Why Now Is The Perfect Time To Buy AFC Energy plc, SSE PLC & Hargreaves Services plc!

These 3 stocks look set to soar: AFC Energy plc (LON: AFC), SSE PLC (LON: SSE) and Hargreaves Services plc (LON: HSP)

| 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.

sdf

Shares in alkaline fuel cell developer AFC Energy (LSE: AFC) are up by as much as 13% today after the company announced that it has successfully delivered the first power to the grid from its fuel cell facility in Germany. This is a very positive piece of news flow for the company as it is the final test stage of proving and providing electricity to the German Grid from its KORE system. It also confirms that AFC is on-track with its 11 point plan, of which it is progressing with stage 10 at the present time.

The tests results showed that power was delivered to the local grid at between 5.9 and 7.4 kW for around an hour. The test data generated will help AFC to prepare for the operation of upwards of 40 kW from eight cartridges and, with them having been delivered to its plant in Germany, it expects to complete stage 10 of its 11 stage plan before the end of the calendar year.

Clearly, AFC is a relatively volatile stock, with its share price having fallen from 58p in July to just 33p in September. However, with a greater focus on cleaner power generation across the globe and AFC being a profitable business with a bright future, now seems to be the perfect time to buy a slice of it for the long term.

The same is true of domestic energy supplier SSE (LSE: SSE). It remains one of the most appealing dividend stocks around, with it currently yielding a whopping 5.8%. SSE, though, is far more than just a great income play, with the company being forecast to post a rise in its bottom line of 6% next year. This is roughly in-line with the growth rate of the wider index, and yet SSE trades on a price to earnings (P/E) ratio of just 13.8, which indicates that there is upward rerating potential.

In addition, SSE’s future appears to be much more stable following the General Election. While a Labour government may decide to make radical changes to the utility sector, this will not happen until 2020 at the absolute earliest. As such, SSE’s valuation is unlikely to be hurt by any sizeable political risk over the medium term, which has put a brake on its share price performance in the past.

Meanwhile, coal mining company Hargreaves Services (LSE: HSP) has released a disappointing update today which has sent its shares lower by around 11%. The company continues to struggle with a falling coal price and, since it reported its final results in August, prices have softened further by around £1 per tonne.

This, combined with the closure of the steelmaking operations at Redcar (and the falling demand for thermal coal in the UK) means that Hargreaves Services is expecting its operating profit to fall by over £4m per annum in future years. It also expects a one-off charge of £1.5m for the costs of ceasing services provided to Redcar.

Despite this, Hargreaves Services could be a sound buy at the present time. It has begun to de-leverage its balance sheet and has considerable potential to add value in the long run via its property and plant portfolio. This, alongside the scope for projects within the renewable energy sector, makes Hargreaves Services’ current price to book value (P/B) ratio of 0.65 seem good value.

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 owns shares of AFC Energy and SSE. 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

A senior man and his wife holding hands walking up a hill on a footpath looking away from the camera at the view. The fishing village of Polperro is behind them.
Investing Articles

3 shares that could help a SIPP double in value

Christopher Ruane discusses a trio of FTSE 100 shares that he thinks investors should consider for their long-term potential to…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

I’ve doubled my money on this growth stock but I’m not selling it any time soon

Uber has been a great investment for Edward Sheldon, rising more than 100% in just two years. He believes the…

Read more »

British union jack flag and Parliament house at city of Westminster in the background
Investing Articles

The FTSE 100 is on fire! Yet these 2 stocks still look cheap to me

Despite the FTSE 100 hitting record highs, there’s no shortage of undervalued opportunities across the index, says Ben McPoland.

Read more »

Female student sitting at the steps and using laptop
Investing Articles

Greggs shares: an outstanding bargain after crashing nearly 40%?

Shares of one-time market darling Greggs have been in foul form recently. But is this a once-in-a-blue-moon opportunity for our…

Read more »

Close-up of children holding a planet at the beach
Investing Articles

This FTSE 100 stock’s suddenly become the highest-yielder on the index!

The league table of FTSE 100 (INDEXFTSE:UKX) dividend stocks has a new number one. But our writer explains why there…

Read more »

Rear View Of Woman Holding Man Hand during travel in cappadocia
Investing Articles

Is this under-the-radar UK stock as cheap as its rooms?

Our writer’s been keeping an eye on a little-known UK stock that operates in a niche, but profitable, sector of…

Read more »

Young Caucasian woman holding up four fingers
Investing Articles

It’s a ‘Fabulous Friday’ for holders of these FTSE 100 shares!

Four members of the FTSE 100 (INDEXFTSE:UKX) are making their latest dividend payments today (11 July). Our writer takes a…

Read more »

Man riding the bus alone
Investing Articles

Check out this spectacular FTSE 250 stock

UK investors willing to look beyond the FTSE 100 can find some outstanding companies. Online advertising business Baltic Classifieds might…

Read more »