term, with rising earnings leaving the shares trading on a very attractive P/E rating of just 10.

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

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK owns shares of GKN. 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 company’s shares have already risen by 34% year-to-date and with Microgen now trading on a price-to-earnings growth (PEG) ratio of 2.2, it may be prudent to await a more attractive share price before piling in.

Good time to buy?

Also reporting today was Conviviality (LSE: CVR), with the convenience store chain’s share price rising by 10% following an upbeat set of full-year results. They show that the Bargain Booze operator has increased sales by 137%, with adjusted pre-tax profit rising by 124%. Key to this was a new organisational structure, while Conviviality’s integration plan is ahead of expectations for both Matthew Clark and Bibendum PLB.

Looking ahead, Conviviality is expected to continue its upbeat growth figures. Its bottom line is due to rise by 39% this year and by a further 15% next year, which puts it on a PEG ratio of 0.5 and indicates that now is a good time to buy it.

Contract win

Meanwhile, today’s contract win at Ultra Electronics (LSE: ULE) shows that the company is continuing to move in the right direction. The defence and aerospace business has been awarded a firm one-year contract valued at just over $4m from the US Navy for the continuing production of the ADC MK2 Countermeasure. Options to extend the contract for a further four years could increase the initial value to just under $34m.

Despite this positive news, Ultra Electronics is expected to increase its earnings by just 5% this year and by a further 6% next year. This is rather low given the company’s price-to-earnings (P/E) ratio of 13.5, which indicates that now may not be a perfect time to buy it.

Could do better?

Also releasing news today was Finsbury Food (LSE: FIF), with the bakery company reporting that strong trading has continued in the second half of the year. It’s therefore confident of delivering profits in line with market expectations, which were upgraded following the strong first half of the year.

Finsbury Food believes it’s well-placed to cope with any impact from Brexit due to it being a well-diversified and strong multi-channel business. But with earnings growth of just 4% pencilled-in for the current year and Finsbury having a P/E ratio of 12.6, there may be better value options available elsewhere.

Seeing (almost) double

Meanwhile, Seeing Machines (LSE: SEE) has stated today that it expects to report figures for the year to 30 June 2016 that are in line with market expectations. In terms of sales, Seeing Machines expects to report a figure of A$33.6m, which may not be quite double but is 77% up on the previous year’s total and shows that its business is moving from strength to strength.

Looking ahead, the company is forecast to remain lossmaking next year. Although it has a bright long-term future and could turn around its 26% fall in value since the turn of the year, there may be better options elsewhere in the small-cap space.

The post Are these 5 stocks ‘buys’ after today’s news? 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.

Shares in Gulf Keystone Petroleum (LE: GKP) have been given a boost today, with the northern Iraq-focused oil producer rising by as much as 7%. This was caused by the announcement that Gulf Keystone has received a payment of $8m from the Kurdistan Regional Government (KRG) for oil exports in May. This represents partial payment of the invoiced amount, with the balance expected to be paid shortly.

Clearly, this is encouraging news for Gulf Keystone and with the price of oil having soared from a low of $28 per barrel earlier this year to as much as $50 per barrel, its long term outlook appears to be significantly brighter than it was a few months ago. However, this does not appear to be reflected in Gulf Keystone’s share price performance, with the company’s shares having fallen by 70% since the turn of the year.

While Gulf Keystone has a sound asset base and is performing well despite the geopolitical risks which it faces, there may be better options elsewhere within the oil and gas industry in my view. That’s because there remain question marks about the company’s financial standing and the fact that its locality is politically unstable.

A bright future

Also releasing news today was contract-for difference (CFD) specialist Plus500 (LSE: PLUS), which released an update on the potential impact on its business from Brexit. Clearly, in the short run, high volatility tends to be good news for spread betting and CFD providers, due to it encouraging greater interest in such products among investors. And with Plus500 recording record signups and new customers on the day following the referendum, it seems to have been a good thing for the business thus far.

Looking further ahead, Plus500 states in today’s update that the UK represented 15% of 2015 revenue, with the company having a diverse international customer base. And with Plus500 forecast to increase its bottom line by 20% this year and by a further 7% next year, it seems to have a bright future in my view. Furthermore, with volatility likely to remain high and Plus500 having a price-to-earnings growth (PEG) ratio of 1.1, I think that it offers a relatively appealing risk/reward ratio.

Growing bottom line

Meanwhile, the international defence, security, transport and energy group Ultra Electronics (LSE: ULE) also released an update today. It stated that it has experienced similar market conditions to those discussed in its February update. As such, trading has been in-line with expectations and it is on-track to meet full-year guidance. Furthermore, with order intake in 2016 being positive, Ultra Electronics has experienced an increase in order book value over the 2015 year-end position.

Looking ahead, Ultra Electronics is expected to grow its bottom line by 5% this year and by a further 6% next year. With its shares trading on a price-to-earnings (P/E) ratio of just 12.6, they seem to offer good value for money for long term investors in my opinion.

The post Are Gulf Keystone Petroleum Limited, Plus500 Ltd and Ultra Electronics Holdings plc ‘buys’ or ‘sells’ following today’s updates? 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.

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.

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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.

Of course, not all companies within the sector are themselves stable. For example, defence company Chemring (LSE: CHG) is down by over 4% today and this takes its total fall for 2015 to 21%. The key reason for this is disappointing financial performance, with Chemring recently announcing a £90m rights issue (which is expected to take place in the first quarter of 2016) as it seeks to shore up its financial position.

Encouragingly, Chemring released a post-close update last week which stated that its expectations for the company’s trading performance for the year to the end of October 2015 remain in-line with previous expectations. However, no revenue from the 40mm ammunition contract to the Middle East has been recognised in the 2015 financial year, although export approvals have now been granted and revenues are expected to commence once the cash advance payment has been received.

Looking ahead, Chemring is expected to return to bottom line growth next year, with its earnings forecast to rise by 26%. This puts it on a price to earnings growth (PEG) ratio of just 0.5, which indicates that its shares offer good value for money. As such, and while further volatility is highly likely, Chemring could prove to be a sound long term buy.

Meanwhile, diversified software and electronics company Ultra Electronics (LSE: ULE) is expected to deliver a fall in its bottom line in the current financial year. Its earnings are due to fall by 1% following last year’s 3% decline as it finds trading tough and highly uncertain. In fact, it recently reported that the US Defence department’s budget has only recently been resolved and that, as such, 2015 has been a very difficult year.

Looking ahead, Ultra Electronics is due to meet its full-year expectations and, with significant cost-cutting on the horizon, is forecast to post a rise in its earnings of 8% next year. While positive, the market appears to have priced in a turnaround in profitability and, with Ultra Electronics trading on a price to earnings (P/E) ratio of 16.7, it may be prudent to wait for a keener share price before piling in.

Similarly, Avon Rubber (LSE: AVON) is due to report a fall in earnings per share of 2% in the current year and, with its shares trading on a P/E ratio of 19.5, they appear to be fully valued.

Of course, Avon Rubber has enjoyed a highly successful period, with its bottom line rising at an annualised rate of 21% during the last five years as strategic decisions to invest in innovative new products and technologies while expanding into international markets have begun to pay off. And, while the company’s long term prospects remain bright, it may be prudent to wait for a share price dip – especially since Avon Rubber’s shares have already risen by 39% this year. With them yielding just 0.9%, there appears to be a lack of major total return potential for 2016.

The post Are Chemring Group plc, Ultra Electronics Holdings plc & Avon Rubber plc Top Picks For 2016? appeared first on The Twelfth Magpie.

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• Is there any value left in Lloyds shares now they’re over £1?
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• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

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.

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.