Is Now The Perfect Time To Buy Rio Tinto plc, Talktalk Telecom Group PLC And Burberry Group plc?

Are these 3 shares set for improved returns? Rio Tinto plc (LON: RIO), Talktalk Telecom Group PLC (LON: TALK) and Burberry Group plc (LON: BRBY)

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Shares in Talk Talk (LSE: TALK) have fallen by over 10% today after the company announced that it has been the victim of a cyber-attack. In a short statement, the company said that the Metropolitan Police is investing a ‘significant and sustained’ attack which may have left customer data compromised. This includes both identity and financial information and, as such, the company is contacting all of its customers to inform them of the news.

Clearly, this is hugely disappointing for Talk Talk and its share price fall today is very understandable. In the short run, its valuation could come under further pressure and, as a result, it appears to be worth waiting for further details to emerge as to the extent of the damage before buying shares in the company.

Of course, Talk Talk’s long term future remains relatively bright. It is expected to post earnings growth of 69% this year and 52% next year; both of which are above and beyond the forecasts for its sector peers. And, with it trading on a price to earnings growth (PEG) ratio of just 0.2, it appears to offer growth at a very reasonable price. As such, once the dust settles regarding the unfortunate cyber-attack, it could prove to be a stunning long term buy.

Similarly, shares in Burberry (LSE: BRBY) have fallen heavily recently after the company reduced its guidance for the full year. This was caused by disappointing sales growth in China and, while this trend could continue in the short run, the long term opportunity for Burberry in the world’s second-largest economy remains significant.

Clearly, Burberry’s earnings are expected to take a hit this year, with a fall of 4% in net profit being forecast. However, the company is due to return to growth next year when its bottom line is set to rise by around 8%. Therefore, its current valuation appears to be highly enticing, with the company trading on a forward price to earnings (P/E) ratio of just 16.3. For a business with such a high degree of customer loyalty as well as excellent long term growth potential across the emerging world, this appears to be a very fair price to pay.

Meanwhile, Rio Tinto (LSE: RIO) has also been a disappointing performer of late, with its shares falling by 18% since the turn of the year. Certainly, it is enduring a highly challenging period and, while the price of iron ore has risen dramatically in recent weeks, the short to medium term outlook for the steel-making ingredient remains highly uncertain.

Due to this, Rio Tinto’s share price is likely to remain highly volatile, but with it now trading on a price to book value (P/B) ratio of just 1.25, it appears to offer a sufficiently wide margin of safety to warrant investment. Furthermore, with Rio Tinto in the midst of reducing its costs, improving efficiencies and diversifying its exploration spend, it could become an improved business over the medium term and benefit from rising profitability due to having a higher market share in the coming years.

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 Burberry, Talk Talk, and Rio Tinto. The Motley Fool UK has recommended Burberry. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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