Will AstraZeneca plc, Flybe Group PLC And Acal plc Prove To Be Stellar Turnaround Stocks?

Should you pile into these 3 stocks despite poor starts to the year? AstraZeneca plc (LON: AZN), Flybe Group PLC (LON: FLYB) and Acal plc (LON: ACL).

| 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 customised electronics supplier Acal (LSE: ACL) have risen by around 7% today after it released an upbeat trading update for the full year to 31 March. Encouragingly, earnings are set to be slightly ahead of previous guidance, with sales and margins both performing better than expected.

For example, sales for the year increased by 14% at constant currency and a key reason for that was strong numbers from Acal’s design and manufacturing division. It accounted for 48% of group sales and with its top line rising by 3% on a like-for-like (LFL) basis, it made a positive impact on overall financial performance. Furthermore, with Acal’s design and manufacturing division benefitting from the impact of recent acquisitions, its total sales rose by a very impressive 50%.

With Acal forecast to increase its bottom line by 14% this year and by a further 12% next year, it seems likely to turn around the 6% share price fall recorded since the start of the year. That’s especially the case since Acal trades on a price-to-earnings-growth (PEG) ratio of just 1, which indicates that now could be a great time to buy it.

Profit potential

Also in the news today is Europe’s largest regional airline Flybe (LSE: FLYB), with the company announcing that its new franchise partnership with Blue Islands will commence on 6 June. This is a 10-year franchise partnership, with Blue Islands operating six routes into Jersey. It should help Flybe to retain a presence on key routes to and from the Channel Islands and has been structured to accommodate additional aircraft and routes if required.

Clearly, Flybe’s share price performance has been hugely disappointing since the turn of the year, with its valuation declining by 36% during the period. However, with its shares trading on a PEG ratio of just 0.1, it offers superb capital gain prospects. As such, and while it can be difficult to buy any stock at its lowest ebb, for long-term investors Flybe offers excellent profit potential.

A good buy?

Also declining since the turn of the year have been shares in AstraZeneca (LSE: AZN). They’ve fallen by 10% and have underperformed the wider index by 11%. Clearly, this is disappointing, but with AstraZeneca having strengthened its drugs pipeline in recent years it’s in a much stronger position than it has been for a number of years.

Due to this, the company has excellent turnaround potential. It also has the financial strength to continue with its acquisition programme and build a more diverse and potentially more profitable pipeline. And with it previously forecasting a doubling of sales by 2023, investor sentiment in the stock could be positively catalysed. With a price-to-earnings (P/E) ratio of 14.7, AstraZeneca appears to offer good value for money and while its turnaround story has a long way to go, it seems to be on track and worthy of purchase right now.

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 AstraZeneca. The Motley Fool UK has recommended AstraZeneca. 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

Here’s how investing £250 a month could bag me over £10K in passive income annually

This Fool breaks down how she would go about building a passive income stream worth over £10,000 annually to enjoy…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

I’d snap this FTSE 250 stock up in a heartbeat for juicy returns and growth!

Sumayya Mansoor explains why this FTSE 250 property stock is firmly on her radar as she looks to buy stocks…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

1 dirt-cheap FTSE 100 stock investors should consider buying in June

The FTSE 100 is littered with bargains, according to our writer. She explains why investors should be taking a closer…

Read more »

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

The Legal & General share price has gone nowhere. Why?

The Legal & General share price has performed much worse than the the FTSE 100 over the past five years.…

Read more »

Investing Articles

Where will the BT share price go in the next 12 months? Here’s what the experts say

The BT share price has been sliding for years. But after the latest set of results, it looks like the…

Read more »

Investing Articles

Are National Grid shares now a brilliant bargain?

National Grid shares look exceptionally cheap following last week's selloff. Is now the time to buy the FTSE 100 firm…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Up more than 15%! — this small-cap company is delivering phenomenal dividend growth

There’s more good news in this company’s interim report and it may be shaping up as a decent dividend growth…

Read more »

Electric cars charging at a charging station
Investing Articles

Big news for Tesla stock investors!

Tesla has just quietly dropped a key target it set for itself just a few years ago. What does this…

Read more »