3 Stocks To Pile Into? National Grid plc, Essentra PLC And Millennium & Copthorne Hotels plc

Should you buy these 3 stocks right now? National Grid plc (LON: NG), Essentra PLC (LON: ESNT) and Millennium & Copthorne Hotels plc (LON: MLC).

| 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 components and solutions provider Essentra (LSE: ESNT) have soared by over 10% today after it released an encouraging set of results for the 2015 financial year. Even though pre-tax profit fell due to one-off costs, the company nevertheless appears to be performing well despite challenging trading conditions. And with it increasing its dividend, it seems to be confident in its long-term outlook.

In fact, Essentra posted revenue of over £1bn for the first time in its history. This is a major achievement since its specialist technologies division was hit by the downturn in spending in the oil and gas industry, while the acquisition of Clondalkin Specialist Packaging and subsequent site rationalisation measures hurt the company’s margins.

Looking ahead, Essentra is forecast to increase its bottom line by around 15% in 2016. This puts it on a price-to-earnings growth (PEG) ratio of just 1.1, which indicates that even though challenges in some of its divisions seem likely to remain, it could prove to be a sound long-term buy.

Expensive hotels?

Also reporting today was Millennium & Copthorne Hotels (LSE: MLC). Its shares are down by around 5% after it recorded a fall in profit and reduced its dividend. In fact, its pre-tax profit fell by 42% versus the prior year, due in part to an impairment charge of £76m on four of the company’s properties. And with Millennium & Copthorne reporting that trading conditions are expected to remain uncertain, it would be of little surprise for investor sentiment to worsen in the short run.

With the company’s shares trading on a price-to-earnings (P/E) ratio of around 18, they appear to be rather fully valued even after today’s price fall. Certainly, Millennium & Copthorne continues to offer long-term growth potential, but it could be worth waiting for a significantly lower share price before piling-in.

Power play

One stock that does appear to be worth buying right now though is National Grid (LSE: NG). It seems likely to gain in popularity for three main reasons. Firstly, it offers supreme defensive qualities during what is undoubtedly a highly uncertain period for the stock market. As such, the company’s valuation could be bid up by fearful investors.

Secondly, National Grid is likely to increase in popularity as a result of a reduced chance of interest rates rising over the medium term. As a highly indebted company, borrowing costs are always a major concern for the company’s investors. With them set to remain low, National Grid’s profitability could hold up better than expected.

Finally, National Grid’s dividend remains relatively high, with it standing at 4.7%. With a loose monetary policy causing income shares to remain in vogue, National Grid’s income potential could cause its share price to rise substantially in the coming months and 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 National Grid. The Motley Fool UK has recommended Essentra. 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

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

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 »