Should You Buy Tullow Oil PLC, KAZ Minerals plc & Renold plc On Tuesday?

Royston Wild runs the rule over newsmakers Tullow Oil PLC (LON: TLW), KAZ Minerals plc (LON: KAZ) and Renold plc (LON: RNO).

| 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 am looking at three FTSE stocks making the papers in Tuesday trade.

Tullow Oil

The bad news for the oil industry just keeps on coming, and investors in Tullow Oil (LSE: TLW) were given a further whack in Tuesday trading after the release of a disappointing exploration update. The London firm advised that its Emesek-1 exploration well in the North Lokichar basin, Kenya had failed to discover any hydrocarbons.

The well will now be capped and abandoned, with Tullow Oil moving its attention to the Etom-2 well in the South Lokichar basin. Such disappointments are, of course, to be expected in the oil industry. Instead, I am rather more concerned with the wider state of the oil market on Tullow Oil’s future — Brent crude came within a whisker of touching fresh six-year troughs below $45 per barrel just yesterday.

Tullow Oil shot higher on Monday following a rating upgrade from UBS, who advised that the quality of the firm’s assets and cost-cutting initiatives make it a ‘buy’ candidate. But should the oil price keep on sinking, a nailed-on scenario in my opinion — and the company experience further operational difficulties, such as delays to its TEN development project in Ghana set for production in 2016 — I believe the stock is in danger of sinking again.

KAZ Minerals

Likewise, I believe copper giant KAZ Minerals (LSE: KAZ) is at threat of falling further as the fallout of chronic supply/demand balances in commodity markets weighs. The Kazakhstan-focused entity gave a rare reason for cheer on Tuesday, however, after announcing that it had agreed to defer a $300m payment related to its Aktogay project to its principal construction contractor, Non Ferrous China. Costs due in 2016 and 2017 will now be settled in the first half of 2018.

The market responded by sending shares 7.3% higher on the day. But I do not believe investors should get too excited by today’s news as the financial arrangement could prove nothing more than ‘kicking the can down the road’ as the prospect of further copper price weakness looms.

Just yesterday copper collapsed to levels not seen since May 2009 below $4,600 per tonne, taking out further key technical levels and leading to fresh fears over just how low the bellwether metal can go. With Chinese data continuing to disappoint, I believe KAZ Minerals’ positive news today could prove nothing more than a fresh selling opportunity, particularly as the firm still nurses a $1.85bn net debt pile.

Renold

Shares in industrial chain builder Renold (LSE: RNO) have also enjoyed a positive bump, and the business was recently 9.3% higher from Monday’s close. The company advised it had swooped for German rival Aventics for up to £4.5m in cash, and represents Renold’s first foray into the ‘inverted tooth chain’ market. The technology is used across a variety of applications such as within bottling plants.

The market subsequently shrugged off news that underlying revenues had slipped 6.8% during April-September, to £84.5m, with Renold reporting “challenging and volatile conditions in most of our geographical markets.” Indeed, the fruits of the company’s restructuring measures actually helped push pre-tax profit 4.6% higher for the period, to £4.6m.

And despite today’s monster share price rise, I believe Renold still represents excellent value for money. An expected 7% earnings uptick for the 12 months to March 2016 results in an ultra-low P/E ratio of 10.2 times. And while the firm still faces troubles in key end markets, I believe Renold’s successful self-help measures — combined with its ongoing acquisition and global expansion drive — should keep earnings moving skywards.

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 recommended Tullow Oil. 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

Young Asian woman holding a cup of takeaway coffee and folders containing paperwork, on her way into the office
Investing Articles

How I could make a 10% yield for high passive income a reality

Jon Smith explains how he can target high passive income from top-yielding stocks, including one specific example he'd consider.

Read more »

Investing Articles

I’d buy 1,784 shares of this FTSE 100 stock to target £350 of monthly passive income

Muhammad Cheema takes a look at how British American Tobacco shares, with a dividend yield of 10.1%, can generate a…

Read more »

White female supervisor working at an oil rig
Investing Articles

1 ex-FTSE 100 stock that I think will get promoted soon

Jon Smith flags up an energy stock that used to be in the FTSE 100 and currently has strong momentum…

Read more »

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 »