Do Acquisitions And Disposals Make Just Eat PLC, Centrica PLC And Halma plc Buys Today?

Should you pile into these three stocks following recent updates? Just Eat PLC (LON: JE), Centrica PLC (LON: CNA) and Halma plc (LON: HLMA)

| 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 online takeaway ordering service Just Eat (LSE: JE) have soared by as much as 10% today after it announced the acquisition of four takeaway businesses for €125m. The purchases are from Rocket Internet in Spain and Italy, as well as from foodpanda in Brazil and Mexico. They will be funded through existing cash resources and are expected to boost Just Eat’s 2017 EBITDA figure by around £5m.

Just Eat states in the release that the acquired businesses are highly complementary to its existing offering in these countries and are in-line with its strategy to dominate the markets in which it operates. As such, they seem to be a sound move by the company as it seeks to generate further economies of scale as well as greater efficiencies over the medium term.

With Just Eat forecast to grow its bottom line by 59% in the current year, its price to earnings growth (PEG) ratio of 0.9 holds considerable appeal. Not only is online takeaway growth likely to be strong in future years, Just Eat is very well-diversified across multiple geographies and this brings a degree of resilience as well as the opportunity to record significant capital gains for the company’s investors.

Also announcing an acquisition today is Halma (LSE: HLMA), with the health care company purchasing CenTrak for $140m in cash. CenTrak designs and manufactures sensors and proprietary communication technology that provides reliable and precise location data for healthcare facilities to ensure compliance with regulations.

The acquisition appears to represent good value for money for Halma, with it being a multiple of 2015’s profit before tax of around 14. And with CenTrak’s technologies being very similar to those used by other Halma companies in its infrastructure safety and environmental & analysis sectors, its integration could be relatively smooth.

However, with Halma trading on a price to earnings (P/E) ratio of 24.2 and being forecast to increase its bottom line by 8% in the current year, its PEG ratio of 3 lacks appeal at the present time.

Meanwhile, Centrica (LSE: CNA) has announced an asset disposal today, with the energy company selling off its 50% stake in the Glens of Foudland, Lynn and Inner Dowsing wind farms for £115m. Centrica will purchase 100% of the power and 50% of the Renewable Obligation Certificates from the three wind farms until 2024, with the deal being in-line with its strategy of selling off wind power generation assets.

Looking ahead, Centrica is set to sell off more assets in the coming years as it seeks to become a more focused domestic energy supplier. With the outlook for the oil price and wider energy sector being relatively downbeat, this could prove to be a sound move. And with Centrica set to deliver major cost savings which could boost dividends upwards from an already appealing 6.2%, now could be a great time to buy a slice of the business.

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 Centrica. The Motley Fool UK has recommended Centrica. 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

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

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 »