Now though, the company offers what appears to be a low valuation. As such, it could be worth buying alongside another share which reported encouraging results on Monday. Both shares could outperform the FTSE 100 in the long run.

In-line performance

Reporting upbeat results on Monday was supplier of integrated training and support solutions to the defence and regulated civilian sectors, Pennant International (LSE: PEN). The company is performing in line with expectations, recording a more-than 100% rise in pre-tax profit to £2.03m. It’s been able to successfully rescope a key contract with a major UK prime contractor during the first half of the year, while also delivering all remaining training aids on Middle East contracts that were signed in 2016.

Looking ahead, the company’s contracted order book of £31m, scheduled for delivery over the next three years, suggests that it has a bright future. It also has a pipeline of potential opportunities that are valued at over £100m in aggregate.

With Pennant International currently trading on a price-to-earnings growth (PEG) ratio of 0.1, it seems to offer good value for money. With net cash of £3m, and what seems to be a solid growth strategy, its share price performance could improve over the medium term.

Volatile prospects?

As mentioned, the Royal Mail share price has disappointed in recent months. The company’s financial outlook is unlikely to cause a sudden improvement in investor sentiment, with it due to report a fall in earnings of 14% in the current year. While a return to growth is forecast for 2019, the company’s bottom line is expected to increase by just 1% versus the current year. This suggests the challenges that have held back its performance in recent years are set to continue.

With the majority of Royal Mail’s revenue being generated in the UK, political uncertainty remains a key risk facing the business. Although cost avoidance measures are helping to make the UK operations more efficient, volumes are likely to remain under pressure. This could cause a further decline in the company’s financial performance in the near term.

In the long run though, a pivot towards international markets could take place under the new CEO. This could be done through a mix of organic growth and acquisitions, with the prospects for international markets much stronger than the UK, according to the company’s recent update. As such, and with the stock now having a price-to-earnings (P/E) ratio of 14 following its recent decline, now could be the right time to buy it ahead of what may prove to be a period of improved performance.

The post Here’s why FTSE 100-member Royal Mail’s share price could be set for a rebound appeared first on The Motley Fool UK.

More reading

• Could Greggs shares bounce back and pull a Rolls-Royce?
• Should investors consider buying Palantir stock after its stellar earnings?
• A huge opportunity for growth investors looking for stocks to buy in May?
• £8,580 invested in Rolls-Royce shares shares 5 years ago is now worth…
• £7,500 invested in Santander shares 3 years ago is now worth…

Peter Stephens 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.

Halosource

Water filtration play Halosource (LSE: HALO) has extended its rotten run of form in end-of-week trade and was recently dealing 26% lower from Thursday’s close around 8.75p per share.

A range of operational problems mean the business is now trading at a mere fraction of its 166p price seen five years ago, and although share values had picked up during the past year, a series of poor updates in recent weeks has eradicated all of these gains. Halosource is now dealing at levels not seen since last September.

Halosource set the ball rolling in November when it advised that product rollout delays by key customers, along with capacity expansion issues in China — problems that will dent its ability to meet client orders — will cause revenues in 2015 to fall “materially lower than market expectations.”

And investors headed for the doors again today after Halosource advised that, while its Chinese facility was now back up and running, that further orders delays are expected. Indeed, all of these orders may not be able to be met until the first quarter of 2016, it noted, and total sales are now expected to register at $18m-$19m this year versus $21m in 2014.

With net losses also expected to be subsequently higher than forecast, and net cash expected to stand at $4m at the end of the year, Halosource advised that it is “exploring opportunities to strengthen its balance sheet and improve cash generation.”

 There is no doubting that surging demand for clean water in emerging markets provides terrific growth opportunities for the likes of Halosource. But with the US-based business facing a murky near-term sales outlook, as well as potentially-drastic action to mend its battered finances, I believe the firm is a risk too far at the current time.

Pennant International Group

Defence specialists Pennant International (LSE: PEN) also shocked the market with a disappointing update in Friday business, and the stock was subsequently dealing 14% lower from the prior close.

The Cheltenham-based firm, which supplies products and services to the defence, rail, naval and aerospace segments, advised that it had only signed off on one of two critical contracts for 2015.

As a result Pennant International now expects “the loss for the second half… to be significantly greater than that reported in the first half.” This year’s sales expectations were based on total contracts worth £15m being rubber-stamped.

 In more encouraging news, Pennant International advised that a strong order book for 2016 and 2017 should deliver underlying revenues of £10.2m for each of these years, exceeding expected sales for the current period.

 But should Pennant International experience further contract delays — a common theme in the company’s core markets — shares could be in for a further battering looking ahead. Like Halosource, I reckon Pennant International carries too much risk at present.

The post Should You Follow Heavy Selling At Halosource Inc & Pennant International Group plc? appeared first on The Motley Fool UK.

More reading

• Could Greggs shares bounce back and pull a Rolls-Royce?
• Should investors consider buying Palantir stock after its stellar earnings?
• A huge opportunity for growth investors looking for stocks to buy in May?
• £8,580 invested in Rolls-Royce shares shares 5 years ago is now worth…
• £7,500 invested in Santander shares 3 years ago is now worth…

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

KAZ Minerals

It comes as no great surprise that KAZ Minerals (LSE KAZ) continues to suffer the wrath of the market. The copper miner is currently down an eye-popping 20% in start-of-week business, meaning its shares are now worth 95% less than they were just 12 months ago! But I do not believe the worst is over just yet.

KAZ Minerals’ latest dive has coincided with another fall in the red metal price, and copper is now back below the $5,000 per tonne level, at $4,943. The commodity is now just $80 off the six-year troughs struck last month, and I believe a fall back through this level is an inevitability given the industry’s reluctance to meaningfully shutter production, not to mention relentless stream of negative economic news flow from China.

With metal prices back in free fall, and Credit Suisse slashed its rating on KAZ Minerals last week owing to the difficult industry backcloth, commenting that “given [the company’s] high debt levels, the funding risk is high and the valuation very sensitive to medium- to long- term copper price assumptions.” I reckon both copper price, and consequently KAZ Minerals’ bottom line, should continue to worsen as supply/demand dynamics deteriorate.

Pennant International Group

Those suffering from heart palpitations had best steer clear of Pennant International (LSE: PEN), too, the business having conceded 23% so far on Monday. Sickly investor sentiment was prompted by the firm’s latest interim statement, which showed revenues tank 41% during January-June, plunging to £5.7m. As a result the firm swung to a pre-tax loss of £750,000 from a profit of £1.18m a year earlier.

Pennant International said that “contract awards have been delayed by the weakness of the oil price, election uncertainty in the UK and the complexities of public sector procurement.” Although the logistics specialists remain bubbly over its prospects for next year the market clearly disagrees, thanks in no small part to the likelihood of further pressure from the oil sector.

Indeed, investors paid little regard to news that Pennant International had inked a major contract with a global aerospace and defence contractor worth more than £7m, a deal which could rise to £9m. But with the company advising that the outcome for 2016 “could either be in line or significantly below market expectations” according to the timing of anticipated contracts, more bad news could be lurking around the corner for the Cheltenham-based business.

Shanks Group

Sentiment towards Shanks Group (LSE: BLT) has been far more settled compared with its two FTSE peers, however, and the business was last dealing 0.3% higher in Monday’s session. The waste and resource management specialists advised that “trading performance has been in line with the Board’s expectations” during April-September, it announced today.

And promisingly Shanks said that conditions in its Netherlands unit continue to improve, a situation that should offset the impact of weak oil prices on its Hazardous division and delays to its waste management facility at Wakefield. The latter is is likely to result in additional costs to the tune of £5m, the business noted.

The City expects improving demand for Shanks’ services to flip the business from a projected 6% earnings dip in the 12 months to March 2016, to a 14% advance in the following year, pushing a P/E ratio of 19.3 times for the current period to a very-respectable 17.1 times for 2017. Although investors should of course be vigilant concerning the state of the oil market, I reckon the company’s long-term earnings prospects are encouraging as market conditions elsewhere keep on improving.

The post Should You Buy KAZ Minerals plc, Pennant International Group plc And Shanks Group plc Following Today’s Developments? appeared first on The Motley Fool UK.

More reading

• Could Greggs shares bounce back and pull a Rolls-Royce?
• Should investors consider buying Palantir stock after its stellar earnings?
• A huge opportunity for growth investors looking for stocks to buy in May?
• £8,580 invested in Rolls-Royce shares shares 5 years ago is now worth…
• £7,500 invested in Santander shares 3 years ago is now worth…

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