Should You Buy Gulf Keystone Petroleum Limited, SAGA PLC & Ashmore Group plc Today?

Royston Wild runs the rule over Gulf Keystone Petroleum Limited (LON: GKP), SAGA PLC (LON: SAGA) and Ashmore Group plc (LON: ASHM).

| 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.

sdf

Today I am taking a look at three of Tuesday’s major headline makers.

Silver surfer

Insurance giant SAGA (LSE: SAGA) continued its recent upsurge in Tuesday trade, the release of bubbly full-year results propelling the stock to fresh three-month peaks.

SAGA saw pre-tax profit leap 55% higher in the year to January 2016, to £176.2m, the business enjoying sales growth of 11% and 4.1% for its travel and insurance products respectively. SAGA put this robust performance down to “new and improving products, new routes to market and the ability to target a broader range of customers.”

The City has certainly bought into SAGA’s growth story, and expects earnings to rise 5% and 15% in fiscal 2017 and 2018, resulting in decent P/E ratings of 14.3 times and 12.6 times. Like the number crunchers, I believe SAGA could prove a very lucrative investment.

Fund manager flips higher

Emerging market play Ashmore Group (LSE: SGM) gave its troubled shareholders a much needed boost in Tuesday trade after a string of disappointing recent updates.

The fund manager announced that assets under management edged 4% higher between January and March, to $49.4bn. The company noted that “the quarter saw strong returns from emerging markets assets as value was recognised and prices recovered from over-sold levels earlier in the period.”

Ashmore isn’t quite out of the woods, however, as fears over developing markets — allied with the fragility of commodity prices and subsequently many emerging region currencies — still remain large in many investors’ minds.

And with predicted earnings dips of 28% and 2% in 2016 and 2017 respectively resulting in high P/E ratings of 21.2 times and 21.3 times, I believe there is plenty of room for Ashmore’s share price to stage another shocking reversal.

Driller in dire straits

The volatility washing over Gulf Keystone Petroleum (LSE: GKP) in recent sessions shows no signs of abating. The business was recently dealing 17% higher from Monday’s close, moving away from fresh troughs below 4p per share struck last week.

The cash-starved company cheered the market last Tuesday with news of $15m payment from the Kurdistan Regional Government for March. But the euphoria was washed away later in the week as Gulf Keystone announced plans to start discussions over its battered balance sheet.

Alarmingly Gulf Keystone advised that its Shaikan wells “may begin to exhibit natural declines later in 2016” without further capital expenditure. The firm says that it needs around $71m to maintain output at around 40,000 barrels per day, a colossal amount given that Gulf Keystone only has $69.5m in its bank account.

And the driller has a series of interest payments in the months ahead, too, leaving the company on perilous ground as it scrambles to execute near-term fundraising and balance sheet restructuring.

Things are clearly in danger of getting a lot more turbulent at Gulf Keystone in the weeks and months to come, even discounting the strong possibility of another sharp oil price correction. I believe the Middle Eastern producer is a risk too far for savvy investors.

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.

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.

More on Investing Articles

A pastel colored growing graph with rising rocket.
Investing Articles

Here’s how long it’s taken £1k of Nvidia stock to turn into £10k today!

Our writer explains how money invested in Nvidia stock less than three years ago has grown in value over tenfold…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
US Stock

3 red flags I’m seeing right now for the S&P 500

Jon Smith points out some concerns he has with the S&P 500 at current levels and picks one stock he's…

Read more »

UK financial background: share prices and stock graph overlaid on an image of the Union Jack
Investing Articles

UK dividend shares are outperforming US tech stocks!

UK dividend shares aren’t just for passive income investors. Over the last 12 months, they’ve been outperforming their US tech…

Read more »

DIVIDEND YIELD text written on a notebook with chart
US Stock

Here’s how much passive income an investor could make with £2k in Meta stock

Jon Smith looks at Meta stock from a different angle to normal, considering it as an option for an investor's…

Read more »

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

1 of my top UK shares is up 15% in a day! Is it still a buy for me?

Celebrus shares are soaring after strong full-year results. At a P/E ratio below 13, is it one of the best…

Read more »

Close-up of children holding a planet at the beach
Investing Articles

£10,000 invested in Jet2 shares 2 years ago is now worth…

Jet2 shares have surged in recent months and finally appear to be pushing towards fair value. Dr James Fox shares…

Read more »

piggy bank, searching with binoculars
Investing Articles

This FTSE 100 blue-chip could rise 26% in 12 months, according to brokers

While this FTSE 100 dividend stock has put investors through the wringer in recent years, some analysts see brighter skies…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

A 3-step passive income strategy to target major wealth

Want to invest in the stock market to build up a passive income stream? There's no fiendlishly complex multi-step mystique…

Read more »