Will Monitise Plc, 7Digital Group PLC And Imagination Technologies Group plc Save Your Portfolio In A Bear market?

Should you buy these 3 stocks right now? Monitise Plc (LON: MONI), 7Digital Group PLC (LON: 7DIG) and Imagination Technologies Group plc (LON: IMG)

| 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.

Shares in mobile payments provider Monitise (LSE: MONI) were given a boost this week when the company released an upbeat set of interim results. They stated that the company expects to break even in the second half of the year based on earnings before interest, tax, depreciation and amortisation (EBITDA) and this seems to be a step in the right direction following a very challenging period for the business.

Of course, Monitise booked a loss of around £20m in the first half of the year and anticipates that an impairment charge of around £160m will feature in the current year’s performance as it writes down the value of intangible non-cloud assets. Although that is disappointing, Monitise is set to significantly reduce costs in the second half of the year and market sentiment appears to be picking up in response to this, with the company’s shares up 4% today.

While Monitise’s progress under its new management team is impressive, it is still very early days and the company has a long way to go before it reports a black bottom line. Therefore, it appears to be a stock to watch, rather than buy, at the present time, although its update is certainly a step in the right direction.

Also posting strong share price gains today is 7Digital (LSE: 7DIG), with the music company being 27% higher at the time of writing. This follows an upbeat update from yesterday when 7Digital reported that its 2015 financial performance will meet market expectations and that it is on-track to deliver a profit in 2016. Furthermore, is also announced the signing of a new contract with eMusic, with 7Digital providing additional functionality to customers and it being set to contribute to 2016’s financial performance.

Encouragingly, 7Digital reported a rise in monthly recurring revenues of 72% in 2015 as it continues the positive transformation of its revenue quality and develops healthy increases in higher margin licensing revenues. They increased by 21% versus the prior year and, with gross margins rising to 70% from 52% last year, 7Digital’s financial outlook continues to improve. Clearly, it remains a very small, high risk stock but could be worth a closer look for less risk averse investors.

Meanwhile, shares in Imagination Technologies (LSE: IMG) are also up by a considerable amount today, with them trading as much as 7% higher. This takes their gain to 10% for the week and, while it is too soon to say whether this is the start of a prolonged period of improving investor sentiment, the company’s second half of the year is set to offer a major improvement on its first half. As such, the company’s share price could offer strength in an otherwise highly volatile and potentially weak wider market.

Clearly, Imagination Technologies is undergoing a challenging period and this is evidenced by a forecast fall of 28% in its earnings this year. However, with a rebound of 52% being pencilled in for next year, Imagination Technologies offers significant capital gain potential – especially with it having a wide margin of safety since its shares trade on a price to earnings growth (PEG) ratio of only 0.6.

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 owns shares of Imagination Technologies and Monitise. 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

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

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 »