Today’s AGM statement from intellectual property support services company RWS (LSE: RWS) is very bullish and has caused its share price to rise by over 15%. The company has performed significantly ahead of its own expectations during the first quarter of the year. It’s been an excellent period for the fully-integrated patent translation and filing division, including Inovia and a strong two months’ contribution from CTi.
Furthermore, RWS is benefitting from positive currency translation and expects to consolidate its market-leading positions within its chosen sectors. As such, it seems likely that forecasts for growth in earnings of 17% in the current year will be increased and this makes RWS’s price-to-earnings growth (PEG) ratio of 1.3 appear to be extremely good value.
That’s especially the case when you consider that RWS enjoys significant barriers to entry and a relatively wide economic moat, thereby providing relatively consistent financial performance. As such, it seems to be a strong long-term buy.
Wait and see
Also reporting today is Tungsten (LSE: TUNG), with the electronic invoicing and analytics company stating that trading in the third quarter was in line with market expectations. Revenues for the full year to 30 April 2016 are expected to be broadly in line with previous guidance, while Tungsten continues to anticipate an EBITDA loss for the year of no more than £15m (excluding one-off items). Furthermore, Tungsten believes it’s on track to break even on an EBITDA basis by the end of the 2017 financial year, which could be viewed as a positive event by the market.
Despite this, Tungsten’s share price has fallen by as much as 10% today following the release, although it’s still up by a whopping 61% since the turn of the year. While it’s tempting to buy now due to the improved investor sentiment of recent months and the expected improvement in the company’s financial performance, it could be prudent to wait for confirmation of profitability before buying a slice of Tungsten.
Meanwhile, Sainsbury’s (LSE: SBRY) has also been in the news of late regarding its bid for Home Retail. The inclusion of Argos within the Sainsbury’s business seems to be a logical step, since it should create synergies and boost sales at both companies due to the potential for cross-selling opportunities. In addition, it may help to diversify the Sainsbury’s brand away from food retailing and clothing.
Looking ahead, Sainsbury’s is likely to benefit from an improving UK consumer outlook. With inflation being low and wage growth on the up, disposable incomes are rising in real terms and this could help to push some customers back towards mid-market operators such as Sainsbury’s and away from no-frills supermarkets such as Lidl and Aldi. And with Sainsbury’s trading on a price-to-earnings (P/E) ratio of just 11.3, it appears to offer good value for money given its bright long-term future.
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Peter Stephens owns shares of RWS and Sainsbury (J). 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.