3 AIM Stocks I’d Buy Before Monitise Plc: James Halstead PLC, Telford Homes plc And CVS Group Plc

These 3 stocks have better prospects than Monitise Plc (LON: MONI): James Halstead PLC (LON: JHD), Telford Homes plc (LON: TEF) and CVS Group Plc (LON: CVS)

| 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’s news that mobile payments specialist Monitise (LSE: MONI) has released another revenue warning is perhaps not a major surprise.  Certainly, the company’s shares have fallen by only 3% today and, with it being the fourth such warning since the start of last year, it is not completely out of the blue.

Clearly, Monitise is still struggling to turn a great product into a highly profitable business. And, looking ahead, there is a danger that Monitise runs out of time on this front, since technological change is as fast as ever. Certainly, there is the potential for a bid approach, but with it having reviewed its strategic options and found no realistic buyer, Monitise is left trying to turn a red bottom line into a black one.

As a result, it may be prudent to stick to highly profitable businesses that are also in the AIM 50 list. For example, Telford Homes (LSE: TEF) has grown its pretax profit in each of the last five years and, looking ahead, is set to post a 20% rise in earnings in the current year. Furthermore, its long term future is very bright, with it set to benefit from increasing demand near to planned Cross Rail sites in the south east of England. As such, its price to earnings (P/E) ratio of 10.7 indicates excellent value for money – especially with the monetary policy outlook being favourable for the house building sector.

Also benefitting from lower interest rates (via a weak sterling) is flooring company, James Halstead (LSE: JHD). It has an excellent track record of profitability and is a relatively consistent and robust performer. Furthermore, it also offers a yield of 2.7%, which is covered 1.4 times by profit and this provides more evidence that the company’s financial standing is relatively sound. Certainly, it is not as cheap as it was a year ago, owing to a share price gain of 35%, but its consistency means that investor sentiment should remain upbeat moving forward.

Likewise, veterinary services provide, CVS (LSE: CVS), has a bright future ahead of it. That’s because it is expected to post earnings growth of 25% this year, followed by 13% next year. This puts it on a price to earnings growth (PEG) ratio of just 1.1, which indicates that share price appreciation is very much on the cards. Furthermore, CVS is a very robust performer, with the pet care sector being a very defensive space in which to operate. In fact, even during downturns and recessions, pet owners rarely cut back on looking after their animals and, as such, CVS’s long term earnings outlook is strong and very transparent.

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.

Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. 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 man drinking coffee at home and looking at his phone
Investing Articles

Is Rolls-Royce’s share price an irresistible bargain?

Is Rolls-Royce's share price the FTSE 100's greatest bargain today? Royston Wild explains why he would -- and wouldn't --…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

Is the Vodafone share price a wonderful bargain or a horrible value trap?

As the Vodafone share price continues to fall, is it now a stock to buy with a view to a…

Read more »

Hand of a mature man opening a safety deposit box.
Investing Articles

I’d buy 95,239 shares of this banking stock to generate £200 of monthly passive income

Muhammad Cheema takes a look at how Lloyds shares, with a dividend yield of 5.9%, can generate a healthy monthly…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

Can FY results give the Antofagasta share price a long-term boost?

The Antofagasta share price has had a good five years. Now the company says it's set to enter a new…

Read more »

Person holding magnifying glass over important document, reading the small print
Dividend Shares

Can I make sustainable passive income from share buybacks?

Jon Smith notes the rise in share buybacks from FTSE 100 companies, but flags up why they aren't great for…

Read more »

Front view of a mixed-race couple walking past a shop window and looking in.
Investing Articles

After the Currys share price rockets, here are more potential UK takeover targets!

The Currys share price has surged 39% higher in response to news of a takeover bid. Which UK stocks could…

Read more »

Investing Articles

Down 25%, where will the British American Tobacco share price go next?

The British American Tobacco share price has taken a hit. But this Fool isn't deterred. He think's now could be…

Read more »

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

2 cheap dividend stocks I’d snap up in a heartbeat!

This Fool is on the look out for quality dividend stocks and earmarks these two firms as great options to…

Read more »