Is Now The Perfect Time To Buy Vodafone Group plc, ASOS plc & President Energy PLC?

Are these 3 stocks worth adding to your portfolio? Vodafone Group plc (LON: VOD), ASOS plc (LON: ASC) and President Energy PLC (LON: PPC)

| 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.

While the FTSE 100 has slumped by 12% in the last six months, shares in Vodafone (LSE: VOD) have fared much better. While they are down, they have fallen by just 2% and this is evidence of their defensive nature which, at the present time, has huge appeal for investors given the uncertain outlook for the index.

However, Vodafone is much more than just a defensive stock to own during rough patches for the rest of the market. In fact, its business may not be as defensive as it was in the past, since it lacks the same extent of regional diversity as it once did following the sale of its stake in North America-focused Verizon Wireless. This shifted Vodafone’s dependence onto Europe; a region that has struggled to deliver any kind of economic growth in the recent past, but where Vodafone is buying up discounted assets and investing in the quality of its infrastructure.

And, with Europe offering relatively bright future growth via an expansionary monetary policy, investors could soon begin to switch from Asia-focused stocks to European-focused ones, with Vodafone likely to be a major beneficiary of this.

Of course, Vodafone remains a great income play. It yields over 5% and has an excellent track record of dividend growth, with them having increased in each of the last five years. This combination of income, growth potential plus defensive qualities mean that Vodafone should continue to outperform the FTSE 100 over the medium to long term.

The same may not be true, though, for online fashion company ASOS (LSE: ASC). It is a superb business with an efficient supply chain, slick website and a relatively high degree of customer loyalty. Furthermore, it has scope to continue to expand outside of the UK, while its position as the go-to destination for twentysomethings in the UK looks fairly stable.

However, as an investment, ASOS lacks appeal. Certainly, the 25% fall in its share price in the last six months makes its appeal somewhat stronger, but it still trades on a very generous valuation given its growth outlook. For example, ASOS has a price to earnings (P/E) ratio of 61 and, while its bottom line is forecast to rise by 24% next year, it still translates into a price to earnings growth (PEG) ratio of 2.5. Although this is lower than it has been for some time, ASOS’s shares may need to come under further pressure for it to become an enticing investment for me.

Meanwhile, oil and gas exploration company President Energy (LSE: PPC) released positive news flow today regarding its reserves, which has pushed its shares upwards by 3%. The Argentinian-focused company has stated that an independent report has shown the amount of reserves and potential resources it owns is higher than previously thought. In fact, proven oil reserves are up by 21%, while proven plus probable reserves are 28% higher.

This is clearly positive news for the company and, while a lower oil price has hurt sentiment this year (President Energy’s share price is down 41% year-to-date), the increase in proven plus probable reserves has increased President Energy’s net present value by 10% to around £215m. With its shares having a market capitalisation of £45m and a price to book value (P/B) ratio of 0.4, it could be a strong performer over the medium to long term.

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 and has recommended ASOS. 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

A pastel colored growing graph with rising rocket.
Investing Articles

How much passive income could I make for every £1,000 invested in Aviva shares?

Even a relatively small investment in Aviva shares could generate much greater passive income, particularly if the dividends are reinvested…

Read more »

Close-up of British bank notes
Investing Articles

I’m considering 100 shares in this FTSE 250 gem to aim for £300 a month in dividends

Mark Hartley outlines why a lesser-known banking stock from the FTSE 250's worth considering for an income portfolio in 2024.

Read more »

Investing Articles

History suggests these UK shares might soar if interest rates are cut in August

Some UK shares could rocket if interest rates fall from its 5.25% high next month. And there's one our writer…

Read more »

Female Doctor In White Coat Having Meeting With Woman Patient In Office
Investing Articles

Here’s why H1 results could boost the AstraZeneca share price

The AstraZeneca share price has been a success story in the past five years. With H1 results due, can it…

Read more »

Investing Articles

£17,365 in savings? Here’s how I’d use it to target a £6,700-a-month passive income

Here's how a lump sum investment could pave the way for me to make a four-figure monthly passive income in…

Read more »

Investing Articles

Down more than 10% in 6 months, Fools are backing these 5 UK stocks to reverse that – and then some! – by 2025

Some of our UK free-site writers have put forward their candidates for turnaround stocks!

Read more »

Investing Articles

Down 23%! Should I buy more CrowdStrike shares for my Stocks and Shares ISA?

Sometimes bad news can be good news for long-term investors. But is that the case for CrowdStrike in relation to…

Read more »

Investing Articles

2 UK shares near 52-week lows I’m considering snapping up

These UK shares are loitering near, or at, 52-week lows. Are these prime opportunities for our writer to boost her…

Read more »