This morning, investors sensed bargains at London Stock Exchange (LSE: LSE), Electrocomponents (LSE: ECM) and Tesco (LSE: TSCO).
This morning, the retail clients of stockbroker TD Direct Investing leapt on two stocks buffeted by bad news -- and on a third, where a weakening share price reveals investors' concerns that more bad news might be on the way, when it reveals its interim results next week.
First up: the London Stock Exchange (LSE: LSE) itself, which operates not only London's markets, but also bourses overseas -- Italy, for instance, reportedly accounts for almost 20% of group revenues.
In short, regulatory recommendations published today by the European Securities and Markets Authority and the European Banking Authority look set to hit revenues. The result? A 7% dive in the share price -- and a rush of private investors, sensing a bargain.
On a forward price-to-earnings (P/E) ratio of just under 10, and offering a yield of 3%, LSE doesn't exactly scream 'cheap' to me, but many investors obviously thought otherwise. One thing, though, is certain; at 197p the share is 7% cheaper than it was yesterday -- and for some investors, that provided all the incentive required.
Next up: distributor Electrocomponents (LSE: ECM), better known in industrial circles for its RS Components brand. Announcing a 1% fall in revenues and a 30% fall in pre-tax profits this morning, the company promptly saw its share price dive 11% to 195p -- enough to make it the fourth-most popular 'buy' by the retail clients of TD Direct Investing between the market's opening and 12 noon.
That said, on a forward P/E of 11, and yield of 5.5%, they've probably got a bargain. The business has transformed its efficiencies and operating model in recent years, and the eventual uptick in manufacturing output -- both here and overseas, where the business has extensive interests -- should see the shares regain their former lustre.
The seventh-most popular purchase by TD Direct Investing's individual clients this morning was perennial Foolish favourite Tesco (LSE: TSCO). On something of a roll in recent weeks after shocking the market with a profits warning back in January, the shares have wobbled over the last few days as investors fret over just how much of a turnaround will be apparent in the firm's fortunes. The result? As we've seen, renewed private investor interest.
Personally, I doubt how much clarity next week's numbers will provide. My own suspicion is that the company's shares will need more than just one or two decent sets of results before the business goes back to its status as one of the rare 'no brainer' shares of the FTSE 100 (UKX). But at today's price of 333p, Tesco is on a forecast P/E of 9.4, and offers a prospective yield of 4.6% -- both numbers distinctly attractive for a business of Tesco's calibre.
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Investing ideas from Malcolm Wheatley:
> Malcolm holds shares in Tesco, but has no disclosable interest in any other of the shares listed. The Motley Fool owns shares in Tesco.
Disclaimer: The TD Direct Investing (www.tddirectinvesting.co.uk) list of Top Ten Buys should not be taken as a recommendation to buy or sell any particular bond or stock, and is not intended as any form of advice. Instead, it is simply an indication of the general buying trends amongst TD Direct Investing customers during the period stated.