2 bargain stocks you can’t afford to ignore

Royston Wild runs the rule over two white-hot value stocks.

| 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.

I reckon Informa’s (LSE: INF) pacy expansion drive and broad span of operations puts it in an outstanding position to create blistering earnings growth in the years ahead.

This week the publishing and events powerhouse announced that revenues rose 11% during 2016, to £1.35bn, with sales rising 1.6% on an organic basis. As a result, adjusted operating profit advanced 13.8% year-on-year, to £416.1m.

Informa’s latest results pay testament to its three-year Growth Investment Plan which is due to complete this year, and result in the rollout of more than 30 products through to the end of next year.

And Informa’s long-running expansion into the US also offers plenty of further upside, of course, particularly after the potentially game-changing acquisition of North American rival Penton during the autumn. Meanwhile, the company’s successful portfolio improvement programme looks set to continue with the possible divestment of its troubled domestic conference businesses at its Knowledge & Networking arm.

Square Mile analysts expect Informa to follow a predicted 16% earnings rise in 2016 with further advances of 12% for this year and 7% for 2018. And these forward numbers produce P/E ratios of 13.6 times and 12.7 times respectively, far below the prospective average of 15 times for its FTSE 100 compatriots.

Animal magic

TV and film star Entertainment One (LSE: ETO) is also a brilliant growth bet for cash-savvy investors, in my opinion.

In a cheery update Entertainment One announced recently that “reported revenues in the full year have shown significant growth, having almost doubled against the previous year, with underlying EBITDA anticipated to be materially ahead of the previous year.

Entertainment One noted that its Television division continues to perform strongly and sales are expected to have doubled during the year to March 2017.

And looking elsewhere, Peppa Pig continues to bring home the bacon for the Entertainment One’s Family division, with merchandise sales exploding in the US thanks to a broad retail rollout before Christmas (the firm puts retail revenues Stateside at $200m in the 2016 calendar year). And Entertainment One’s PJ Masks show has also exceeded sales predictions, and which are likely to pick up as licensing across the globe steps up during the next 12 months.

Entertainment One expects sales to have risen 25% last year at Family, and predicts that box office revenues at its Film division to have advanced by a similar percentage thanks to monster releases like La La Land and Arrival.

The firm is clearly picking up a head of steam, and the City consequently expects it to recover from an anticipated 1% earnings slide in fiscal 2017 with rises of 18% and 8% in 2018 and 2019 respectively. And these figures result in P/E ratios of just 10.6 times and 9.9 times.

I believe both Entertainment One and Informa are great buys at current prices considering their exceptional earnings potential.

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. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

2 no-brainer FTSE 100 value shares to consider buying with just £500?

These FTSE 100 shares offer exceptional all-round value at today's prices. Could they end up supercharging investors' long-term returns?

Read more »

Investing Articles

These FTSE 250 growth shares could soar over the next year!

The FTSE 250's risen strongly as demand for British assets like shares has recovered. I think these two top companies…

Read more »

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

If an investor put £30,000 into the S&P 500 a decade ago, here’s what they’d have today!

A lump sum investment in S&P 500 shares would have created spectacular returns between 2014 and now. Can the US…

Read more »

Investing Articles

Is Games Workshop a top stock to consider buying in December for the long haul?

With Games Workshop updating on its deal with Amazon, is the UK company a stock to think about buying for…

Read more »

Investing Articles

What does 2025 hold for the Lloyds share price?

Lloyds' share price could be in for a rocky ride next year as tough economic conditions and a fresh mis-selling…

Read more »

Investing For Beginners

3 ways to try and build a bulletproof ISA

Jon Smith explains factors such as allocating funds to defensive stocks as a way to try and smooth out volatility…

Read more »

Dividend Shares

Why the 2025 dividend forecast for Lloyds shares doesn’t tempt me

Lloyds' shares offer a yield of over 6% today. But Edward Sheldon believes other UK stocks will deliver higher overall…

Read more »

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

This is 1 of the hottest themes in the stock market right now and it’s generating huge gains for investors

This area of the stock market's absolutely on fire at the moment. And Edward Sheldon believes the momentum could continue…

Read more »