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Should You Buy Tullow Oil PLC, KAZ Minerals plc & Renold plc On Tuesday?

Today I am looking at three FTSE stocks making the papers in Tuesday trade.

Tullow Oil

The bad news for the oil industry just keeps on coming, and investors in Tullow Oil (LSE: TLW) were given a further whack in Tuesday trading after the release of a disappointing exploration update. The London firm advised that its Emesek-1 exploration well in the North Lokichar basin, Kenya had failed to discover any hydrocarbons.

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The well will now be capped and abandoned, with Tullow Oil moving its attention to the Etom-2 well in the South Lokichar basin. Such disappointments are, of course, to be expected in the oil industry. Instead, I am rather more concerned with the wider state of the oil market on Tullow Oil’s future — Brent crude came within a whisker of touching fresh six-year troughs below $45 per barrel just yesterday.

Tullow Oil shot higher on Monday following a rating upgrade from UBS, who advised that the quality of the firm’s assets and cost-cutting initiatives make it a ‘buy’ candidate. But should the oil price keep on sinking, a nailed-on scenario in my opinion — and the company experience further operational difficulties, such as delays to its TEN development project in Ghana set for production in 2016 — I believe the stock is in danger of sinking again.

KAZ Minerals

Likewise, I believe copper giant KAZ Minerals (LSE: KAZ) is at threat of falling further as the fallout of chronic supply/demand balances in commodity markets weighs. The Kazakhstan-focused entity gave a rare reason for cheer on Tuesday, however, after announcing that it had agreed to defer a $300m payment related to its Aktogay project to its principal construction contractor, Non Ferrous China. Costs due in 2016 and 2017 will now be settled in the first half of 2018.

The market responded by sending shares 7.3% higher on the day. But I do not believe investors should get too excited by today’s news as the financial arrangement could prove nothing more than ‘kicking the can down the road’ as the prospect of further copper price weakness looms.

Just yesterday copper collapsed to levels not seen since May 2009 below $4,600 per tonne, taking out further key technical levels and leading to fresh fears over just how low the bellwether metal can go. With Chinese data continuing to disappoint, I believe KAZ Minerals’ positive news today could prove nothing more than a fresh selling opportunity, particularly as the firm still nurses a $1.85bn net debt pile.


Shares in industrial chain builder Renold (LSE: RNO) have also enjoyed a positive bump, and the business was recently 9.3% higher from Monday’s close. The company advised it had swooped for German rival Aventics for up to £4.5m in cash, and represents Renold’s first foray into the ‘inverted tooth chain’ market. The technology is used across a variety of applications such as within bottling plants.

The market subsequently shrugged off news that underlying revenues had slipped 6.8% during April-September, to £84.5m, with Renold reporting “challenging and volatile conditions in most of our geographical markets.” Indeed, the fruits of the company’s restructuring measures actually helped push pre-tax profit 4.6% higher for the period, to £4.6m.

And despite today’s monster share price rise, I believe Renold still represents excellent value for money. An expected 7% earnings uptick for the 12 months to March 2016 results in an ultra-low P/E ratio of 10.2 times. And while the firm still faces troubles in key end markets, I believe Renold’s successful self-help measures — combined with its ongoing acquisition and global expansion drive — should keep earnings moving skywards.

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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.