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Why WYG PLC And Patisserie Holdings PLC Could Be Worth Buying After Surging Over 10% Today


Shares in WYG (LSE: WYG) are as much as 11% higher today after the company made an announcement stating that it is currently conducting a major strategic review. This is highly significant news for shareholders of the company, since it could mean that WYG is acquired and made part of a larger group – hence the bid premium that now appears to be included in the company’s share price.

Of course, a strategic review can come to the conclusion that things are best left as they are, which could cause today’s spike to be reversed. Or, it could mean that WYG enters into a strategic partnership with another company in the hope of gaining synergies and reducing risk.

Either way, WYG continues to offer a bright future as an investment. For example, it trades on a price to earnings (P/E) ratio of 16.5 but, when its earnings growth forecast of 35% for next year is taken into account, the resulting price to earnings growth (PEG) ratio of 0.3 seems to equate to growth at a reasonable price. As such, and while its short-term performance is likely to be very volatile, WYG could be worth buying for the medium to long term.

Patisserie Holdings

The owner of Patisserie Valerie, Patisserie Holdings (LSE: CAKE), has seen its share price surge by over 10% today despite a lack of major news flow being reported. This gain continues the momentum that has seen the company’s share price soar by over 38% in the last three months alone, with its excellent full-year results seemingly being the main catalyst.

For example, Patisserie Holdings reported an increase in adjusted EBITDA of 27% in the year to the end of September 2014 and, looking ahead, its future prospects appear to be relatively bright, too. That’s because in the year to September 2016 it is forecast to grow its bottom line by 17% and, when combined with its P/E ratio, this equates to a PEG ratio of 1.1, which means that the company offers strong growth potential at a very reasonable price.

Furthermore, Patisserie Holdings currently yields 1.3% and, with dividends forecast to rise at a rapid rate (they are due to be 16.2% higher next year) it could become a realistic income play over the long term, too. In addition, it has an enviable estate location that could benefit from an increase in UK consumer spending due to the real terms increases in disposable income that are being pencilled in for the current year. As such, it could be worth buying at the present time.

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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.