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Should You Stash Your Cash In Tullow Oil plc, Darty PLC Or Findel plc?

Today I am looking at the investment case for three Thursday headline-grabbers.

Tullow Oil

With the oil market set to remain drowning in excess supply, I reckon that explorer Tullow Oil (LSE: TLW) is a precarious selection for stock hunters. While the Brent price remains steady around $65 per barrel, given that subdued economic growth is failing to suck up bulging stockpiles and production from OPEC, Russia and the US edges ever higher, I believe that black gold prices could be set for another hefty shuttle lower.

The number crunchers expect Tullow Oil to swing from losses of 170.9 US cents per share last year to earnings of 17.8 cents in 2015, before advancing an additional 62% in 2016 to 28.8 cents. Still, these projections leave the business changing hands on P/E multiples of 33.3 times and 20.6 times for these years — I would consider a value closer to the bargain barometer of 10 times to be a fairer price given the worrying state of the oil market.

Although around 55% of Tullow Oil’s 2015 production is hedged, this percentage falls away drastically in the coming years. And with the producer facing a backcloth of escalating costs, a prolonged period of weak period could play havoc with the bottom line.


Electrical giant Darty (LSE: DRTY) greeted the market with better-than-expected full-year results in Thursday trade and was recently dealing 4% higher. The retailer, whose stores straddle European markets including France, Belgium and the Netherlands, saw pre-tax profit slip 12% in the year to April 2015, to €32.9m, even though revenues ticked 3% higher to €3.5bn.

But with Darty advising of improving consumer confidence in its key markets, and its Nouvelle Confiance scheme reducing its exposure to underperforming territories like the UK, Italy and Spain, slashing costs across the business, and boosting its web operations, it looks as though Darty could be set for a bumper bounceback.

The London firm has now clocked up four consecutive earnings dips, but City believes fiscal 2016 will mark a sea change in Darty’s fortunes and have pencilled in a 27% uptick for the current period, leaving the business dealing on a P/E multiple of just 13.9 times. And the ratio slips to just 11.4 times for 2017 amid expectations of a further 25% bottom-line surge.

And this bubbly earnings backdrop is expected to underpin a resumption the business’ progressive dividend policy, too. The payout has remained locked at 3.5 US cents per share since 2012, but this is predicted to rise to 4 cents in 2016 before stomping to 4.26 cents the following year. Consequently Darty sports chunky yields of 4% for this year and 4.2% for 2017.


Unlike Darty, fellow retailer Findel (LSE: FDL) was cast adrift in Thursday trade following its latest financials and was last 4.4% lower. The Hyde business swung to a pre-tax loss of £1.7m in the 12 months concluding March 2015 from profits of £5.7m previously, even though turnover crept 3% higher during the period to £284m.

However, the firm has implemented a drastic overhaul of its education operations to turn around its dragging bottom line, while sales at its Kitbag sports division are showing signs of recovery. And the galloping popularity of its Express Gifts remains a critical girder for future growth. As a consequence I reckon Findel could be considered a bona-fide bargain for investors on the hunt for turnaround stocks.

Indeed, an expected 6% earnings tick for this year leaves the business changing hands on a ridiculously-low P/E multiple of 8.7 times, while predictions of a further 11% earnings rise in 2017 drives the readout to just 7.9 times. And with profits expected to steadily improve, Findel is expected to start shelling out dividends again during this period, with a prospective reward of 0.6p per share for 2016 anticipated to rise to 1.3p the following year.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Tullow Oil. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.