The Motley Fool

Should you buy Rio Tinto plc, PlayTech plc and B&M European Value Retail SA following today’s news?

Shares in software firm PlayTech (LSE: PTEC) have leapt 5% in the wake of acquisition news on Wednesday. PlayTech — which provides online gaming applications and websites — announced the purchase of a 90% stake in industry rival Best Gaming Technology (BGT) for €138m.

The Vienna-based business is a leading supplier of sports betting software for sports and betting companies, and is a major supplier of proprietary software for self-service betting terminals (SSBTs).

Indeed, BGT provided around 24,000 SSBTs with software as of the end of 2015, and counts bookmakers such as Betfred, Coral, Ladbrokes, Paddy Power Betfair and William Hill among its clients.

The deal is likely to give PlayTech’s already-explosive revenues outlook a further shot in the arm, in my opinion. And I believe the gaming giant’s forward P/E rating of 15.9 times represents great value given its splendid upward momentum.

Low-cost lovely

The acquisition of Poundland by South Africa’s Steinhoff International on Wednesday for £597m underlines the likely surge in discount retailers in Brexit Britain.

A range of consumer confidence gauges and retail spending reports in recent days have revealed the extent to which shoppers have already altered their spending patterns in anticipation of significant economic turbulence in the months ahead.

This landscape is likely to significantly boost footfall at value retailer B&M (LSE: BME), in my opinion.

And the Liverpool-based business is putting itself in the box seat to enjoy robust sales growth as its store expansion scheme clicks through the gears — B&M plans to open a further 50 stores in the period to March 2017, adding to the record 79 new outlets unveiled last year.

Given these factors, I reckon B&M’s forward P/E ratio of 18 times represents fair value.

Stuck in a hole

Rampant demand for digger and driller Rio Tinto (LSE: RIO) shows no signs of slowing as investors desperately seek ports in which to weather the Brexit storm. There are plenty of defensive options for cautious investors, in my opinion, but the commodities sector isn’t one of those I’m afraid.

Indeed, latest trade data from China overnight again casts a pall over the demand outlook for metals and energy looking ahead. Exports from the Asian powerhouse slumped 4.8% in June on a dollar-denominated basis, worse than broker consensus and speeding up from the 4.1% annualised drop in May.

And import data underlined Beijing’s travails as global trade cools and domestic demand remains sluggish. Inbound shipments of key commodities like iron ore, copper and crude oil all slipped month-on-month in June.

I believe that the likes of Rio Tinto remain a risk too far given this worrisome demand backcloth, and reckon that a forward P/E rating of 20.1 times fails to adequately reflect these problems.

Do you want to be rich?

Selecting stocks can be stressful business at the best of times. So we at The Motley Fool have been hard at work drawing up this special report that should provide your stocks portfolio with an extra shot in the arm.

Our NEW A Top Income Share report looks at a 'secret' FTSE superstar enjoying breakneck sales growth across the globe, and whose ambitious expansion plans are expected to deliver stunning dividend growth in the years ahead.

Just click here to enjoy this exclusive wealth report.  It's 100% free and can be sent straight to your inbox.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Rio Tinto. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.