The Motley Fool

Are these 2 bargain stocks unmissable buys after rising 25% in a week?

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.

Arrowings ascending on a chalkboard
Image source: Getty Images.

The following two companies have both crashed and lost more than half their value over the past 12 months. However, they are up more than 25% in a single week. Can recent positive momentum continue?

No support

International support services and construction group Interserve (LSE: IRV) has given investors an unwanted rollercoaster ride, amid profit warnings and fears over breached banking covenants. Its stock is down 54% over 12 months, up 28% over the last week, and down 13.54% this morning on publication of its annual 2017 results.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Today’s report showed a small rise in revenue, from £3.24bn to £3.25bn, but that was almost the only positive number. Total operating profit halved from £155m to £75m, the group’s loss before tax of £94m widened to £244m amid hefty writedowns, while headline earnings per share (EPS) crumbled by two thirds from 84.5p to 29p.

White stuff

Throw in a near doubling of net debt, from £274m to £502m, and you can see why investors are feeling so queasy. Worse, the group’s debt could rise to £680m in the second half, before improving slightly. Investors are ignoring one sign of hope, that the Berkshire-based group has secured full debt refinancing with committed borrowing facilities of £834m, through to 2021

New chief executive Debbie White claims her “fit for growth” plan will deliver an annual benefit of up to £50m to operating profits by 2020, £15m in the current year.

This is an opportunity for fearless contrarians given Interserve’s lowly valuation of just 6.2 times earnings, especially since it has future workload of £7.6bn, following a string of key contract wins in the year. These include the Ministry of Defence, Ministry of Justice, Department of Work and Pensions, Network Rail and the BBC, amid similar success in the Middle East. Interserve, which has a market cap of £132m, is a gamble, but a potentially rewarding one. My Foolish colleague Peter Stephens finds it tempting.

Capita crash

FTSE 250-listed Capita (LSE: CPI) has also left investors with churned stomachs, its share price crashing from 1,326p in July 2015 to just 187p today, down a thumping 85%. However, it is up 24% in the past week. Could this be your opportunity to hop on board for the next upwards swing?

The £1.25bn company’s numbers are absolutely all over the place, with a rock bottom valuation of just 3.3 times earnings, combined with a dizzyingly high yield of 16.9%. Don’t be fooled by that final number, the forecast for 2018 is a rather less rewarding 0%.

Comeback kid?

The recovery process may be slow and we are only in the early stages, as Capita changes its business model and launches a rights issue to generate extra capital. EPS are still expected to crash a massive 44% this year, and another 5% in 2019. Revenues may also dip slightly, although pre-tax profits may pick up a little, suggesting the stock has comeback potential.

Like Interserve, Capita has fallen so low, many will feel that the only way is up. History shows that companies take a long time to recover from such a bumpy ride, so if you are tempted, brace yourself for further highs and lows.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Harvey Jones has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.