3 Bargains For The Week Ahead: SKY PLC, Tullow Oil plc And BAE Systems plc

If we keep our eye on upcoming company results, over the course of a year we’ll have a well-spaced opportunity to take a look at all of our top companies at least twice. Next week’s calendar is pretty full, and I’ve been picking out a few of my favourite candidates:

Comms winner

Shares in telly and internet company SKY (LSE: SKY) have put in a great 12 months, climbing 23% to 1,137p. Over five years there’s been a more modest gain of just 60%, but the price had been a little high based on earnings growth expectations, and we’ve had a few years of those earnings catching up. There’s good reason to expect growth to continue into the future too, if Q3 figures are any indication.

The quarter brought in 242,000 new customers and more than a million new paid-for subscription services, providing SKY with its highest third-quarter growth in the UK and Ireland in 11 years. With Q3 revenue up 5% to £8,453m and operating profit up 20% to £1,025m, I’m expecting full-year results due on Wednesday to look good.

On a forward P/E of a bit under 18 for 2016, SKY isn’t in screamingly cheap territory, but it looks like a good value long-term investment to me.

Bombed-out oily?

On the same day, we should get interim results from Tullow Oil (LSE: TLW), whose shares have certainly not been doing so well — they’re down 67% over the past 12 months to 254p, and down 82% since February 2012. That’s almost all down to the plunging oil price that has hit the whole sector. However, unlike some of the harder-hit exploration-only oilies that are still in their cash-burn phase, Tullow is pumping and is profitable — well, it recorded a loss in 2014, but it should be pack into profit this year.

And I reckon the share price fall is overdone now, with Tullow shares on a price to book value rating of under 0.9. That’s on sub-$50 oil, and I reckon it makes Tullow one of the companies most likely to benefit when the oil price recovers (and it surely will recover, won’t it?)

Aerospace bargain

My third here is BAE Systems (LSE: BA), whose first-half results will be with us on Thursday. The BAE share price has been held back by cuts in defence spending in recent years, but it’s still managed a 49% rise over five years, to 467p. And despite those fears, earnings and dividends have actually been holding up well — forecasts suggest dividend yields of 4.3% this year and 4.5% next., with the shares on a 2016 forward P/E of a very modest 11.5 and with a 6% rise in earnings predicted for that year.

Dividends are more than adequately covered and look safe, and the global economic recovery makes BAE look like a tempting prospect to me — with above-average dividends now, and growth tomorrow from a stock on a lower-than-average P/E.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Sky and 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.