Will Sirius Minerals plc, Regus plc and Relx plc beat the FTSE 100 all over again?

Should you buy these 3 stocks right now? Sirius Minerals plc (LON: SXX), Regus plc (LON: RGU) and Relx plc (LON: REL).

| 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.

Flexible workspace solutions provider Regus (LSE: RGU) has today released an upbeat trading statement for the first quarter. Encouragingly, it’s in line with management expectations and included a 14.5% increase in revenue as well as a doubling of the company’s cash generation. And with 42 new locations added to the company’s global network, Regus seems to be well-placed to deliver further growth over the medium-to-long term.

In fact, Regus is forecast to increase its bottom line by 28% this year and by a further 23% next year. And with its shares trading on a price-to-earnings-growth (PEG) ratio of just 0.7, they seem to offer good value for money. Clearly, Regus remains a relatively cyclical business and its outlook could deteriorate if the outlook for the global economy worsens. But with such a wide margin of safety, Regus looks set to beat the FTSE 100 after having done so by 33% in the last year.

Index beater?

Similarly, information and analytics specialist Relx (LSE: REL) has also handsomely outperformed the FTSE 100 over the last year. Its shares have risen by 9% while the FTSE 100 has fallen by 11%. Looking ahead, Relx is due to increase its bottom line by 12% this year and by a further 7% next year. This puts it on a PEG ratio of 1.5, which indicates that its shares offer a relatively appealing risk/reward ratio and have a good chance of beating the wider index.

Although Relx may not have the fastest growing bottom line in the FTSE 100, it has been very reliable in recent years. In fact, it has recorded positive earnings growth in each of the last five years and at a time when the outlook for the global economy is rather uncertain, it could become increasingly popular among investors. And with a dividend which is covered 2.2 times by profit, Relx’s yield of 2.6% may hold significant appeal in the long run.

Future prospects priced-in

Meanwhile, Sirius Minerals (LSE: SXX) has also outperformed the FTSE 100 in the last year. Its shares have risen by a whopping 48% during the period as approval was granted for Sirius Minerals’ potash mine in Yorkshire and crop studies yielded positive results for the company’s polyhalite fertiliser.

While Sirius Minerals could deliver exceptional share price growth in the long run due to high demand for its fertiliser, in the shorter term its shares could fail to record such strong performance. That’s because much of the company’s future prospects seem to be priced-in, while challenges regarding fundraising in what is a tough period for the mining sector may not be fully included in the company’s valuation.

As such, and while Sirius Minerals may be of interest to less risk-averse investors, the chances of it beating the market as handsomely as it has done in the last year appear to be slim.

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 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.

More on Investing Articles

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »

Investing Articles

3 ideas to help investors aim for a million-pound Stocks & Shares ISA

The UK has a growing number of Stocks and Shares ISA millionaires, and this plan may be one of the…

Read more »

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 »