Will Vodafone Group plc, Tribal Group plc And Barratt Developments Plc Transform Your Portfolio In 2016?

Should you buy these 3 stocks right now? Vodafone Group plc (LON: VOD), Tribal Group plc (LON: TRB) and Barratt Developments Plc (LON: BDEV).

| 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.

Shares in education software and services company Tribal Group (LSE: TRB) have fallen by as much as 53% today after it released a profit warning, fundraising and a move to AIM. Clearly, the company is experiencing a number of challenges at the present time, with sales momentum continuing to slow and a number of key customer contract milestones having been deferred until 2016.

As a result of this, Tribal expects adjusted operating profit for the current financial year to be significantly lower than anticipated. Furthermore, the company has identified that a number of significant cash receipts may not be received until the next financial year. As such, net debt could be higher at the end of the current year tha previously anticipated. This means that Tribal may break its debt covenants and so is in talks with its lenders to negotiate amendments to its terms. Additionally, Tribal has announced a rights issue of up to £35m, with more details to come when it releases its full-year results.

Undoubtedly, Tribal is enduring a prolonged period of disappointment and while its shares have fallen by 80% already this year, further falls could come. That’s at least partly because the company’s payments are linked to customer programme milestones in some cases. And with the milestones not being within Tribal’s control, there’s the potential for further delays to payments. It seems Tribal is a stock to watch rather than buy at the present time.

Home sweet home

Meanwhile, the house building sector continues to have excellent growth potential for 2016. That’s at least partly because of a reduced chance of an interest rate rise now that inflation is near-zero, thereby potentially maintaining high demand for property. Partly as a result of this, Barratt (LSE: BDEV) is expected to increase its bottom line by 18% in the current financial year. This puts it on a price-to-earnings growth (PEG) ratio of just 0.6, which indicates that share price growth could lie ahead in 2016.

Furthermore, with Barratt yielding 5% at the present time from a dividend that’s covered 1.8 times by profit, it remains a hugely enticing income play too. With income-seeking investors still likely to be reliant on shares for their income next year due to low interest rates, Barratt is likely to remain firmly in favour.

Good times ahead?

Similarly, buying Vodafone (LSE: VOD) right now appears to be a very sound move. Many investors will be rather lukewarm about that prospect due to Vodafone’s disappointing performance in recent years. But that has mostly been due to challenges in the markets in which it operates rather than internal factors. In fact, Vodafone has steadily been investing in its offering and in diversifying its business so as to provide a more visible revenue stream in future years.

This should allow it to become a more resilient and reliable income stock over the medium term. And with its shares yielding 5.5% and earnings growth forecast at 19% for next year, there appear to be adequate catalysts to push the company’s share price higher in 2016.

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.

Peter Stephens owns shares of Vodafone. The Motley Fool UK has no position in any of the shares mentioned. 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

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

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 »