Should you buy these three shares after today’s updates?

Does the latest news expose any nice Brexit bargains?

| 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.

As the hot summer continues, so does the stream of company news in what’s set to be a busy week for share watchers. Here are three with updates today.

Cheap airline?

Airlines have been hit since the Brexit vote with fears of loss of access to Europe’s open skies being eclipsed by the fall in the value of the pound — easyJet told us last week that it had seen its costs rise by £40m in the month since the vote due to the resulting fuel price rise.

But today, Ryanair Holdings (LSE: RYA) saw its shares pick up 5.5% in morning trading to €11.50 after releasing Q1 figures. That still leaves the price down 16% since referendum day. But as the company was able to report a 4% rise in pre-tax profit and a 12% rise in earnings per share due to traffic rising 11%, and despite a 10% cut in average fares, I can’t help thinking the sell-off is overdone.

With Ryanair still expanding its routes (and staying in the EU), the long-term future for the budget airline looks rosy to me. The shares are on a forward P/E of 10.5 for this year, and that would drop to 9.6 based on 2017’s forecast EPS rise. I reckon that’s cheap.

A six-bagger with more to come?

You might not have heard of CVS Group (LSE: CVSG), but it bills itself as the UK’s largest veterinary group, and that’s big business — if you’d bought CVS shares five years ago, you’d be sitting on a gain of 550%.

Today the company gave us an update ahead of full-year results (due 23 September), telling us that revenue and adjusted EBITDA should be “modestly ahead of market expectations“. Those expectations currently suggest a 38% rise in earnings per share. Like-for-like revenue has risen by 4.8%, and the firm’s loyalty scheme membership has increased by 19%. With members contributing 16.3% of revenue, such schemes are great for tying-in future custom.

CVS is growing by buying up individual surgeries too, and acquired 67 new ones during the year as well as other acquisitions, saying: “We continue to see a significant number of acquisition opportunities“.

The 726p shares are on a forward P/E of 21, dropping to 18 for 2017, and to me that looks like reasonable value for such a convincing growth story.

A Brexit-safe bet?

XP Power (LSE: XP) has enjoyed several years of solid earnings and dividends, and an upbeat set of first-half figures suggest this year will bring more of the same. The firm, which develops electronics power supply components, reported a 12% revenue rise to £60.3m, on the back of a strong order book. Adjusted pre-tax profit of £10.2m (up 6%) led to a 4% EPS rise to 52.2p, and allowed the interim dividend to be lifted 7.4% to 29p per share.

Chairman James Peters enthused: “Reported order intake and revenues for the first six months of 2016 all set new records,” expressing “confidence that we should be able to continue to grow revenues in the second half of 2016“.

With around 50% of XP’s business done in North America and very little in the EU, the falling pound shouldn’t do it any harm at all and will make dollar earnings look a lot better. With XP’s shares at 1,622p, we’re looking at P/E multiples for this year and next of 15 and 14, with dividend yields of 4.4% and 4.6% on the cards. Looks like a decent buy to me.

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.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended XP Power. 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 »