Should You Buy Vedanta Resources plc, Carr’s Group PLC & Iofina plc Today?

Royston Wild considers whether investors should pile into Vedanta Resources plc (LON: VED), Carr’s Group PLC (LON: CARR) and Iofina plc (LON: IOF) on Monday.

| 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.

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 I’m looking at three stocks making the news in Monday business.

Still digging

Raw materials goliath Vedanta Resources (LSE: VED) was recently dealing up over 2% in start-of-week trading after releasing exceptional production numbers.

The company churned out record quantities of copper cathodes, aluminium, silver and electricity between January and March, Vedanta reaping the fruits of improved efficiency, better ore grades and production expansions across its major commodity classes.

Also, Vedanta’s iron ore division finished the quarter with a production run rate of 800,000 tonnes per month, reflecting ongoing expansion work in Goa and the resolution of previous transport issues.

Major producers like Vedanta are hiking volumes to mitigate the impact of subdued commodity prices, of course, and to put higher-cost operators out of business. But such measures are casting a huge pall over future earnings as chronic supply/demand imbalances look set to persist.

The City expects Vedanta to punch losses of 128 US cents per share in the year to March 2016. And the firm is anticipated to remain in the red until fiscal 2018 at the earliest as commodity prices look set to languish. I believe the metals and energy giant is a risk too far at the present time.

Farming faller

The market was much less receptive to Carr’s Group (LSE: CARR) in Monday business, the diversified agricultural business dealing down 4% from Friday’s close at time of writing.

The company announced that pre-tax profit slipped 0.9% during September-February, to £10.5m, the result prompted by a 9.4% revenues decline.

Worryingly, Carr’s Group said “the UK agricultural market has suffered from the depressed farm gate milk and livestock prices and we expect this to continue through 2016 and 2017.”

These issues are expected to push earnings 1% lower in the period to August 2016, according to City forecasts, although a 3% rebound is anticipated for 2017. Sure, these figures produce relatively-low P/E ratings of 11.4 times and 11.1 times, respectively. But I believe today’s worrying market outlook could see brokers take the red pen to these earnings predictions.

Pumping higher

Iodine producer Iofina (LSE: IOF) has emerged as one of Monday’s big winners, the company shooting 89% higher from the end of last week.

Iofina announced that it had produced 124.6 metric tonnes of crystalline iodine between January and March. Although down from 127.9 metric tonnes during the corresponding 2015 period, the company had six of its IOsorb plants running last year compared with five during the last quarter.

Most promisingly, Iofina reaffirmed its target of producing 250-270 metric tonnes of iodine in the first half. And while the firm has seen iodine prices for large users fall below $25 per kilo, Iofina said that it “has seen recent signs of price stabilisation across the global iodine market.”

The City expects Iofina to record further losses in 2016 before bouncing into the black next year. However, 2017’s projection leaves the firm dealing on a P/E rating of 34.6 times. I reckon such a multiple remains far too heady given the still-patchy outlook for iodine values.

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.

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.

More on Investing Articles

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

With an 8% dividend yield, I think this undervalued FTSE stock is a no-brainer buy

With an impressive yield and good track record of payments, Mark David Hartley is considering adding this promising FTSE share…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£9,500 in savings? Here’s how I’d try to turn that into £1,809 a month of passive income

Investing a relatively small amount into high-yielding stocks and reinvesting the dividends paid can generate significant passive income over time.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Dividend star Legal & General’s share price is still marked down, so should I buy more?

Legal & General’s share price looks very undervalued against its peers. But it pays an 8%+ dividend yield, and has…

Read more »

Investing Articles

Dividend shares: 1 FTSE 100 stock to consider buying for chunky shareholder income

This company’s ‘clean’ dividend record looks attractive to me and I’d consider buying some of the shares to hold long…

Read more »

Investing Articles

3 of my top FTSE 250 stocks to consider buying before April

Buying undervalued UK shares can be a great way to generate long-term wealth. Here, Royston Wild reveals a handful on…

Read more »

Ice cube tray filled with ice cubes and three loose ice cubes against dark wood.
Investing Articles

Just released: our 3 top income-focused stocks to buy before April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

Is this the best chance to buy cheap FTSE 100 shares in a generation?

I want to buy shares when they're cheap, and sell... never, just keep taking the dividends. And the FTSE 100…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

Could NatWest shares be 2024’s number one buy for passive income?

For those of us looking to earn some long-term passive income, how does NatWest's 7% dividend yield sound? It sounds…

Read more »