Why Are Dixons Carphone PLC, BATM Advanced Communications Ltd & APR Energy PLC Rising Today?

Does today’s news make Dixons Carphone PLC (LON:DC), BATM Advanced Communications Ltd (LON:BVC) and APR Energy PLC (LON:APR) a buy?

| 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.

Three of this morning’s biggest risers are Dixons Carphone (LSE: DC), BATM Advanced Communications (LSE: BVC) and APR Energy (LSE: APR).

What’s happened, and why are these shares rising?

Dixons Carphone

Dixons Carphone surprised investors this morning by announcing plans for a 500-store joint venture with US mobile operator Sprint.

Dixons will supply “mobile phone retail expertise and proprietary knowledge” to Sprint. The US firm will initially open 20 Sprint-branded stores in the US. If these are a success, the two companies plan to expand the venture to create a chain of 500 stores.

Dixons’ investment is limited to $32m for a 50% stake in the joint venture, so if things don’t go well, shareholders’ exposure seems limited. I reckon this could prove a success for the firm, assuming the Carphone Warehouse retail system translates to the US market successfully.

Shares in Dixons Carphone currently trade on a forecast P/E of 19, so they’re not cheap. However, I reckon shareholders should hang on, as there could be more to come.

Incidentally, Tesco investors may want to remember that the successful combination of Dixons and Carphone Warehouse happened under the watch of former chairman John Allan. Mr Allan has a track record of transforming companies, and is now chairman of Tesco.

BATM Advanced Communications

This small cap technology company makes specialised computer networking and medical equipment.

It’s been struggling to deliver on the promise of a few years ago, but this morning announced a new cyber security contract with “a government defense ministry”. The firm’s shares are currently up by 9%.

The initial value of the contract is only $3.7m, but BATM expects this to increase to $10m by 2017 and to $20m by 2020.

BATM is expected to return to profit this year. Broker forecasts for earnings of 0.2 cents per share put the company on a forecast P/E of 126, falling to 29 in 2016. It’s not a buy for the faint-hearted, but BATM is well funded and could yet prove to be a strong growth story.

APR Energy

Shares in temporary power provider APR spiked higher this morning after the firm announced a new $30m contract in Egypt.

The shares have slipped back somewhat since then, but have seen heavy buying in early trade. In reality, however, this deal isn’t anywhere near big enough to solve APR’s problems.

APR’s shares have fallen by 69% over the last month, after it warned that this year’s full-year loss would be worse than expected. APR has net debt of $547m and in June the firm warned that it might breach its financial covenants later this year.

APR faces a variety of headwinds, but the risk of debt problems should be the biggest concern for shareholders. These could result in the firm being forced to raise new funds through a discounted rights issue or placing.

While APR looks cheap based on its historical performance and its price-to-book ratio of just 0.3, I think the risks are too high. I intend to steer clear until the picture improves.

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.

Roland Head owns shares of Tesco. 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

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

1 Warren Buffett stock I’m buying now

Coca-Cola is the fourth-largest holding in Warren Buffett’s Berkshire Hathaway. I’ll explain why I’m following Buffett and buying more.

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

I bought 4,403 Lloyds shares in June and 4,856 in September. Here’s what they’re worth now

Harvey Jones thought he was bagging a FTSE 100 bargain when he bought Lloyds shares on two occasions last year.…

Read more »

Young woman holding up three fingers
Investing Articles

I’m itching to buy these 3 hidden FTSE gems in a Stocks and Shares ISA

Harvey Jones is keen to add these three FTSE 100 companies to his Stocks and Shares ISA before April. Only…

Read more »

Close up of a group of friends enjoying a movie in the cinema
Investing Articles

How I’d try and turn just £1 a day into a fabulous £54,485 passive income for life

By investing small, regular sums in FTSE 100 shares I can potentially generate a huge passive income stream. It won't…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’d aim for a million buying under a dozen shares

Christopher Ruane explains why less could be more when it comes to building a share portfolio if he wants to…

Read more »

Investing Articles

Rolls-Royce shares are up over 1,000% since 2020! Am I too late to buy?

Rolls-Royce shares now cost over tenfold what they did in the firm's 2020 rights issue. Our writer thinks they may…

Read more »

Investing Articles

1 top UK growth stock for my tech portfolio in 2024

Up 30% in just one year, this growth stock looks positioned to continue on the path of substantial gains, according…

Read more »

Buffett at the BRK AGM
Investing Articles

I’d follow Warren Buffett to target effortless passive income

Warren Buffett knows a thing or two about building passive income streams. By learning from the Sage of Omaha, so…

Read more »