Should You Buy J Sainsbury plc, Tungsten Corp PLC And RWS Holdings plc After Recent News Flow?

Do these 3 shares offer appealing risk/reward ratios? J Sainsbury plc (LON: SBRY), Tungsten Corp PLC (LON: TUNG) and RWS Holdings plc (LON: RWS).

| 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.

Today’s AGM statement from intellectual property support services company RWS (LSE: RWS) is very bullish and has caused its share price to rise by over 15%. The company has performed significantly ahead of its own expectations during the first quarter of the year. It’s been an excellent period for the fully-integrated patent translation and filing division, including Inovia and a strong two months’ contribution from CTi.

Furthermore, RWS is benefitting from positive currency translation and expects to consolidate its market-leading positions within its chosen sectors. As such, it seems likely that forecasts for growth in earnings of 17% in the current year will be increased and this makes RWS’s price-to-earnings growth (PEG) ratio of 1.3 appear to be extremely good value.

That’s especially the case when you consider that RWS enjoys significant barriers to entry and a relatively wide economic moat, thereby providing relatively consistent financial performance. As such, it seems to be a strong long-term buy.

Wait and see

Also reporting today is Tungsten (LSE: TUNG), with the electronic invoicing and analytics company stating that trading in the third quarter was in line with market expectations. Revenues for the full year to 30 April 2016 are expected to be broadly in line with previous guidance, while Tungsten continues to anticipate an EBITDA loss for the year of no more than £15m (excluding one-off items).  Furthermore, Tungsten believes it’s on track to break even on an EBITDA basis by the end of the 2017 financial year, which could be viewed as a positive event by the market.

Despite this, Tungsten’s share price has fallen by as much as 10% today following the release, although it’s still up by a whopping 61% since the turn of the year. While it’s tempting to buy now due to the improved investor sentiment of recent months and the expected improvement in the company’s financial performance, it could be prudent to wait for confirmation of profitability before buying a slice of Tungsten.

Bright future?

Meanwhile, Sainsbury’s (LSE: SBRY) has also been in the news of late regarding its bid for Home Retail. The inclusion of Argos within the Sainsbury’s business seems to be a logical step, since it should create synergies and boost sales at both companies due to the potential for cross-selling opportunities. In addition, it may help to diversify the Sainsbury’s brand away from food retailing and clothing.

Looking ahead, Sainsbury’s is likely to benefit from an improving UK consumer outlook. With inflation being low and wage growth on the up, disposable incomes are rising in real terms and this could help to push some customers back towards mid-market operators such as Sainsbury’s and away from no-frills supermarkets such as Lidl and Aldi. And with Sainsbury’s trading on a price-to-earnings (P/E) ratio of just 11.3, it appears to offer good value for money given its bright long-term future.

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 owns shares of RWS and Sainsbury (J). 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

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 »