Should You Buy These Thursday Movers? Paypoint plc, Afren Plc, Ladbrokes PLC And easyJet plc

Royston Wild runs the rule over Paypoint plc (LON: PAY), Afren Plc (LON: AFR), Ladbrokes PLC (LON: LAD) and easyJet plc (LON: EZJ).

| 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.

Today I am looking at the investment case for four of London’s largest movers.


Shares in payment collectors PayPoint (LSE: PAY) have carried on their bumper run of recent weeks and were recently changing hands 4.5% higher in Thursday trading. The business announced late last month that revenues rose 3% in the year concluding March 2015, to £218.5m, a result that drove pre-tax profit 7.7% higher to £49.6m. And with the firm doubling-down on its retail operations, I expect sales to surge higher on the back of galloping online shopping activity.

PayPoint is expected to record a 4% earnings advance for 2016, and a further 8% rise is pencilled in for the following year. Consequently a P/E ratio of 15.7 times for this year falls to 14.6 times for the following period, below the threshold of 15 times that indicates splendid value. On top of this, expected dividend hikes to 40.6p per share in 2015, and 43.7p for 2016, create market-busting yields of 4.3% and 4.6%.


I have long urged caution to those considering ploughing their cash in oil producers like Afren (LSE: AFR), with signs of a prolonged supply/demand imbalance threatening to drive crude prices through the floor again. Against this backcloth Afren alone was recently dealing 4.4% lower on Thursday, with investor optimism in the natural resources sector struck again after the OECD slashed its global growth forecasts for 2015, to 3.1% from 3.7% previously.

With pumpers across the US, Russia and the OPEC cartel of nations expected to maintain production at elevated levels during the next few years at least, questions continue to rise over how this excess material will be mopped up. And with Afren facing an ongoing battle just to keep its head above water as net debt rises — this climbed to $1.2bn as of March — and output for this year set to decline from 2014 levels, the odds look increasingly stacked against the firm.


Bookmaker Ladbrokes (LSE: LAD) has seen shares shoot higher since the start of April and the firm was recently 2.5% higher in today’s trading, with investor appetite no doubt boosted by the appointment of online head Jim Mullen in recent weeks. Although his expertise in internet gambling is a critical area looking ahead, much head-scratching is bound to persist over how to turn around its ailing High Street operations.

Consequently Ladbrokes is expected to record a third straight earnings decline in 2015, and a 39% dip is currently chalked in by the number crunchers. But a 16% rebound is anticipated for 2016, improving the P/E ratio from 17.4 times for the current year to a much-better 14.8 times. And although the bookie is expected to cut last year’s 8.9p per share dividend to around 7.2p this year and next, this still creates a blockbuster yield of 6%. But with much work still to be undertaken to turn around its ailing fortunes, I believe that Ladbrokes remains a risky bet.


With demand for budget airline seats still taking off, I reckon easyJet (LSE: EZJ) is a terrific selection for those seeking solid earnings growth. And this promising trend was confirmed in Thursday trading after the Luton firm advised passenger numbers climbed 7.2% in May to almost 6.5 million, a result that drove shares in the carrier 1.2% higher.

Bubbly passenger activity is expected to drive earnings at easyJet 13% and 11% higher for the years concluding September 2015 and 2016 correspondingly, projections that create attractive P/E multiples of just 12.5 times and 11.3 times. And a strident bottom line is expected to light a fire under dividends for this period, with last year’s 45.4p-per-share payout expected to rise to 52.5p this year and 58.6p for 2016. Consequently the business sees a handy yield of 3.2% for 2015 leap to 3.6% for next year.

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 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

Should I buy more Rolls-Royce shares near 500p?

This investor is wondering whether to buy more Rolls-Royce shares this summer or to just stick with those he already…

Read more »

Investing Articles

After its big fall, is the National Grid share price dirt cheap now?

The National Grid share price fell sharply in reponse to new rights issue plans. But is it an even better…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Starting in June, I’d invest £1,000 a month to aim for a £102,000 second income in retirement

This author highlights a less well-known FTSE 100 stock that could help his portfolio generate a very big second income…

Read more »

Investing Articles

Down 47% in 5 years, is the IAG share price due a bounce?

Many companies in the travel sector have seen fierce rallies since 2020. But with the IAG share price still down…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Despite its drop, I reckon this is one of the best FTSE 100 stocks to buy and hold!

The FTSE 100 has been climbing in 2024 but this favourite of our writer's has been falling. Despite this, she’s…

Read more »

Investing Articles

AI stocks vs EV shares; which is the best sector for me to invest in?

Jon Smith considers the recent rally in AI stocks and weighs up whether to allocate more money there versus EV…

Read more »

A graph made of neon tubes in a room
Investing Articles

Do Greggs shares have even more growth ahead?

Greggs shares have seen some solid growth in the last few months, as the economy shows positive signs. But is…

Read more »

Investing For Beginners

How I’d aim to grow my Stocks & Shares ISA from £20k to £1m

Jon Smith explains how diversification and focusing on sectors for the future can help grow his Stocks and Shares ISA.

Read more »