Even though the FTSE 100 has risen by over 7% in the last month, there continue to be growth opportunities across the UK stock market. Investor sentiment appears to be buoyant and perhaps more resilient than expected given the risks from higher inflation and rising interest rates across the globe.
With this in mind, there could be buying opportunities available for long-term investors. Reporting on Wednesday was a company which offers strong growth, while an industry peer could also be an impressive performer in future years.
Wednesday saw gold and silver miner Fresnillo (LSE: FRES) sharing its first quarter production update. It was generally positive and showed that the company is on target to meet its guidance for the full year.
During the quarter, silver production increased by 14% versus the same period of the previous year. This was mainly due to the contribution from San Julian JM (phase II). Quarterly gold production increased by 4.1% year-on-year, with it benefitting from a higher contribution from Herradura.
Rising production means that Fresnillo is expected to deliver an increase in its bottom line of 14% in the current year, followed by further growth of 10% next year. This puts it on a price-to-earnings growth (PEG) ratio of 1.9, which suggests that it may offer good value for money at the present time.
Certainly, the prospects for the gold and silver prices remain uncertain. Higher inflation expectations could provide a boost to their prices, although rising interest rates may offset this to some extent. Given that Fresnillo seems to offer growth at a reasonable price and volatility remains high in stock markets, it could prove to be a sound buy.
With the oil price having risen significantly in recent months, the outlook for the oil and gas industry has improved. Cairn Energy (LSE: CNE) is a stock which could benefit from improving sentiment across the industry, with its exploration and development programme now due to deliver rising production over the next couple of years.
In fact, the company is expected to be profitable in the current financial year and then generate earnings growth of 73% in the 2019 financial year. This has the potential to boost investor sentiment in the company. And with it trading on a PEG ratio of 0.3, it appears as though there is a wide margin of safety on offer. This could mean that even if the oil price experiences a decline, the company’s share price may not be severely affected.
Of course, Cairn Energy remains a relatively high risk stock in terms of its exposure to commodity prices. But with what seems to be a solid balance sheet and an asset base which could generate high returns, it could be worth buying for the long term. Its valuation suggests that the market has not priced in its full potential.
Peter Stephens owns shares of Fresnillo. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.