Today I am looking at the investment prospects of four British and American stocks.
Crude set to clatter lower?
A stream of disappointing data from China this week has once again brought the sellers out in force, with Brent crude prices sinking to two-month lows below $45 per barrel as a result. And I believe plunges to fresh multi-year troughs can be expected as the world swims in excess supply, a terrifying scenario for the likes of ‘black gold’ explorer Enquest (LSE: ENQ).
The International Energy Agency (IEA) has done market sentiment no favours by advising on Friday that OECD oil supplies stand at a whopping 3 billion barrels, adding that “oil market bears may choose not to hibernate,” particularly if forecasts of a cold winter in the US and Europe fail to materialise.
Enquest saw revenues slump 12% in January-June thanks to the diving oil price, to $444m, while net debt cantered to $1.28bn from $932m a year earlier. I believe additional trouble can be expected as demand levels drop and supply rattles relentlessly higher.
Stakes rise in payments battle
American tech colossus Apple (NASDAQ: AAPL.US) is making huge waves in the business of mobile payments. Its Apple Pay platform launched last year allows users to make payments to certain retailers with a simple swipe of their iPhone, and the company now has the likes of PayPal (NASDAQ: PYPL.US) in its sights if latest rumours are to be believed.
The Wall Street Journal has announced that Apple is in discussion with several US banks to launch its own peer-to-peer payment service, a move that would provide direct competition to the likes of PayPal and its Venmo platform.
If discussions progress well Apple’s new service could be launched as early as next year, and could provide earnings with a further boot higher thanks to the ubiquity of its products in an increasingly cash-less world. I reckon that PayPal’s dominance of this fast-growing market is suddenly looking a little less robust.
Valves play under pressure
Like Enquest, I believe that a backcloth of persistent oil price weakness should weigh on revenues at valvebuilder Rotork (LSE: ROR). The Bath business advised today that “the trading environment has remained challenging across most of our key markets and geographies,” and that although full-year guidance remains unchanged from September, revenues during July-September had slipped 18.1%.
On top of this, Rotork’s group orders had slumped 17.2% in the period, a worrying precursor for future revenues, while the firm’s admission that “the timing of order placement and product delivery remains difficult to forecast” should also send shivers down investors’ spines. With oil producers the world over sagely scaling back capex given current market troubles, I believe the worst could be far from over for the valve manufacturer.
