Shares in BT (LSE: BT-A) have performed exceptionally well in 2015, with them having risen by 21% since the turn of the year. A key reason for this is the strategy changes which are ongoing at the company and which are rapidly changing the company’s product offering so as to position it for long term growth.
Of course, the major news which has positively catalysed BT’s share price this year is its move into the quad play market, with it now offering landline, broadband, pay-tv and mobile services. This should enable the company to successfully cross-sell its products to existing consumers and, with the company on-track to take over the UK’s largest mobile network EE, its customer base is due to increase and provide even greater opportunity to sell new products to existing customers.
However, BT’s shares have also reacted positively to news that the company is increasing its customer base at a rapid rate via organic channels. For example, its superfast broadband is now widely available after a major investment programme and its policy of offering considerable discounts to new customers has also proved popular.
The problem, though, is that BT is making major changes at a rapid rate, which is leading to significant costs in the short run. This is a contributing factor in BT being forecast to post a fall in its earnings of 3% in the current year. And, with the company’s balance sheet still being highly indebted and having a major pension liability, the price to earnings (P/E) ratio of 15.9 does not indicate that BT offers good value for money at the present time.
Meanwhile, fashion designer Ted Baker (LSE: TED) has released a positive trading update today, with the company reporting a rise in sales of 21% in its most recent quarter despite experiencing challenging trading conditions. And, with new stores opening in key markets such as the US and online sales increasing by 74% versus the same quarter last year, the company appears to be well-positioned to deliver improved performance over the medium to long term.
With Ted Baker being forecast to grow its bottom line by 19% in the current year and by a further 15% next year, its current price to earnings growth (PEG) ratio of 1.9 indicates good value for money is on offer. Furthermore, with the company having posted double-digit earnings growth in each of the last five years, it appears to be a resilient growth play, too.
Also reporting today was molten flow engineering company Vesuvius (LSE VSVS), with it stating that full-year performance will now be at the lower end of market expectations. That’s at least partly as a result of a declining industry outlook, with the global steel and foundry markets undergoing a highly challenging period. For example, global steel production declined by 2.4% in the twelve months to September and, looking ahead, further difficulties appear likely in the short run.
Still, Vesuvius is a relatively resilient company and is being aided by its restructuring programme. And, with the company’s shares trading on a P/E ratio of 11.2 and yielding 4.8% from a dividend which is covered 1.9 times by profit, it appears to offer good value for money at the present time for long term investors who can cope with a relatively downbeat short to medium term outlook.
