3 Shares Analysts Love: ARM Holdings plc, Prudential plc And Just Eat PLC

Why ARM Holdings plc (LON:ARM), Prudential plc (LON:PRU) and Just Eat PLC (LON:JE) are in favour with City experts.

| 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.

Right now, ARM Holdings (LSE: ARM) (NASDAQ: ARMH.US), Prudential (LSE: PRU) (NYSE: PUK.US) and Just Eat (LSE: JE) are among the favoured stocks of professional analysts.

Prudential

Prudential is the biggest of the three companies, and the top insurer in the FTSE 100. Earlier this month, JP Morgan Cazenove upgraded the stock from “underweight” to “neutral”, leaving no analyst with a negative view that I can see.

Cazenove said its previous concerns about Prudential’s exposure to Asian regulatory risk and US variable annuities had both receded. The broker lifted its target price on the company to 1,380p. Meanwhile, the three out of every four analysts who rate Prudential as a “buy” or “overweight” have targets in the 1,700p to 1,800p area.

At a current price of 1,600p, Prudential trades on 14.5 times forecast 12-month earnings. With double-digit earnings growth expected both this year and next, the shares look reasonable, if not outstanding, value to me.

ARM Holdings

Microchip designer ARM has almost as much analyst support as Prudential. Last month, Citigroup moved ARM from “neutral” to “buy”, citing a number of reasons, including “improving earnings momentum” and the analysts’ “increased conviction in the firm’s ability to compete and maintain its dominant share in mobile”.

Citigroup reiterated its position after ARM reported strong results last week, while Goldman Sachs maintained a “conviction buy” rating, referring to the company’s “structural multi-year royalty growth opportunity”.

At a current price of 1,061p, ARM trades on 33.7 times forecast 12-month earnings. That may seem high, but this is a quality growth business, and you’re doing quite well if you can pick the shares up at under 35 times earnings.

Just Eat

If ARM’s earnings valuation lifted your eyebrows, prepare for them to fly clean off your head when I tell you Just Eat’s rating! The online takeaway ordering platform, which joined the stock market last April at 260p a share, has seen its shares rise to a current 370p — or 64 times forecast 12-month earnings.

Despite the stratospheric valuation, the City is bullish on the company’s prospects, and an increasing number of analysts are covering the stock. Citigroup initiated coverage in December with a “buy” rating, and Canaccord Genuity joined the party earlier this month, also with a “buy”.

The Canaccord analysts believe Just Eat demonstrated the popularity of its service and strength of its systems over the festive period, and said: “We see scope for further returns, premised on rapid earnings growth and potential catalysts in the form of acquisitions”.

Just Eat isn’t my kind of investment, but it looks one of the more promising of a clutch of recently floated high-growth companies that includes AO World.

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.

G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. 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

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 »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

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

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »