Can Further Gains Be Expected At RSA Insurance Group plc, JD Sports Fashion PLC, Admiral Group plc And PayPoint plc Following A Scorching Summer?

Royston Wild looks at whether RSA Insurance Group plc (LON: RSA), JD Sports Fashion PLC (LON: JD), Admiral Group plc (LON: ADM) and PayPoint plc (LON: PAY) can continue their recent charge.

| 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.

Today I am looking at the future prospects of four stock market stormers.

RSA Insurance Group

Shares in financial services leviathan RSA Insurance (LSE: RSA) have leapt more than 20% since the start of June, the stock gaining fire after Zurich announced its intention to purchase the firm. With the deadline looming this week, RSA announced it was “willing to recommend” its Swiss rival’s latest £5.6bn offer, worth an estimated 550p per share, and asked for the Takeover Panel to allow more time for the deal to be signed off.

The deal is far from a foregone conclusion, however, particularly as the macroeconomic jitters of recent days could prompt Zurich’s shareholders to put the kibosh on any alliance. Still, RSA’s current share price of 516p represents a chunky discount to the proposed buyout price. And the release of positive financials this week — pre-tax profit galloped to £288m during the first-half, RSA noted — could potentially attract a bidding war from other insurers won over by the London firm’s transformation plan. I think RSA’s share price could chug still higher in the weeks ahead.

JD Sports Fashion

Supported by steadily-improving retail conditions in the UK, investor appetite for trainer emporium JD Sports (LSE: JD) has lit up in recent months and the stock has risen 33% since the end of May. The business announced during the period that, thanks to like-for-like sales continuing to steam higher, that pre-tax profit for the 12 months to January 2016 should smash expectations. And with JD Sports continuing to aggressively expand I fully expect the top-line to keep on exploding in the years ahead.

With last month’s announcement having prompted scores of broker upgrades, the City expects the retailer to enjoy earnings expansion of 21% and 9% in 2016 and 2017 respectively. And despite the recent share price gain, JD Sports does not appear to be chronically overvalued, either, dealing on P/E ratios of 17.4 times for this year and 16.1 times for 2017. I believe this is a great point to get in on the sportswear giant’s terrific growth tale.

Admiral Group

Car insurance colossus Admiral (LSE: ADM) has seen its stock advance by a more modest 2% during the summer months, but I believe momentum should pick up looking ahead as industry pressures ease. Indeed, the Association of British Insurers advised last month that the average premium advanced 3.1% in the second quarter from the same point in 2014. On top of this, Admiral’s improving performance in the US and Italy also bodes well for revenues growth.

The number crunchers expect Admiral to report a 5% earnings slip in 2015 thanks to previous rate pressures, but a 3% uplift is forecast for the following year. Consequently a P/E ratio of 16 times for 2015 falls to a highly-appealing 15.8 times for 2016. Furthermore, projected dividends of 93.3p per share and 96.5p for 2015 and 2016 respectively are hard to ignore, the insurer’s robust capital base enabling yields of 6% and 6.2% for these years.

PayPoint

Shares in PayPoint (LSE: PAY) have continued the upsurge that started in the spring, and the payment collection specialists have ascended a further 7% during the summer period. The company is enjoying the fruits of surging e-commerce volumes, and announced last month that it processed 201.6 million transactions in April-June, up 6% from a year earlier, with net revenues edging 1% higher during the period to £29m.

And I believe the firm’s decision to bolster its retail operations should deliver solid returns as improving consumer spending power powers the rise of internet retailing still further. This view is shared by the analysts, and PayPoint is anticipated to enjoy earnings expansion of 6% in both 2015 and 2016, resulting in decent P/E multiples of 16.4 times and 15.3 times respectively. In my opinion this is a decent price for a company that could see the bottom line explode looking further down the line.

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 owns shares of PayPoint. 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

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 »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

2 FTSE income stocks investors should consider buying in April

Income stocks are a great way to build wealth. Our writer details two picks she believes investors should consider snapping…

Read more »

Investing Articles

What might the 5-year price chart tell us about BT shares?

Christopher Ruane considers what clues the long-term performance of BT shares might offer him about business performance and whether to…

Read more »