Should you buy ASOS plc, Premier Oil plc and Galliford Try plc following today’s news?

Royston Wild considers the investment prospects of ASOS plc (LON: ASC), Premier Oil plc (LON: PMO) and Galliford Try plc (LON: GFRD).

| 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.

A bubbly operating update has powered Premier Oil (LSE: PMO) 5% higher in Tuesday business, the company advising that production averaged 61,000 barrels per day during January-June.

Output even reached a record 80,000 barrels at one point. And Premier Oil now expects total output for 2016 to ring in at the upper end of a guided 65,000-70,000 barrels per day. First oil at Solan was produced during the period, and development of the Catcher project also achieved major milestones, Premier Oil noted.

Healthy safe-haven appetite has powered fossil fuel plays like Premier Oil in the wake of last month’s Brexit vote. But questions remain over how long this stellar run can keep going.

US producers appear to be acclimatising to the environment of depressed crude values, with latest Baker Hughes data showing the rig count rising for five out of the past six weeks. And of course much-needed output cuts elsewhere are still to materialise.

The City expects Premier Oil to keep producing losses until at least next year. And given the oil market’s worrying long-term supply outlook, I reckon the bottom line may continue to struggle at Premier Oil, despite its improving operational performance.

Construction confidence

Shares in Galliford Try (LSE: GFRD) have also bounced following a market update of its own, the stock 6% higher from Monday’s close as I write.

The construction play said that it expects to print record results for the year to June 2016, with strong growth being enjoyed across its Construction, Linden Homes and Partnerships divisions.

Galliford Try advised that “recent political events create a backdrop of uncertainty for the new financial year,” although the firm remains confident over the two latter segments thanks to the robustness of the housing segment. And it notes that 82% of the order book has been secured for fiscal 2017.

Of course the full impact of Brexit will take some time to play out. But some would argue that Galliford Try’s ultra-low P/E rating of 6.1 times for the current period more than accounts for the consequent risks.

Fashion favourite

I’ve long been a believer that the explosive popularity of online shopping should blast earnings higher at ASOS (LSE: ASC) in the years ahead.

And today’s results underpinned my belief in ASOS’s business model. The clothing retailer saw total sales roar 30% during the four months to June, to £500.5m. And ASOS saw customers numbers leap by almost a quarter year-on-year, to 12m as of last month.

And the market certainly continues to believe in the ASOS growth story. Indeed, the stock has leapt to 27-month highs in Tuesday trading, above £45.60 per share.

While international sales are surging, investors shouldn’t lose sight of its huge reliance on the UK market, however, and subsequently the possibility of severe economic cooling on revenues looking ahead. The firm garners around 40% of total sales from its home market.

Still, ASOS remains positive looking ahead, particularly as it’s enjoying “further acceleration across the US, EU and the rest of the world.” And of course, the company should enjoy the fruits of declining sterling against the dollar and euro looking ahead.

I reckon ASOS is still a strong pick for those seeking access to the retail market, even in spite of a heady forward P/E rating of 77.7 times.

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.

Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. 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 »