Are Clarkson plc, RM plc, Hargreaves Services plc and Kier Group plc buys after today’s updates?

Should you pile into these four stocks right now? Clarkson plc (LON: CKN), RM plc (LON: RM), Hargreaves Services plc (LON: HSP) and Kier Group plc (LON: KIE).

| 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.

Today’s update from bulk material logistics specialist Hargreaves Services (LSE: HSP) is rather mixed. On the one hand, the company is set to be a net beneficiary of sterling’s weakness due to its current stocks of largely dollar-denominated coal and coke. However, it also announced that a £7m earthworks project at a major UK port has been postponed owing to Brexit-related concerns. Due to its significant exposure to construction activity and capital investment projects, the uncertainty surrounding Brexit could be bad for business.

As such, a wide margin of safety may be required when investing in Hargreaves Services. Its shares currently have a price-to-earnings growth (PEG) ratio of only 0.3, therefore they appear to offer growth at a very reasonable price. While they may remain volatile as the effects of Brexit become apparent, for long-term investors Hargreaves Services appears to be a bargain.

Share price slump

Also reporting today was Clarkson (LSE: CKN). The integrated shipping services provider’s shares have slumped by 17% as it experienced a difficult trading period since its AGM. The ClarkSea index has fallen by a further 10% since the AGM, so that its average level for the first six months of 2016 was 30% lower than for the first half of 2015.

This deterioration in freight rates is due to higher uncertainty regarding the global economic outlook as well as the continuing imbalance between supply and demand in shipping and offshore. Clearly, Clarkson’s outlook is somewhat downbeat and this is reflected in its expected rise in earnings of just 2% this year. However, due to significantly better performance expected for next year, Clarkson has a PEG ratio of 0.7 and this indicates that for less risk-averse investors it could be a sound long-term buy.

Earnings rise

RM’s (LSE: RM) update has boosted its share price by over 4% today. The education software and services company recorded an increase in adjusted earnings of 5.2% in its first half, with strong revenue growth in its Results division partially offsetting reductions in its Resources and Education segments. As such, results were in line with expectations even though the UK education market remains somewhat subdued.

This operating environment is reflected in RM’s forecasts. It’s expected to report a fall in earnings of 5% this year, followed by a rise of just 2% next year. While disappointing, RM’s price-to-earnings (P/E) ratio of 7.6 indicates that it has a sufficiently wide margin of safety to merit purchase right now. Certainly, share price volatility may be high, but profitability for RM’s investors may be impressive in the coming years.

Strong pipeline

Meanwhile, Kier Group (LSE: KIE) also reported today. The property and construction services group is trading in line with management’s expectations since the release of its interim results in March. Looking ahead, it faces an uncertain outlook due in part to the potential impact from Brexit on UK construction. However, Kier believes the breadth of its business activities and strong order book provide both visibility and resilience.

For example, Kier Group’s Property division has a pipeline of projects totalling over £1bn, while its Residential division’s mixed tenure business has a pipeline of over £600m. Due to Kier trading on a forward P/E ratio of only 8.8, it seems to have a sufficiently wide margin of safety to make it an appealing long-term buy. Furthermore, its yield of 6.2% is likely to have huge appeal if interest rates fall over the coming months.

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 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

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Here’s what a FTSE 100 exit could mean for the Shell share price

As the oil major suggests quitting London for New York, Charlie Carman considers what impact such a move could have…

Read more »

Two white male workmen working on site at an oil rig
Investing Articles

Shell hints at UK exit: will the BP share price take a hit?

I’m checking the pulse of the BP share price after UK markets reeled recently at the mere thought of FTSE…

Read more »

Investing Articles

Why I’m confident Tesco shares can provide a reliable income for investors

This FTSE 100 stalwart generated £2bn of surplus cash last year. Roland Head thinks Tesco shares look like a solid…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

£20,000 in savings? I’d buy 532 shares of this FTSE 100 stock to aim for a £10,100 second income

Stephen Wright thinks an unusually high dividend yield means Unilever shares could be a great opportunity for investors looking to…

Read more »

Investing Articles

Everyone’s talking about AI again! Which FTSE 100 shares can I buy for exposure?

Our writer highlights a number of FTSE 100 stocks that offer different ways of investing in the artificial intelligence revolution.

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

3 top US dividend stocks for value investors to consider in 2024

I’m searching far and wide to find the best dividend stocks that money can buy. Do the Americans have more…

Read more »

Investing Articles

1 FTSE dividend stock I’d put 100% of my money into for passive income!

If I could invest in just one stock to generate a regular passive income stream, I'd choose this FTSE 100…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Forecasts are down, but I see a bright future for FTSE 100 dividend stocks

Cash forecasts for UK dividend stocks are falling... time to panic! Actually, no. I reckon the future has never looked…

Read more »