The fact that the company is still an integral part of the financial system is clear in its very sold H1 results. In the period to June, the company’s pro forma revenues, which include the recently acquired voice broking division of NEX Group, rose 12% year-on-year (y/y) to £925m as demand for its voice broking and electronic trading services increased.

As the company digests this acquisition and cuts redundant costs such as overlapping IT systems, underlying operating margins bumped up from 14.1% to 15.6% y/y and underlying operating profit increased 23% to £144m. Results were less flattering on a statutory basis, but these underlying results give a better view of the health of the business by stripping away acquisition-related costs.

Looking forward, there is no doubt that voice broking is a business under threat. Management is well aware of this and has been investing heavily in building out its electronic services to co-exist alongside human brokers who still provide clients with in-depth knowledge about market conditions that no computer is able to provide.

By emphasising the benefits of accessing both state of the art electronic data as well as the human connection, TP ICAP is growing nicely by taking market share from smaller competitors, building out its capabilities in the energy business and sweeping up smaller institutional traders that big banks have cut to focus on a handful of huge clients.

TP ICAP may seem a bit of a throwback, especially compared to the solely tech-focused NEX Group. But with solid growth potential, a highly cash generative business model, a 3.4% dividend yield and attractive valuation of 15 times forward earnings, I see plenty to like about it.

The end of the line?

Another company swept up in recent merger talk is industrial workwear rental and laundry provider Berendsen (LSE: BRSN). After initially rejecting a series of bids from French competitor Elis earlier this year, the board finally recommended a takeover offer in June that consists of £5.40 and 0.403 Elis shares per Berendsen share that at the time held a combined value of £12.61.

The company’s shareholder will have their say on whether to accept the offer at the general meeting later this month, but if all goes to plan, Berendsen will be de-listed in early September. And while many large mergers go astray, there appears to be significant logic behind combining these two businesses.

The combined group will offer its services across most major European countries and will improve its pricing power, lead to some cost savings and give it a better platform to pursue smaller bolt-on acquisitions. Current shareholders will have to decide for themselves whether to sell their shares now and pocket a hefty premium or to stick with Elis, but either way, this takeover offer has been a boon to Berendsen’s struggling share price.

The post An underrated growth and income star trading at a great valuation appeared first on The Motley Fool UK.

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Ian Pierce has no position in any 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.

Beauty is in the eye

Beazley (LSE: BEZ) sells “beautifully designed insurance“, its website tells us and I am duly impressed, because I have never heard that word applied to insurance before. Its products combine risk management, financial indemnity and incident response services and investors will find plenty to admire in its recent share price growth, with the stock up 250% in the past five years. Now that really is beautiful.

The growth story continues, with the stock up 26% in the last six months alone, so I was expecting to see an aesthetically pleasing set of results when I clicked on May’s trading statement for the three months to 31 March. Imagine my surprise to discover that gross written premiums had fallen 2% to $573m, while premium rates for renewal business had dipped 1%. That’s somewhat ugly. 

Birds and Beazley

There was better news further in the statement, with investment and cash rising from $4.3bn to $4.6bn and a year-to-date investment return of 0.9% versus 0.7% in 2016. Specialty lines, its largest division, achieved premium growth of 6% year-on-year. Beazley’s last few sets of results have shown steady, reliable growth and investors are clearly buying into that, as well as its strategy of diversifying beyond its core US market into Canada, with the recent acquisition of Creechurch Underwriters.

Despite recent stellar growth it trades at just 12.5 times earnings, which offers scope for a re-rating and makes now a surprisingly tempting time to buy. Today’s yield of 2.8% is covered 3.7 times and that suggests there is plenty of scope for progression. This high flyer could continue to fly, and that’s a beautiful thing.

Keep it clean

Investors in laundry services group Berendsen (LSE: BRSN) have cleaned up lately, with the share price leaping 25% in the last six months, and 115% over five years. However, these figures mask a 17% drop in the share price last October after it issued a full-year profit warning following operational instability in its UK Flat Linen business, which serves the hotel and healthcare industries.

The share price plummeted again in March after management warned that putting right ongoing problems with plant and machinery would continue to weigh on earnings. Investors have recovered their poise, even shrugging off a Morgan Stanley downgrade in April, after it warned that Berendsen needs to invest in property, plant and equipment and is also facing increasing competition in the UK. The investment bank also warned that much of its equipment dates from the 1970s and is often obsolete and not well maintained, which if true is a bit pathetic.

Lost in France

Management is fresh from fighting off an unwanted takeover offer from France’s Elis Services, claiming the proposal significantly undervalues the company and the leveraged bid raised shareholder risk. It reckons its strategy can deliver value without a takeover, with the company forecasting adjusted operating profit forecast of £170m in 2018, from a predicted £150m this year.

A forecast 8% drop in earnings per share this year adds to my concerns although they should recover from 2% in 2018. This looks like a turnaround opportunity but at 17.5 times earnings this is one to watch rather than rush out and buy.

The post Your last chance to buy these 2 FTSE 250 growth heroes appeared first on The Motley Fool UK.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended shares in Berendsen. 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.

This strategy may not appeal to every investor who is just getting involved in the stock market, but by following it, you will get your investment career off to a solid start.

To such ‘fortress’ businesses that have achieved steady returns for investors year after year are Berendsen (LSE: BRSN) and Reckitt Benckiser (LSE: RB), both of which are great stocks for a starter portfolio.

Fallen on hard times 

Berendsen may have fallen on hard times recently, but over the past five years the company has gone from strength to strength. Between year-end 2011 and mid-2016 shares in the company produced a return of more than 200% for investors, excluding dividends. Including dividends, the total return is closer to 220%. And despite the company’s recent stumble, I believe Berendsen can regain its composure and return to growth.

Berendsen is essentially a laundry business, providing outsourced workwear services to 80,000 customers across Europe. This business isn’t glamorous but it sure is steady, and the company is unlikely to experience a sudden collapse in demand for the services overnight. Last year’s profit warning was caused by higher-than-expected costs in UK Flat Linen, which serves the hotel and healthcare industries. The company has acted quickly to reduce these costs and also streamline its processes in the division.

City analysts are optimistic about these changes and expect the group to return to growth next year, with earnings per share set to tick higher by 4% for 2018 following a decline of 8% for 2017. 

At the time of writing shares in the company support a dividend yield of 4% and trade at a forward P/E of 14.4. The payout is covered nearly twice by earnings per share. 

The most defensive company 

Reckitt Benckiser is one of the most defensive companies trading on the UK market today. The producer of baby food and cleaning products has an impressive growth record behind it, and as the world’s population continues to grow, sales should continue to expand. 

Over the past five years, sales have increased by around a third, excluding one-off items, and City analysts are forecasting further growth in the years ahead. Specifically, City analysts have pencilled-in earnings per share growth of 10% for 2017 and 5% for 2018. As one of the world’s largest consumer goods companies, demand for Reckitt’s products is unlikely to drop suddenly overnight, and the company’s steady growth is boring but predictable.

Shares in Reckitt currently trade at a forward P/E of 21.2, which is expensive but the shares are worth paying a premium for considering the company’s defensive nature. The shares also support a dividend yield of 2.4% at the time of writing, and the payout is covered twice by earnings per share.

The post The 2 ‘fortress’ Footsie stocks I’d buy with £2,000 today appeared first on The Motley Fool UK.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Berendsen and Reckitt Benckiser. 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.

The City expects Shell to fork out dividends of 188 US cents per share through to the close of next year, meaning the crude colossus sports a yield of 7.2%. This clearly blows the FTSE 100 forward average of 3.5% to smithereens.

But not even this headline-grabbing figure would be enough to encourage me to part with my cash.

Shale shines

Escalating fears over the crude market’s supply/demand imbalance are reflected by Shell’s share price sinking to its cheapest since late November just this week.

Investor appetite has seeped back through the floor as the reality of OPEC’s production agreement of autumn has become clear. While the cartel’s compliance rate has exceeded all expectations (the group’s compliance rate rose to 104% in March from 90% the previous month), more concerning is the resulting support for oil prices that has seen US shale producers return to work with gusto.

Baker Hughes data last week showed 683 drilling units in operation in American oilfields, representing the highest level for two years. This is putting huge strain on already-bloated crude inventories, and threatens to keep oil prices locked around or below the $50 per barrel marker as it has been for many months.

Even should OPEC extend its supply freeze beyond the initial six-month period due to expire in June, these steps would simply encourage North American producers to keep upping tools, thus putting the kibosh on any oil price breakout.

In danger?

A surge in crude values is essential for Shell to realise forecasts of earnings rises of 202% and 27% in 2017 and 2018 respectively.

Although the business continues to divest assets and reduce capex budgets to mend its pressured balance sheet, such measures can only be extended so far before they become seriously earnings-destructive in the long run.

Shell may have the necessary capital strength to shrug off poor dividend coverage to meet current dividend projections with anticipated earnings of 139.7 cents per share actually outstripping this year’s expected payout, while coverage stands at 1.2 times for 2018. But I believe the company’s generous dividend policy could come crashing down further out.

In a spin

Berendsen (LSE: BRSN) is another income stock expected to pay out big in the medium term, but which I am also giving short shrift to.

The laundry giant is anticipated to pay a 33.9p per share dividend in 2017, yielding 4.4%, and to lift the reward to 35.3p next year, yielding 4.5%.

But extreme trading difficulties are putting these projections under the microscope — Berendsen warned last month that the “first half of 2017 will continue to be impacted by legacy operations in the UK.”

Dividend coverage stands at 1.7 times through to the close of 2018, below the widely-regarded security benchmark of two times. And with net debt ballooning to £429.4m last year from £370.9m a year earlier, and Berendsen facing a lot of hard work and capital expenditure to remedy the chronic underinvestment of yesteryear, I reckon current dividend targets could fall well short.

The post Royal Dutch Shell plc isn’t the only dividend champion I refuse to buy appeared first on The Motley Fool UK.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Berendsen and Royal Dutch Shell B. 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.

Trading at a discount

Pets at Home (LSE: PETS), the UK’s largest pet supplies retailer, has seen its share price fall 22% since the start of the year. This drop has left its shares changing hands at just 12.2 times its consensus forecast for full-year underlying earnings per share of 15.6p. That’s a significant discount to the sector average of 15.4 and its 3-year historical average of 16.8.

The sharp valuation compression of its shares is down to the weakness of the company’s merchandise sales in recent months. Like-for-like merchandise sales fell 0.5% in the third-quarter, down from growth of 1.7% last year. However, despite this, management still expects to be able to meet full-year profit expectations, as service revenues continue to grow robustly.

Looking forward, the group expects services — such as veterinary practices and dog grooming — rather than merchandise to be the main engine of growth, as it faces growing competition from supermarket and discount stores, which have been expanding their pet-product offerings. Revenues from services rose 47.8%, to £26.3m, in the third-quarter, with like-for-like growth of 7%.

City analysts project earnings per share will continue to climb, hitting 15.6p in 2017. With higher profits, this should mean dividends will likely grow this year too. The stock already carries an attractive yield of 4%, but with a payout ratio of just over 50% forecast for 2017, there’s plenty of room for future growth as well. With an above-average dividend yield and solid long-term dividend growth potential, Pets At Home seems to me like a dividend growth machine that income investors should take a good look at.

Turnaround potential

Berendsen’s (LSE: BRSN) share price has slumped by almost 10% since the company warned about the cost of legacy issues from its UK textiles businesses earlier this month. As a result of increased levels of machine downtime, and bottle necks caused by inefficient machinery relating to its UK operations, adjusted operating profit for 2017 is expected to be approximately £150m, down from £161m in 2016.

However, looking forward, I’m optimistic about its longer term growth prospects despite recent setbacks. Revenue continues to grow as Berendsen continues to expand into new markets, and the company has a turnaround plan for its lagging UK business — it intends to invest some £450m in improving its operational efficiency. The company has a strong track record in delivering earnings growth, with a five-year compound annual growth rate (CAGR) in earnings per share of over 13.2%.

At a current price of 842p, its shares trade at 12.9 times its consensus forecast for full-year earnings per share of 65.1p. That’s a big discount to the sector average of 17.2 times, and seems unfair given its turnaround potential and above-average dividend yield. Shares in Berendsen yield 4.0%, with a dividend payout ratio of 52%.

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

A difficult year

The last financial year was difficult for the company because of legacy issues. Its second-half performance was impacted by challenges within its UK textiles segment (Workwear, Hospitality & Healthcare), with the sector reporting profits which were £10m lower than in the previous year. This caused operating profit to fall by 4% on a reported basis, although when the positive effects of currency changes are factored-in, operating profit increased by 5%.

Aside from the difficulties in UK textiles, the company’s performance was in line with expectations. Its strategy is driving improvements in processes, controls and operational visibility, while capital investment in plant and machinery is being increased and accelerated. In fact, Berendsen expects to invest around £150m per annum in plant and machinery in each of the next three years. And since it continues to see good opportunities in attractive customer markets, its prospects appear to be bright.

Growth potential

While further issues are expected in the first half of the year from the troubled UK textile division, Berendsen’s earnings growth potential is relatively bright. It is expected to record a rise in earnings of 6% in both 2017 and 2018, which is in line with the growth rate of the wider index. Following today’s share price fall, the company now trades on a price-to-earnings (P/E) ratio of just 12.2. This is lower than its four-year average P/E ratio of 15.8. Therefore, if its rating reverts to the average of recent years and it meets its forecasts for 2017 and 2018, its share price could rise by as much as 46%.

Clearly, that may appear to be a rather ambitious figure. However, given the fact that the stock could benefit from weak sterling and also expects to make progress with its UK textile division and the rest of the business in 2017, it could be a strong long-term performer.

Sector opportunity

In fact, the company trades on a lower P/E ratio than sector peer WS Atkins (LSE: ATK). It has a rating of 12.6 and yet is forecast to grow its bottom line at a lower rate than Berendsen over the next two years. WS Atkins is forecast to record a rise in earnings of 4% next year and 5% the year after. This indicates that the company is performing well and could be worth buying given its current valuation. However, its sector peer could have significantly more upside potential after today’s share price fall.

Since Berendsen has a yield of 4.5% from a dividend which is covered 1.9 times by profit, it also seems to have superior income prospects relative to its sector peer. The WS Atkins yield is 3% from a dividend which is covered 2.8 times by profit. Therefore, despite investor sentiment falling today, Berendsen could be a sound buy.

The post Is Berendsen plc a falling knife to catch after crashing 15%? appeared first on The Motley Fool UK.

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

However, some UK mid-caps have not benefited from investors’ renewed optimism towards the sector despite the fact that their underlying business performance continues to meet expectations. 

Here are three of these unloved UK champions with a promising outlook. 

Sell, sell, sell

When car dealer Pendragon (LSE: PDG) reported its full-year 2016 results earlier this week, investors rushed to sell the company’s shares, despite management’s positive outlook. For 2017, management expects car sales to remain flat, compared to industry projections of a 5% fall, and the firm is looking to double its share of the UK used car market to 10%. Underlying pre-tax profit for 2016 rose 7.6% although reported profit before tax fell 7.6% year-on-year as last year the company benefitted from some one-off items, which weren’t repeated. 

Alongside the results the company announced it’s increasing its dividend payout by 10% and based on January trading, is optimistic for the year ahead. City analysts are expecting the company to report no earnings growth for 2017 and based on this forecast the market has marked down the shares to just 9.1 times forward earnings. 

If management is right and trading does prove to be better than City expectations for the year, the shares could quickly re-rate higher. 

Troubled turnaround 

Shares in SIG (LSE: SHI) have been on a rocky ride over the past five years falling from a high of 216p to a low of 89p as the building products specialist has struggled to achieve steady earnings growth.  

Nonetheless, the company’s turnaround seems to be gaining traction with analysts expecting pre-tax profits to come in at £76m for 2016, up from £51m for 2015. Further profitability growth is forecast for the next two years with analysts targeting a group pre-tax profit of £86m for 2017. 

Even with this steady growth outlook on the cards, shares in SIG only trade at a forward P/E of 11.4. They also support a dividend yield of 3.9%. The payout is covered two-and-a-half times by earnings per share. 

Sudden fall

Shares in Berendsen (LSE: BRSN) took a dive during October after the company issued a profit warning. The root of this warning was the group’s UK Flat Linen business where costs jumped more than expected. 

Management has promised to remedy the Flat Linen issues, and I believe they will stick to their word. After all, the company has grown earnings per share at an average annual rate of 32% over the last six years, while revenue has ticked higher by only 0.4% per annum. Shares in the company currently trade at a forward P/E of 13.5 and could offer significant long term growth potential based on past trends. The dividend yield is 3.8%. 

The post 3 mid-cap stocks I’d buy in March appeared first on The Motley Fool UK.

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Rupert Hargreaves owns shares in Pendragon. The Motley Fool UK has recommended Berendsen and Pendragon. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Essentra collapses

Shares in FTSE 250-listed Essentra (LSE: ESNT) collapsed by a fifth this morning after the company reported a dip in both revenue and profits for the period to 30 June. The specialist plastic and fibre products supplier revealed pre-tax profits of £42.6m, compared to £45.1m for the same period a year earlier, with revenues £5.2m lower year-on-year at £545.2m. The disappointing results come after last month’s profit warning that also resulted in a sharp fall in the share price.

The Milton Keynes-based firm has seen its shares fall by almost 50% during the last 12 months, sinking to sub-500p levels in early morning trading. Before today’s update, analysts had pencilled-in an 8% fall in earnings for the full year, but these consensus estimates will no doubt be revised downwards in the coming months. Despite the sharp falls in the share price this year, Essentra still looks expensive to me, trading at 14 times forecast earnings and given the challenges ahead.

Indivior soars

In stark contrast, shares in speciality pharmaceuticals business Indivior (LSE: INDV) rose by 10% after a strong half-year update. The mid-cap firm reported a rise in net revenue for the first half to $531m, compared to $517m reported for the first half of 2015. However, expenses incurred as a result of investment in research and development led to a $32m fall in operating profit to $198m.

The US-based business has lifted its full-year guidance for net revenue from a range of $945m-$975m to a healthier $1bn-$1.03bn, and its net adjusted income guidance from $155m-$180m to $180m-$200m. Shares in Indivior have doubled in the last six months and are now trading at a demanding forward price-to-earnings ratio of 17 for 2017. Despite today’s encouraging results, the shares still look too expensive to me.

All-time high

Also reporting today was textile services business Berendsen (LSE: BRSN). The London-based mid-cap firm reported a 7% rise in revenue to £533.5m for the six months to June, with adjusted operating profit also up by 7% to £70.2m. Adjusted pre-tax profit climbed to £60.2m, a 7% improvement on the first half of 2015, with earnings per share rising 8% to 27p. Management also decided to raise the interim dividend by 5% to 10.5p, leaving full-year dividend forecasts at 34.41p.

Market consensus suggests a 9% rise in full-year earnings for Berendsen, with a further 7% improvement expected next year. But the shares are trading at close to all-time highs and now look expensive at 20 times forward earnings. In my view the predicted growth is already priced-in so I would stay on the sidelines and wait for a more favourable valuation.

The post 3 shares to buy after today’s half-time results? appeared first on The Motley Fool UK.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Essentra. The Motley Fool UK has recommended Berendsen. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Of course, investor sentiment hasn’t warmed towards Glencore exclusively because of an improved outlook for the wider resources sector. The market seems to be upbeat about Glencore’s new strategy, which is seeing it make asset disposals, cut costs and reduce the amount of leverage on its balance sheet. These changes should ensure that Glencore has a brighter long-term future and while its short-term progress could be hampered by weakness in its operating conditions, it appears to have a sound long-term growth outlook. As a result of this, it seems to be a worthwhile buy, although above-average volatility appears to be a given over the coming months.

Price too high?

Also posting an impressive share price rise in the last three months has been Diploma (LSE: DPLM). The technical product supplier’s valuation has risen by 16% during the period and while it remains a high quality business with an upbeat outlook, its valuation may now have become rather too rich to merit purchase.

For example, Diploma trades on a price-to-earnings (P/E) ratio of 19 and while it has an excellent track record of growth, its forecasts for the next two years are somewhat modest. In fact, Diploma’s bottom line is expected to rise by 6% this year and by a further 8% next year, which is roughly in line with the growth rate of the wider market.

And looking back at its growth rate from the last three years, Diploma has only been able to average earnings growth of 5% per annum. This means that while it may offer a degree of resilience in the face of heightened uncertainty in the wider market, Diploma’s shares could underperform over the medium term.

Selling oportunity

Meanwhile, it’s a similar story with Berendsen (LSE: BRSN). The textile services business has a good track record of earnings growth, with it having increased its bottom line in four of the last five years. However, it trades on a rather rich P/E ratio that indicates that now may be an opportune moment to sell, rather than buy.

For example, Berendsen has a P/E ratio of 18.4 and with its bottom line forecast to rise by 8% this year and by a further 7% next year, its share price could come under a degree of pressure since this is in line with the wider market growth rate. And with Berendsen yielding just 2.8%, it appears to lack income as well value and growth appeal. That’s especially the case while the wider index offers a number of cheap stocks with growing bottom lines, which means that Berendsen may be a stock to avoid right now.

The post Don’t buy Glencore plc, Diploma plc or Berendsen plc until you’ve read this! appeared first on The Motley Fool UK.

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

In fact, its top line increased by 3%, while adjusted operating profit benefitted from a rise in margins of 30 basis points to record a rise of 5% versus the previous year. Encouragingly, Berendsen’s return on invested capital rose by 40 basis points to 10.3%, while its free cash flow conversion remains strong at 99% of the adjusted after-tax profit figure.

This upbeat performance has enabled Berendsen to increase its dividend by 5%, which means that it now yields 2.9%. This is lower than the FTSE 100’s yield of around 4%, and with Berendsen trading on a rather rich price-to-earnings (P/E) ratio of 17.7, it appears to be relatively unappealing compared to the wider index and therefore may struggle to outperform the FTSE 100 in the next three years.

High price?

Also reporting today was global consultancy business Ricardo (LSE: RCDO), with the first half of its financial year delivering significant revenue and profitability gains. The company’s top line increased by 31% versus the comparable period from the prior year, with a strong order book of £201m (versus £140m as at 30 June 2015) indicating that its future performance could improve yet further.

In addition, Ricardo is enjoying success in its strategy to diversify the business, with it winning orders from across all geographies and market sectors in which it operates. And with its earnings rising by 31% in the first half of the year, it seems to be on track to deliver on its upbeat growth prospects.

Despite this, Ricardo continues to be rather expensive based on a P/E ratio of 17.3. This indicates that there’s limited upward rerating potential, with a price-to-earnings growth (PEG) ratio of 2.7 showing that even when growth expectations are factored-in, Ricardo may struggle to beat the FTSE 100 over the coming years.

Risky play

Meanwhile, Mediterranean-focused upstream gas company Sound Energy (LSE: SOU) has today announced the mobilisation of a rig for the upcoming first well at its Tendrara licence area, located in Morocco. The rig is due to arrive early next month from its current location in Mauritania.

Furthermore, Sound Energy also announced today that it has received final approval from the Moroccan National Environmental Committee for the first and second Tendrara wells. This means that there are no additional approvals required in order for drilling to commence.

Clearly, today’s news is encouraging and shows that Sound Energy is making progress with its current strategy and plans. As such, it has the potential to beat the FTSE 100 over the next three years, but is highly dependent on news flow during that time, as well as investor sentiment towards the oil and gas sector, which will in turn be heavily influenced by the price of oil.

As such, and while Sound Energy may be worth a closer look for less risk-averse investors, the risk/reward ratio of many other companies could be preferable for long-term investors.

The post Will Berendsen PLC, Ricardo plc And Sound Energy PLC Beat The FTSE 100 Over The Next 3 Years? appeared first on The Motley Fool UK.

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