Should You Snap Up Kier Group plc, Ocado Group PLC, Hunting plc & Benchmark Holdings PLC?

Here’s why Ocado Group PLC (LON:OCD), Benchmark Holdings PLC (LON:BMK), Hunting plc (LON:HTG) and Kier Group plc (LON:KIE) deserve attention.

| 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.

There’s reason to believe that Kier (LSE: KIE) could be a solid buy, but what exactly did we learn from its trading update today? 

And how about Ocado (LSE: OCD) (up 10%) and Hunting (LSE: HTG) (down 8%), whose shares have enjoyed different fortunes today? Elsewhere — in case you haven’t noticed — Benchmark Holdings (LSE: BMK) has risen almost 60% in value in a tough market since 23 July.

Taking profit at 1,419p?

Kier is showing some signs of weakness today, with its stock down around 4.5% at the time of writing. I wouldn’t worry too much: its shares are up over 20% this year, so some investors are just locking in profits, in my view. Preliminary results for the year ended 30 June showed healthy growth rates for revenues, core earnings, earnings per shares and dividends. Return on capital employed is excellent — “in excess of 15%“, the group said. Its core margins are thin but its balance is strong, while its order book is reassuring. True, at 18x forward earnings, its shares are not incredibly cheap but could be added to a diversified portfolio. 

Growth at 352p

Its third-quarter results this week confirm that the notion that Ocado deserves a valuation of between 350p and 450p a share, in my view, and that is backed by rising sales and average orders per week. Its beta is much higher that that of Kier, and its shares are much more expensive, according to most metrics, so you’d be buying volatility for your portfolio, but then Ocado could shine in this growth-starved world. Its free cash flow profile is still tight, its balance sheet is relatively sound — so, Ocado is not exactly a traditional value play. However, capital gains could be huge should it hint at a symbolic dividend payment at some point over the next 24 months. 

Impairment risk at 433p

I have mixed feelings, given that too much uncertainty still surrounds Hunting, whose stock price has fallen 17% so far this year in the wake of today’s performance. Weakness in its stock price presents a good opportunity to add it to your wish list, but then you should keep a close eye to its order book and operating costs line before buying into this restructuring story. Analysts at JP Morgan announced today to have cut their price target from 518p to 338p, which means that if they are right, Hunting could be currently overvalued by almost 30%. I am not that bearish, but my advice would be to wait, based on impairment risk. 

A healthy look at 97p

Benchmark is a small biotech firm that has been on my wish list for a few weeks now. I reiterate the view that its success hinges on its products pipeline, which is hard to value but looks really promising. Strategy-wise, management is showing good progress, and at 97p a share you’d be snapping up a very expensive stock based on its cash flow profile and revenue multiples, but one that could surely reward your patience. It could be worth it, in my view.

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.

Alessandro Pasetti 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

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

Is Legal & General Group one of the FTSE 100’s greatest value shares?

Legal & General shares boast low P/E ratios and massive dividend yields. Could they be one of the London stock…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

I’m looking for the best FTSE 100 value stocks to buy now. Have I found them?

Barclays, NatWest, and Imperial Brands shares are recovering strongly. But these FTSE 100 stocks still trade on rock-bottom earnings multiples.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Where on earth will Nio stock be in 1 year?

Nio stock has demonstrated extraordinary volatility over the past 12 months, but where will it be in a year's time?…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

6.9% dividend yield! 2 cheap stocks to consider for a £1,380 passive income

Looking for a market-beating passive income? These FTSE 100 and FTSE 250 dividend stocks could provide a healthy second income…

Read more »

Mature black couple enjoying shopping together in UK high street
Investing Articles

Potentially 34% undervalued, should I be watching the boohoo share price?

The boohoo share price has seen a rocky few years, but with signs that the economy is improving, could this…

Read more »

Investing Articles

Is the Amazon share price primed for a drop?

The Amazon share price has been on a tear for the last year, but can this trend continue? Gordon Best…

Read more »

Photo of a man going through financial problems
Investing Articles

Down 15% in a week! What’s gone wrong with the National Grid share price?

The National Grid share price isn't supposed to crash but now it has. Harvey Jones is wondering whether to take…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

Taylor Wimpey just paid me £158.78. I’m aiming to turn that into a £100k yearly second income

Harvey Jones says small, regular dividend payments can turn a few pounds into a mighty second income, if he gives…

Read more »