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Should You Buy Servoca Plc, LGO Energy PLC & Punch Taverns plc Today?

Today I’m looking at three stocks making the headlines in mid-week trade.

Gushing higher

Fossil fuel producer LGO Energy (LSE: LGO) has shot 7% higher in Wednesday business on the back of a positive operational update.

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The London-based driller has received approval from authorities in Trinidad to perforate a new oil zone well at its GY-671 well in the Goudron Field, it announced. The zone is located within the Upper C-sands and covers a net pay interval of 208 feet.

LGO Energy added that its GY-50 well had been re-entered and logged to a depth of 2,428 feet, and that an application will now be lodged to perforate and complete 223 feet of new net oil pay across two producing zones.

And the energy producer completed a stunning hat-trick by advising it had also identified six additional extra wells, offering an opportunity to create further low-cost production by accessing previously-uncompleted productive zones.

LGO Energy certainly has the wind in its sails at present, the business also receiving shareholder approval in recent days to raise £28m through a rights issue. Still, the unpredictable nature of oil exploration — allied with LGO Energy’s still-fragile balance sheet — makes the business a risk too far, in my opinion.

Toast terrific returns

Drinking hole operator Punch Taverns (LSE: PUB) was last dealing 4% higher on Wednesday following a bubbly trading update.

At first glance the firm’s latest figures provide little cause for celebration: Punch Taverns saw pre-tax profit slump 84% between September and February, to £54.7m. However, the business put these results down to £288m worth of disposals during the past 18 months.

Indeed, Punch Taverns’ restructuring drive certainly appears to be delivering the goods — average profit per outlet rose 3% during the six months, with like-for-like net incomes across its core estate increasing 1.6%.

Punch Taverns is clearly a firm on the rise, and the City expects the firm to bounce from a 29% earnings dip in the year to August 2016 with a 28% rise the following year. I reckon a P/E rating of just 5.8 times for the current period represents a great level to latch onto the company’s improving growth story.

Recruiter on the rise

Recruitment specialist Servoca (LSE: SVCA) also lit up the leaderboards on Wednesday thanks to a 16% session-on-session rise.

The company advised in its latest trading update that “trading performance has shown excellent progress and results for the first six months will be significantly ahead of the corresponding period last year.”

Servoca announced back in December that its Healthcare and Education units continued to perform strongly, underpinning a 20% revenues rise in the year to September 2015. And the business hinted further acquisitions could be ahead to complement solid organic growth.

The number crunchers expect Servoca to enjoy a 15% earnings gain for fiscal 2016, leaving the business dealing on an ultra-attractive P/E rating of 10.6 times. And a sub-1 PEG reading of 0.7 underlines Servoca’s terrific value. I reckon the business could prove a very shrewd growth stock at current prices.

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Royston Wild has no position in any shares mentioned. 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.

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