Why I Would Sell Quindell PLC And Buy easyJet plc And Carclo plc

Royston Wild looks at the investment cases for Quindell PLC (LON: QPP), easyJet plc (LON: EZJ) and Carclo plc (LON: CAR).

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Today I am running the rule over three FTSE-listed headline makers.

Quindell

If recent reports are to be believed, troubled telematics play Quindell (LSE: QPP) continues to pull out all the stops to repair its battered reputation. Indeed, Sky News reported yesterday evening that Conservative peer Lord Howard had been approached to take up a non-executive directorship role at the business, although insiders advised that talks are at a very early stage.

The move would undoubtedly add a sprinkle of glamour to Quindell’s rolling overhaul of its board. The company recently announced a number of new appointments in recent months, including the instalment of AO World and Booker Group chairman Richard Rose, who will assume a similar role at Quindell once it completes the sale of its Professional Services Division to Slater & Gordon.

Still, in my opinion the strange goings on behind the curtain at Quindell remain a serious cause for concern. From contravening Britain’s Corporate Governance Code by offering its new board members more than £20m worth of share options, through to not disclosing certain assets which are to be sold to the Australian firm, Quindell’s behaviour continues to baffle.

And when question marks over the Hampshire firm’s revenues outlook — now worsened by the sale of its high-value assets — not to mention cash pile are taken into account, I believe that Quindell remains a risk too far for careful investors.

easyJet

Conversely, I reckon that budget airline easyJet (LSE: EZJ) is a great selection for those seeking solid returns in coming years. The business continues to benefit from surging demand for cheap plane seats, and reported today that passenger numbers grew by a chunky 3.8% during April. I fully expect traveller volumes to keep nudging higher as the Luton firm expands its route network and as improving economic conditions in Europe boosts holidaymakers’ appetite.

This view is shared by the City, and easyJet is expected to keep its proud earnings record rolling during the medium term at least. Indeed, earnings rises of 19% and 12% are currently chalked in for the years ending September 2015 and 2016 correspondingly, producing attractive P/E multiples of 13.1 times and 11.8 times prospective earnings — any readout below 15 times is widely considered very good value.

And easyJet’s perky profits outlook is also anticipated to underpin further chunky dividend growth. Last year’s full-year payment of 45.4p per share is expected to jump to 55p this year, creating a yield of 3.1%. And an estimated dividend of 61.5p for fiscal 2016 drives this figure to an appetising 3.4%.

Carclo

The share price of technical plastics company Carclo (LSE: CAR) has risen 75% since the start of 2014, and just this week struck its highest in more than a year, at 164p per share. Carclo has seen demand jump across all of its divisions in recent months, while April’s announcement that it had licensed its CIT Technology division’s fine line technology to electrical giant UniPixel boosted investor sentiment still further.

Despite this recent price strength, however, I believe that Carclo still provides very decent bang for one’s buck. The business is expected to follow a 20% earnings improvement for the year ending March 2015 with an additional 42% rise in the current year, creating a head-turning P/E ratio of 13.8 times. And this number slips to 12 times in fiscal 2017 amid expectations of an extra 17% bottom-line boost.

These solid growth prospects are anticipated to keep Carclo’s progressive dividend policy firmly on track. An estimated 2.7p per share payout for last year is expected to edge to 3p in fiscal 2016, producing a handy yield of 2%. And a projected 3.1p reward next year pushes the yield to 2.1%.

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 considered so you should 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.

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