Are these three underdogs a buy after today’s results?

These three overlooked businesses have reported some impressive results today.

| 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.

Three market underdogs have reported results today and while the companies may not be glamorous enough to appear in the headlines of market news bulletins, the results speak for themselves. 

Golden cash cow 

Caledonia Mining (LSE: CMCL) reported its figures for the first half of 2016 with gold production up by around 3,000/oz, or 12.7%, and the on-mine cost of production per ounce down to $629 at the end of Q2, a fall of $91/oz year-on-year. The company’s all-in-sustaining cost of production for the half fell to $943/oz from $1,007 for the first half of 2015. 

Lower costs and higher production volumes helped Caledonia report a 172% increase in net profit for the first half and earnings per share more than doubled to 8.6 cents, from 4.1 cents for H1 2015. Cash generation for the half was just under $9m. 

There’s no other way of putting it, these figures from Caledonia are extremely impressive. The company is a low-cost gold producer that’s generating plenty of cash and growing production steadily without leaning on debt. Cash generation of $9m, or around £6.7m, for a company with a market cap of £46m makes the company one of the most productive and efficient miners there is. 

City analysts are expecting the company to report earnings per share of 15.9p for 2016 and 26.6p for 2017. Based on these figures the company is trading at an attractive forward P/E of 5.5 and supports a dividend yield of 4.4%. 

Discount to NAV

Shares in energy investment company Riverstone Energy (LSE: RSE) are rising today after the company reported a 13.1% increase in its sterling net asset value per share for the six months ended 30 June. With a share price of only £10.55 at the time of writing and a NAV of £12.25 at the end of June, Riverstone looks to be undervalued.

The company has a portfolio of 16 oil investments around the world, covering both onshore and offshore as well as conventional and unconventional exploration and production, midstream and credit. Only 77% of the group’s total capital is invested, leaving room for further growth if opportunities present themselves. 

Still, the group made a loss of $25.2m for the period, but most of this loss is due to high admin and financing costs. Earlier this week Riverstone announced its first exit transaction which is expected to generate a return of 2.1 times the group’s capital before costs or an internal rate of return of 77%. 

Double-digit earnings growth 

Lastly Coca Cola HBC (LSE: CCH), which today reported results for the six-month period ended 1 July. FX-neutral net sales revenue grew by 2.4%, or 3% taking into account one less selling day in the period and volume grew by 0.7% on the same basis. However, despite this sluggish volume and sales growth, earnings per share increased by 6.9% for the year and basic earnings per share grew by 12.5% as the firm continued to cut costs and improve margins. Net profit for the period expanded 10.8% year-on-year. 

These upbeat figures have sent its shares up by 6.2% in early deals, but after these gains some investors may find that the shares are too expensive for comfort. City analysts are expecting earnings per share growth of 15% for full-year 2016 and if the company hits this target, the shares are trading at a forward P/E of 20.8. 

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.

Rupert Hargreaves 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

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 »