What Is Going On At ISG PLC And Concha PLC?

Why are these 2 stocks in the news? ISG PLC (LON: ISG) and Concha PLC (LON: CHA).

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.

Shares in construction services company ISG (LSE: ISG) have surged by over 15% today due to a takeover approach by investment company Cathexis. It has offered 143p in cash for each ISG share, which represents a premium of 17.2% to the closing price of ISG on 10 December.

This values ISG at £70.8m and with Cathexis already owning just under 30% of the business, it hopes the offer will provide ISG’s shareholders with a degree of certainty following a difficult period for the business. This included a pre-tax loss of £12.9m last year. And with the nature of ISG’s business being relatively uncertain and prone to extraordinary losses from time to time, selling out could be viewed as a positive move by risk-averse investors.

Bargain price?

But looking ahead to the current year, ISG is expected to move back into profitability with a pre-tax profit of £15.7m being forecast. This puts it on a forward price-to-earnings (P/E) ratio of just 6 using the offer price, which indicates that it may be valuing the company rather modestly. Further evidence of this can be seen in the company’s forward yield of 6.2%, which not only indicates impressive income prospects, but also a relatively appealing valuation.

Certainly, there are risks to the business and its share price performance has been hugely disappointing in recent months. In fact, it has fallen by 34% in the last month alone – even when today’s gain is taken into account. However, even factoring in the risks, the current margin of safety appears to be rather wide. As such, if the deal goes through then Cathexis may be picking itself up something of a bargain for the long term.

Hard to predict

Meanwhile, shares in investment company Concha (LSE: CHA) have been volatile this week, with them being down 43% since Monday but trading as much as 14% up at one point. The share price movement has been sufficiently volatile to prompt the company to release a statement in which it said it’s unaware of any press speculation that may have contributed to the recent volatility.

Concha also said it’s constantly reviewing multiple potential acquisition opportunities and that, as highlighted in its September update, discussions are still ongoing regarding a specific global opportunity within its investment scope.

Yes, Concha may have long term potential. But the fact that its shares have been so volatile of late and the company being a lossmaking entity, it seems that there may be better opportunities elsewhere within the small-cap space.  That’s especially the case since there can be no guarantee that its aforementioned discussions will lead to an acquisition, thereby making the company’s future appear rather difficult to accurately forecast at the present time.

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 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

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

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

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

2 FTSE income stocks investors should consider buying in April

Income stocks are a great way to build wealth. Our writer details two picks she believes investors should consider snapping…

Read more »

Investing Articles

What might the 5-year price chart tell us about BT shares?

Christopher Ruane considers what clues the long-term performance of BT shares might offer him about business performance and whether to…

Read more »