Are these 3 hidden bargains from today’s news?

Is today’s news hiding some overlooked tasty 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.

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.

Reporting season might be trailing off a little, but it’s not time to take our eye off the ball and let attractive candidates pass us by. Here are three firms bringing us updates today that I think are worth a closer look.

Cheap cards

Shares in greetings card purveyor Card Factory (LSE: CARD) are down 26% to 296p since September 2015, after a 7.5% fall on the day of a first-half trading update.

Total sales grew 4.8%, with like-for-like sales up 0.2%, and the company reported a net opening of 34 new stores and said it’s “confident of delivering another year of approximately 50 net new openings.” But this half’s growth represents a slowing compared to the first half last year, and when high-flying growth candidates start to slow a little, it’s almost inevitable that their shares will take a tumble.

There’s also a hit from the falling value of the pound, but against that we heard that Card Factory is “highly cash generative, driven by its strong operating margins, limited working capital absorption and relatively low capital expenditure requirements,” and there’ll be news of a surplus cash return when interim results are released in September.

Electronics rebound

TT Electronics (LSE: TTG) shares fell 28% from their 2016 peak in March to late June, after the maker of electronics components reported two years of falling earnings. But since then, they’ve picked up 18% to 144p, perhaps showing some confidence in the current analysts’ consensus of a return to growth this year with a 14% EPS boost on the cards.

First-half results lend credibility to that, with a 25% rise in pre-tax profit and a 21% boost to EPS (16% and 12% at constant exchange rates). Net debt rose from £56.1m to £70.7m, though that doesn’t seem a problem for a company with turnover of more than £500m per year. The interim dividend was maintained at 1.7p per share.

Chief executive Richard Tyson lauded the firm’s return to profitable growth, adding “we are confident of continued progress in 2016.” So are we looking at a bargain now? With a forecast dividend yield of over 4% and further EPS growth predicted for 2017, TT Electronics shares are looking good value to me.

An investment trust?

I’m a fan of investment trusts, and a 21% rise in the share price of Witan Investment Trust (LSE: WTAN) since February has grabbed my attention. Witan is a globally-diversified trust, so could it be a good contrarian time to buy?

First-half results show a 6.4% net asset value (NAV) return, and though that was a little below the firm’s benchmark of 7.7%, excluding changes in the value of debt lifts it to 7.5%. But what really attracts me is that the shares have fallen to a discount of 8.5% to NAV, which means they’re priced at 8.5% less than the market value of the trust’s underlying investments. Investment trust shares do tend to trade at discounts to NAV, but that looks a bit too wide to me — and Witan thinks so too, having been buying back its own shares while they’re lowly-valued.

Total interim dividends amount to 8.5p per share (up from 7.7p at the same stage last year), and though yields of only a little over 2% aren’t that exciting, we’re looking at a growth vehicle rather than an income target. Could be nice.

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 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

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

2 reasons why I’m loading up on FTSE 100 shares

This Fool thinks FTSE 100 shares look cheap. With that, he plans to continue snapping them up today. Here's one…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Why wait? I’d buy FTSE 100 shares now before the next stock market rally!

Our writer explains why he'd snap up what he sees as bargain FTSE 100 shares now rather than waiting in…

Read more »

Investing Articles

Is it time for me to change my tune about Rolls-Royce shares?

This Fool has steered clear of buying Rolls-Royce shares. But after its recent performance, he's reconsidering his stance. Here's why.

Read more »

Investing Articles

Aviva share price: 3 reasons to consider buying for 2024

The Aviva share price is still lower then when I bought some nearly a decade ago. Here's why I'm thinking…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

These 2 shares could bank me £328 a month in second income

Jon Smith runs through two FTSE stocks that have above-average dividend yields that could pay out a generous second income…

Read more »

Stack of one pound coins falling over
Investing Articles

This passive income plan is simple – but could earn me thousands!

Christopher Ruane explains how putting a fiver a day to work in the stock market might help him earn thousands…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Charticle

After record profits, are Lloyds shares a buy, sell, or hold?

As Lloyds pulls in pre-tax profits of £7.5bn, boosts its dividend, and continues to repurchase shares, are the company’s shares…

Read more »

Investing Articles

NatWest shares: is a once-in-a-lifetime opportunity on the way?

Should investors get ready for a unique opportunity as the UK government plans to sell off its NatWest shares later…

Read more »