The Motley Fool

Think the Tullow Oil share price is a FTSE 250 bargain? Read this now

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.

Image source: Getty Images.

The FTSE 250 has been exceptionally volatile in recent weeks, and this trend could continue in the near term. Fears surrounding the UK economy, as well as the world economy, could linger in investors’ minds and cause stock prices to come under pressure.

Against this backdrop, companies such as Tullow Oil (LSE: TLW) may now offer good value for money. The company appears to have improving financial prospects which could lead to a rising share price over the medium term. However, it’s not the only FTSE 250 share which could be worth buying at the present time.

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...

Improving prospects

Reporting on Thursday was speciality chemicals company Elementis (LSE: ELM). It released a third quarter trading update which showed that it has delivered resilient performance, being on track to perform as per previous guidance.

In its personal care division, sales to direct customers of its high-margin hectorite-based products continue, while in its coatings division its transformation programme has made progress. Activity levels in its energy segment improved, being driven by new business and early signs of a recovery in deep water drilling. In its chromium segment, the company’s production has been disrupted due to Hurricane Florence. However, demand has remained strong.

Looking ahead, Elementis is forecast to post a rise in earnings of 10% in the next financial year. With the company’s shares trading on a price-to-earnings growth (PEG) ratio of 1.7, they appear to offer a margin of safety. With the overall performance of the business being relatively sound and it having what appears to be a logical growth strategy, its overall investment prospects appear to be improving.

Volatile outlook

The prospects for Tullow Oil appear to be relatively uncertain at the present time. There is a general concern among investors that the world economy will experience a slowdown in its rate of growth. This could be caused by a rising US interest rate, or by tariffs being placed on imported goods by the US and China. Either way, investor sentiment has weakened significantly in recent weeks, and this trend could continue over the near term.

The oil and gas sector, though, may be supported by geopolitical risks across a number of OPEC nations. Saudi Arabia has been in the spotlight of late, with sanctions being a possibility. Iran and Venezuela are already facing the prospect of supply disruption, and when taken together this could cause supply growth to fall behind demand growth for oil – even in a weaker world economy.

As such, Tullow Oil could enjoy favourable oil prices over the medium term. The company is expected to post a rise in earnings of 11% next year, with its shares trading on a PEG ratio of 1. This suggests that investors have not yet factored in its improving financial outlook, and that there could be capital growth potential on offer.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Peter Stephens owns shares of Elementis. The Motley Fool UK has recommended Elementis. 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.