Is Bioquell plc The Perfect Partner For Shire PLC And BTG plc In Your Portfolio?

Should you buy Bioquell plc (LON: BQE) alongside Shire PLC (LON: SHP) and BTG plc (LON: BTG)?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in decontamination specialist, Bioquell (LSE: BQE), have surged by as much as 36% today after the company announced the sale of its specialist testing subsidiary, TRaC, for £44.5m in cash. The company plans to return almost the entire amount to shareholders following the sale of the unit to Element Materials Technology Group, with Bioquell set to focus solely on biological contamination control moving forward.

The deal appears to be a good one for investors in Bioquell, since it works out at 105p per share. And, when you consider that Bioquell trades at a share price of 110p even after the announcement of the deal, it is clear that it remains a relatively appealing investment at the present time. In fact, that’s even more so since it will now be a simpler business, which should allow it to direct resources to what it feels will be a more rewarding space.

Looking Ahead

Of course, Bioquell was a relatively appealing business before today’s announcement. That’s because it has an excellent track record of profitability, with its bottom line having been in the black in each of the last four years and, looking ahead, it has a very bright future. For example, Bioquell is expected to deliver earnings growth of 45% in the current year, followed by 25% in 2016.

Despite this, Bioquell continues to trade on a very low rating with, for example, it having a price to earnings (P/E) ratio of just 16.2. This equates to a price to earnings growth (PEG) ratio of just 0.5, which indicates that Bioquell’s share price could have much further to go over the medium to long term.

Sector Peers

Of course, there are a number of other health care stocks that also offer excellent future potential. For example, Shire (LSE: SHP) (NASDAQOTH: SHPG.US) is forecast to double its sales by 2020 which, if met, would be a truly stunning result at a time when many of its pharmaceutical peers are struggling to even tread water. And, with Shire trading on a PEG ratio of 1.1, it still seems to offer excellent value for money.

Meanwhile, BTG (LSE: BTG) also offers excellent growth potential at a very enticing price. Its bottom line is forecast to rise by 27% next year and by a further 51% in the following year which, when combined with a P/E ratio of 36.6, equates to a PEG ratio of only 0.5. As such, it appears to be worth buying at the present time – even though its shares have already risen by 37% in the last year.

Vast Opportunity

So, with Bioquell, Shire and BTG all having excellent growth potential, they appear to be well worth buying at the present time. Certainly, they may be more volatile than many of their UK-listed peers but, for long term investors, they could prove to be very rewarding investments.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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

More on Investing Articles

Investing Articles

1 FTSE dividend stock I’d put 100% of my money into for passive income!

If I could invest in just one stock to generate a regular passive income stream, I'd choose this FTSE 100…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Forecasts are down, but I see a bright future for FTSE 100 dividend stocks

Cash forecasts for UK dividend stocks are falling... time to panic! Actually, no. I reckon the future has never looked…

Read more »

Young female analyst working at her desk in the office
Investing Articles

Down 13% in April, AIM stock YouGov now looks like a top-notch bargain

YouGov is an AIM stock that has fallen into potential bargain territory. Its vast quantity of data sets it up…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

Beating the S&P 500? I’d buy this FTSE 250 stock for my Stocks and Shares ISA

Beating the S&P 500's tricky, but Paul Summers is optimistic on this FTSE 250 stock's ability to deliver based on…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

2 spectacular passive income stocks I’d feel confident going all in on

While it's true that diversification is key when it comes to safe and reliable investing, these two passive income stocks…

Read more »

Investing Articles

The easyJet share price is taking off. I think it could soar!

The easyJet share price is having a very good day. Paul Summers takes a look at the latest trading update…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

9 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

As the Rentokil share price dips on Q1 news, I ask if it’s time to buy

The Rentokil Initial share price has disappointed investors in the past 12 months. Could this be the year we get…

Read more »