Can Last Week’s Winners Anglo American plc, TUI AG & Enquest Plc Keep Exploding?

Royston Wild considers whether Anglo American plc (LON: AAL), TUI AG (LON: TUI) and Enquest Plc (LON: ENQ) can keep on charging.

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Today I’m looking at the share price prospects of three recent surgers.

Metal mover

The severe share price volatility over at Anglo American (LSE: AAL) is yet to show signs of cooling, the stock advancing a chunky 8% between last Tuesday and Friday.

The diversified miner has been helped by a surge in iron ore values since the start of 2016 — the steelmaking ingredient topped the $62 per tonne marker just last month. But concerns over the state of the Chinese construction sector have cast doubts over whether this is nothing more than a ‘bubble.’

Anglo American is undergoing a vast divestment drive to cut its exposure to lossmaking ‘bulk’ commodities, and today announced the sale of its 70% stake in the Foxleigh metallurgical coal mine in Queensland, Australia.

While a necessity given the firm’s battered balance sheet, such measures are likely to prove nothing more than a sticking plaster as vast supply/demand imbalances across key markets continue to deteriorate.

Indeed, Anglo American is expected to endure a fifth successive earnings loss in 2016, this time by a gigantic 47%. This reading leaves the company dealing on a massive P/E rating of 27.1 times, leaving Anglo American in danger of a severe correction given its high-risk profile.

Take a trip

Holiday specialist TUI Travel (LSE: TUI) also enjoyed a bump higher last week, the firm advancing 9% between Tuesday and Friday.

The travel operator spiked following news that revenues were up 3% year-on-year during the six months to March, with TUI Travel managing to shrug off the impact of recent terrorist acts on the continent. Indeed, sales from the UK were up 8% from the corresponding period last year as people simply switched destinations rather than cancel their holiday plans.

The City expects TUI Travel to record earnings rises of 14% in both the years ending September 2016 and 2017, resulting in decent P/E ratings of 12 times and 10.8 times, respectively. I reckon this is great value given the firm’s excellent momentum, with improving economic conditions across Europe set to drive holiday bookings.

Crude clanger

Like Anglo American, oil explorer Enquest (LSE: ENQ) emerged last week as one of the FTSE’s major movers, the company’s shares rising 22% during Tuesday-Friday.

But like its resources peer, I reckon the massive imbalance washing over the oil industry also leaves Enquest in danger of a colossal reversal. Brent values have sunk back below the $40 per barrel marker as optimism over an OPEC-led supply cut have receded, while China’s cooling economy continues to batter hopes of a significant demand revival.

Against this backcloth, Enquest is expected to remain lossmaking until 2017 at least, according to City forecasts. And with the business nursing net debt of $1.55bn as of December, I reckon the producer could find itself on thin ice should crude prices fail to significantly recover.

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Royston Wild 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.

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