4 Shares For The Week Ahead: ASOS plc, ARM Holdings plc, Quantum Pharma PLC And SKY PLC

Will ASOS plc (LON:ASC), ARM Holdings plc (LON:ARM), Quantum Pharma PLC (LON:QP) and SKY PLC (LON:SKY) bring good news?

| More on:

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.

Online fashion retailer ASOS (LSE: ASC) has given investors a rocky ride, after the unfeasible growth expectations implied by its 2014 peak share price of more then £70 came tumbling down. Today the shares change hands for a little under £30 apiece, but even that represents a 142% gain since the end of 2011 while the FTSE 100 has managed just 14% in the same period.

ASOS has suffered from the global slowdown, from unfavourable global pricing, and from supply problems, but at the interim stage we heard that a record Christmas had helped — but we still saw a 14% rise in revenues translating to a 10% drop in pre-tax profit. Still, the third quarter brought a 20% rise in sales, and the full year is forecast to see only a modest EPS fall of 2%.

The results are due on Tuesday, 20 October, but on a P/E of 69 based on current forecasts, ASOS shares are still too expensive for me.

Pharma opportunity?

On the same day we’re due first-half results from Quantum Pharma (LSE: QP), which only floated on AIM in December 2014 but which as already given its shareholders a hair-raising ride. By mid-June the price had soared by 76% to 174p, but since then we’ve seen a 27% fall back to 125p — the overall gain so far stands at 28%.

Quantum describes itself as “the UK’s leading manufacturer and supplier of unlicensed medicines and hard-to-source products“, and supplies wholesalers, pharmacy chains, hospitals etc. EPS is expected to fall 24% this year, but a 56% rebound forecast for the year to January 2017 would put the shares on a P/E of only 11, so we could be looking at a nice growth possibility here.

Speaking of growth stocks, ARM Holdings (LSE: ARM) will be bringing us a Q3 update on Wednesday, 21 October, in a year that’s seen a fluctuating share price. It climbed to a peak of 1,233p in March, before falling back to today’s 972p price, despite forecast earnings growth of nearly 70% for the year to December and despite the company’s ongoing share buyback programme.

The shares are on a forward P/E of 32 this year, dropping to 28 next. And while that’s high compared to the FTSE’s average of around 14, it’s the lowest we’ve seen for ARM for some years. Does that make the shares a bargain now? Well, with growth in demand for ARM’s mobile computing chips continuing year on year, I see the shares as undervalued at today’s price.

Telly profits

Wednesday will also bring a first-quarter update from satellite telly firm SKY (LSE: SKY), and we should hopefully see early indications of a return to earnings growth this year — the past two years have brought small declines in adjusted EPS, but the City is expecting a 12% gain by June 2016. And the dividend has kept on growing, by 3% last year, which is nicely ahead of inflation.

Investors seem optimistic, with the current 1,071p share price bringing a 26% gain in the past 12 months, and it looks like there’s going to be an additional 3.3% to add to that from those dividends.

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.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended ARM Holdings and Sky. 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

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

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

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

2 FTSE income stocks investors should consider buying in April

Income stocks are a great way to build wealth. Our writer details two picks she believes investors should consider snapping…

Read more »

Investing Articles

What might the 5-year price chart tell us about BT shares?

Christopher Ruane considers what clues the long-term performance of BT shares might offer him about business performance and whether to…

Read more »