Today’s half-year results from Imperial Brands (LSE: IMB) show that the company is making excellent progress. Tobacco net revenue increased by 16.8%, while adjusted operating profit rose by 19.5%. This has allowed the company to increase dividends per share by 10% and with its US performance in particular being very strong, it seems to be well-positioned to deliver share price growth over the medium-to-long term.

Clearly, the tobacco industry is highly concentrated, with a small number of large companies operating on a global scale. And despite its size, Imperial Brands could be a takeover target for one of its peers, since it owns multiple high quality brands and may operate in different regions to a sector peer.

With Imperial Brands trading on a price-to-earnings (P/E) ratio of 15.6, it seems to offer excellent value for money. That’s because its earnings are stable, it has bright growth prospects and with a large degree of diversity as well as brand loyalty, it could become a realistic takeover target in the coming years.

Margins down but share price up

Also reporting today was pub chain J D Wetherspoon (LSE: JDW). Its sales for the quarter to 24 April increased by 3.8% on a like-for-like basis, which is in line with expectations and in keeping with the performance of the business in the previous quarter. And while operating margins have fallen to 6.4% from 7.5% in the same quarter of the previous year, this is due to an increase in pay for the company’s staff that the market was already anticipating. As such, J D Wetherspoon’s share price is up 1% today.

With J D Wetherspoon trading on a P/E ratio of 15.7 and due to report a fall in earnings of 7% this year, the prospects for a takeover seem slim. That’s especially because the wider leisure industry is due to experience an uncertain period, with higher staffing costs set to cause sales and profitability to come under a degree of pressure. As such, while J D Wetherspoon remains a relatively appealing business, its share price indicates that it’s fully valued.

Strong buy

Meanwhile, Diageo (LSE: DGE) continues to offer significant takeover potential. The main reason for this is its sheer diversity of brands, with it having exposure to stout, vodka, whisky and various other drinks categories. And with many of its brands being market leaders in their respective segments, Diageo offers a high degree of customer loyalty and a very stable business model that’s likely to be more predictable than most.

With Diageo trading on a P/E ratio of 21.1, it may appear to be rather overvalued at the present time. However, with sector peer SABMiller trading on a similarly high rating before being the subject of a takeover from AB InBev, Diageo’s valuation may not prove to be a stumbling block for potential suitors. With growth in its earnings of 9% forecast for next year, Diageo seems to be a strong buy for investors at the present time.

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