Shares in clothing company Supergroup (LSE: SGP) have fallen by over 10% today due to investor concern regarding the company’s trading update which is due to be released tomorrow. With unseasonably warm weather, investors appear to be fearful that sales for Supergroup’s key outerwear products will be lower than expected and, as a result, its full-year financial performance may be less impressive than expected.
Clearly, this is a constant risk for clothing retailers, with the temperature and weather having a major influence on consumer sales. With Supergroup expected to increase its bottom line by 15% in the current year and by a further 18% next year, it appears to be moving in the right direction under its new management team. In fact, Supergroup appears to be more efficient now than in the past and, as such, appears to be a relatively appealing purchase for the long term – especially since it trades on a price to earnings growth (PEG) ratio of just 1.6.
However, with an update due out tomorrow and there being a chance of disappointment, it seems wise to wait for more information before buying a slice of Supergroup.
Meanwhile, Vertu Motors (LSE: VTU) has seen its share price rise by an impressive 27% since the turn of the year and, looking ahead, further capital gains could be on the cards. That’s because Vertu still trades on a relatively appealing valuation, with its shares having a price to earnings (P/E) ratio of just 13.1. This, when combined with earnings growth forecasts of 12% in the current year and 11% next year, translates into a PEG ratio of only 1.1.
Where Vertu also has appeal is with regard to its long term dividend outlook. Certainly, it may yield just 1.7% at the present time, but with dividends being covered 4.5 times by profit, there is tremendous scope for a rise in shareholder payouts. And, with dividends set to rise by 15% next year, Vertu could become a top notch income play over the medium term.
Also enjoying an excellent 2015 has been Sirius Minerals (LSE: SXX). Its shares are 42% higher than at the start of the year and, looking ahead to next year, the company may find it challenging to repeat its stunning performance from this year. That is mainly because the company’s shares were boosted by extremely positive news flow which was focused on impressive crop study results and, of course, permission for a potash mine in Yorkshire.
Looking ahead, Sirius Minerals could suffer from the impact of a weakening resources sector. That’s because, with financing needed over the medium term, investors may prefer to back companies which are profitable or which offer a reduced level of risk. As such, and while Sirius Minerals has a huge amount of long term potential, it may be prudent to await further news flow before piling in.
